Luis Suarez's men have yet to pick up a point after losing their opening two Group E matches to France and Ecuador respectively.
However, Honduras still have a slim chance of making the last 16, should they beat Switzerland and Ecuador lose to France.
Honduras also need a significant goal difference swing in their favour, and Palacios is aware he and his team-mates will have to be on the front foot against Ottmar Hitzfeld's side on Wednesday.
"There is a need to take the risk because we (have to) go out to win," he said at a press conference.
"We have to go out and play on the offensive and, of course, take care of ourselves.
"We are clear that we can win with a good goal difference, but you have to think that we have a tough opponent like Switzerland.
"They want to win, we do not want to lose either, so it will be a very complicated game."
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