Monday, February 2, 2015

Risks Versus Opportunities

Pssst... c'mere... wanna take a risk?

Why do many of us see taking a risk as something to avoid as assiduously as we would a guy standing on the corner trying to sell us a watch from the depths of his trench-coat?

When did risk-taking take on a negative connotation?  The fact is, every decision carries an element of risk, even the decision to not take a risk. There is a cost to every choice we make in life, large or small, and yet we still manage to make choices. However, label one of those choices 'risky' and we immediately begin dredging up visions of everything that could possibly go wrong.  Research has shown that when we evaluate the potential outcome of something that we have labelled as 'risky', we have a tendency to:

  • over-estimate the likelihood of something going wrong
  • we 'Catastrophize' the outcomes, exaggerating the perceived consequences of failing
  • we under-estimate our capabilities in dealing with those perceived consequences and
  • we discount the cost and impact to us of not taking the risk
We then remain firmly in place on the couch.  

When we hesitate to take risks it is because we are focusing solely on the loss and not focusing on the potential gains.  If we want to have and experience something more or different from what we have, then we are going to have to risk trying something different in order to get it.  Focusing solely on the possible cost of the risk leads us to stick with the status quo, living safe but infinitely smaller lives.
"The biggest risk is not taking any risk.  In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks"       Mark Zuckerberg
In order to step out of our comfort zone and learn to embrace the benefits of risk-taking more fully, here's a few steps that will help get you up off that couch.

1.  Shift the focus from the potential Cost to Gain.  Sure the world is full of uncertainty but not all risks have negative consequences.  Sit down and take an open and honest look at the cost of inaction versus the cost of action, along with the potential benefits of inaction versus action.  Fight the tendency to 'awfulize' the potential negative outcomes by focusing more fully on what the positive outcomes look like.  Feel them, smell them, experience them.  The clearer our perspective of what they may be, the more desirable they appear, the easier it will be to let go of our fear and step forward.

2.  Build your Risk-Taking Muscle.  As with anything, the more we take risks, the better we get at it.  The key here then is to start small.  Researcher Norris Kreuger Jr. and Peter Dickson discovered that engaging in even small, measured risk-taking behaviours can increase your confidence and prepare you for facing and handling bigger risks.  It's experience that helps build confidence. Take a few small risks to help you build your base of experience.

3.  Not all Risks are Equal.  There is a difference between jumping into taking a Risk with no planning and taking a Calculated Risk.  You want to mitigate any of the potential negative outcomes of a risk through planning and preparation.  Just as professional football players assume the risk of a permanent career-ending injury each time they step out on the field might mitigate the negative impact by developing outside businesses during their off-season.  Don't confuse taking a risk with impulse actions.  Think, plan and then jump.

4. Accept that Failures Happen.  Not all risks pay off.  That's inevitable.  However, knowing this allows you to plan for the loss.  Often it is the fear of the unexpected that can prove to be the most crippling deterrent to taking a risk.  Mentally evaluate what failure might look like and what you could and would do about it. Often having this plan in place is the biggest preventative action you could take to ever needing to execute it.
"People who don't take risks generally make about two big mistakes a year.  People who do take risks generally make about two big mistakes a year."    Peter Drucker
In the end, after you have analyzed your risky opportunity to death, there comes the need to take a deep breath and just do it.  The only way to achieve anything in life is through action.  Sometimes, bold results require bold actions.  That's what your big-girl panties are for!

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