Everything in life has a risk. Life itself is a risk in fact no one gets out of it alive.
Too many people avoid risks, you might feel safe, but there are consequences. You’ll be left with regrets and “what ifs.” Risk and fear are natural bedfellows. They are designed to keep us safe through the homeostatic response. However, playing it safe for too long can lead to stagnation, inaction and a life of regret. Regret is not why we play the game of life.
In this article, we will look at what risk is and why we should embrace it and we will present a formula for assessing risk before we get started let’s address the elephant in the room.
There Are Consequences For Avoiding Risks
- You forget what it feels like to deliver big wins.
- You stand still and don’t grow.
- You don’t create anything new and better.
- You lose a little bit of self-confidence.
Understanding Risk and Reward
Not all risks are created equal. There are needless risks and purposeful risks, the latter being worth fighting for. So assessing risks effectively can help you make better decisions and improve your outcomes. Here’s how to think about risk in a more structured way. I will use the idea of creating leads as a frame for assessing risk.
Four Stages to Identify Risks to Take
Think of 3-5 ideas that you might like to test, then put them through these filters
- Identify: Determine if the action that could significantly speed up your goal. Ask yourself, “If this idea worked, could I really pull it off, could it be risky.”
- Assess: Evaluate the risk-reward ratio. On a scale of 1 to 10:
- What’s the upside? Is the payoff fantastic or just moderate?
- What’s the downside? How much negative impact could it have?
- Consider multiple options:
- Phone 100 people: Reward 10, Risk 2 = +8
- Send to LinkedIn contacts: Reward 10, Risk 1 = +9
- Facebook ads: Reward 10, Risk 7 = +3
- Give away newsletter for free: Reward 7, Risk 4 = +3
- Adjust: Mitigate the risks by limiting time, money, and resources:
- 20 calls
- 100 LinkedIn messages
- A specific amount of money spent on ads
- The first 3 copies free
- Offset with other offers or partners
- Increase the payoff by making the upside bigger (e.g., testimonials, referrals)
- Decide: Get a definite yes, a maybe, or a no. Treat maybe as a no for now. Do a gut check. Then take massive action.
There are no ways to avoid risks but we can be smart about how we take them. Risk doesn’t have to be an all-or-nothing thing. We can use strategies to mitigate our risks before we take the plunge. Limiting your exposure is smart. It allows you to take more risks more often because if you mitigate them, your efforts don’t end in catastrophe. We go in with far greater upside expectations than downside loss. The more of those bets you take on yourself the greater your chances of succeeding in the long term.
Remember: Action on insights, is the Answer.
Thank you for reading.
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