How risk averse are you?
Our risk tolerance determines the course of our life.
Do we want to open up our own business?
Do we want to stay in a comfortable but unfulfilling relationship?
Do we want to change our careers?
While we all have a different risk tolerance there are certain circumstances or situations where society influences our belief about what is risky. For example, deciding to become a doctor is one of the most prestigious jobs in America.
As far as society is concerned, if you work hard, going to medical school is one of the most secure paths you can take to success.
At the time I am posting this, the average cost of medical school is $278,000 for private school and $207,000 for public school. That’s a pretty steep investment for a career path. I am not saying that being a doctor isn’t a good idea. Sure doctors have bright futures ahead of them. I am simply saying choosing to be a doctor is riskier than we may perceive it to be. Doctors essentially invest a quarter of a million dollars in the hopes that they will have what it takes to master the training. It takes almost 10 years to see progress or make money and even then a new doctor needs to pay off loans. (This of course, doesn’t take into account the students who go to medical school and then drop out in between and decide they do not want to be doctors. They are still responsible for paying back their loans and yet do not become practicing doctors.)
Let’s consider a second scenario. If a student were to graduate from undergrad on the other hand and decided they wanted to dedicate $50,000 to starting their own business over the next five years, most people would perceive this to be way too much of a risk. In fact, most people would perceive this to be riskier than attending medical school. This is interesting isn’t it? In this second scenario the student would be investing half the time and only 25% of the cost. Both experiences would still teach the individual a great deal. Why then, is one decision praised and the other condemned?
How can we prevent ourselves from thinking about risk in this way?
Step One: I think the first step is gaining awareness. We need to think critically about what is really risky and what is just “unconventional” and therefore feels risky, but isn’t really as big of a risk as we think it is.
Step Two: I think the second step is asking ourselves what are we willing to sacrifice or put differently, what we are willing to live with. Take for example, someone who is interested in a career change. It is risky for many people to change their careers after having invested 5 years in a particular role or industry. For some people, it may be “too risky”. However, is anything really too risky when it improves your individual happiness or quality of life? If you’re doing a job that you hate, it may be risky financially to start a new career, but isn’t it worth it in the long run if you will be more fulfilled? Are you willing to live a life of misery in exchange for security?
This can be applied to people in an unhappy relationship or marriage. It may be “risky” to leave your partner and difficult to find someone else your are compatible with, but is it really worth a life of guaranteed unhappiness or unfulfillment in a relationship?
Step Three: I think the third step is having role models. Knowing people who have successfully taken the leap you want to take, makes it easier to think through and eventually take the risk you’ve been thinking about taking.
I think the most important point to drive home here is that there are many benefits to taking risks.
How can we teach ourselves to look at and approach risks differently?
Two of the most important lessons I’ve learned from taking risks are:
Opportunities can always be uncovered – Sure, the number one fear when it comes to taking a risk is the fear of failure. We are all worried that at some point or other, our plan will backfire and that the worst thing we imagined will become our reality. Ok, what if the worst thing that you imagined does become your reality?
What if he/she breaks up with you?
What if you get fired?
Many times, the “worst case scenarios” turn out to be blessings in disguise. Many times, we discover opportunities when the worst thing that could possibly happen to us actually does. For example, if you got fired, maybe you weren’t working at a job that was a good fit for you and because you got fired you have the opportunity to find a job that you love. If you were broken up with, you may have been in love with that person, but now that you’re not with that person you have the opportunity to find someone who is even more compatible with you.
The point is opportunities can always be uncovered. Many times after taking a risk, even if it doesn’t go completely as planned, we will find that, we can create different pathways for ourselves.
More importantly, we learn to become problem solvers. Over time, we become less anxious and more confident in our abilities to create and capitalize on opportunities.
A mentor of mine put it this way, being afraid to take a risk is like holding onto a candle and protecting the flame with a hand hovering over it the entire time, worried that any gust of wind will blow the candle out. Once you understand however that if the candle blows out, you know how to light it again you will never be worried when it goes out.
In other words, give yourself some credit, know your worth, have confidence in the idea that you will be able to light the candle again if the flame goes out. Understanding this, not only helps you to feel less anxious, it empowers you to take action and make bold decisions.
Road blocks associated with risk breed innovation – Risks come with road blocks. Everytime we take a risk, we will inevitably find ourselves being presented with a hurdle. We can choose to retreat or we can choose to evolve our thinking.
Taking risks can be helpful in that it presents us with experiences that teach us to be more creative and innovative.
If you didn’t lose that job, maybe you would have never had the idea to start that side hustle.
Many entrepreneurs who invent products or services do so after they face a problem and feel that there is no straightforward solution.
I will never forget the episode on Shark Tank (for those of you who have never heard of shark tank its a show on ABC where entrepreneurs present their business ideas to raise capital from investors or “sharks) of the entrepreneurs who came up with a product called “Drop Stop”. The product was designed for anyone who has ever dropped anything down the gap between the seat and center console in your car. It was a funny product, but it was created because of a small, but common problem people had.
When you’re taking a risk, it may present you with larger problems, but if you adopt the right mindset that can be exciting because that just means you may come up with a life changing idea to combat that problem.
Hopefully, this changes your perspective on risk. Let me know if it has in the comments section!