There are few accomplishments in life that didn’t take a significant amount of risk to embark on. From summiting Mount Everest to submitting a poem for publication – risk is an inherent component of achieving big things.
Not all risks are the same, of course. Different frameworks are needed in order to evaluate and mitigate different types of risk. Understanding and mitigating risk doesn’t mean removing fear, but it does set you up to intentionally step into that fear under the right circumstances.
Having read through countless trails of bold risk-takers on OwnTrail, I’ve observed a few main categories of risk that can feel particularly scary. Here are my thoughts on navigating each of them.
Physical Risk
With physical risk, the decision you make could have life-impacting consequences. Mountain climbing, bungee jumping or deep-sea diving are activities that could greatly enhance your lived experience, but could also end it.
There are plenty of non-recreational physical risks as well, such as the decision to carry a high-risk pregnancy to term, to try a new medical treatment that is still in trials, or to work in a hazardous environment in order to make ends meet.
When the alternative to a physical risk is another type of risk, the evaluation has to take into account the probabilities and worst case scenarios of each side.
When the physical risk is recreational, risk mitigation is an important exercise. Could you use a rope and harness in case you fall off of the aerial silks that are hung from the hot air balloon? Could you pack a second parachute in case yours doesn’t release when skydiving? (I actually don’t know the answer to that second question – can you?)
I know my physical risk tolerance went down a bit after I had children, as there were suddenly more lives dependent on my own. Part of risk assessment includes thinking through the worst case scenarios and deciding if the possibility of one is worth the benefit of taking the risk. For physical risks, that is a decision that can seldom be made in a vacuum.
Once you’ve added sufficient mitigations and reconciled the worst case scenarios for the physical risk you’re considering, you’re ready to jump out of that metaphorical (or literal) airplane!
Financial Risk
Financial risk can also impact your livelihood, and needs to be measured. Leaving a stable job to start a company is a great example of financial risk (that I have direct experience with).
Financial risk can be largely assessed with math. How long can you live without a salary, or with a reduced one? How much do you need to borrow or raise? What are you willing to live without in order to take the risk you want to take, and for how long? It’s important to note that there is inherent privilege (or lack thereof) in the calculations available to you.
Financial risk in business can oftentimes be mitigated, such as with insurance policies, legal structures and alternative sources of income.
The nice thing about the mathematical assessments and structural mitigations that can be done around financial risks, is that you can usually make a pretty informed decision. You can end up saying, “I won’t quit my day job until I have x paying customers, or until I have raised y in funding for this idea.” Or you could say “I’ll try to bootstrap this for x months, and if it doesn’t reach y in revenue by then I’ll get another job.”
There’s also the financial risk that’s more of a gamble, such as… gambling. This can also be assessed with math. What is the probability of winning? (If you’re at a casino, it’s somewhere between 30%-49.5%, depending on the game and skill level). Given probabilities, you can do math to decide how much you’d be ok losing before walking away.
With financial risk, as long as you have a reasonable plan, you can push through the fear and take big leaps.
Reputation Risk
Another type of risk that often stops us in our tracks is reputation risk: the risk of damaging others’ perceptions of you.
What’s interesting is that reputation risk can oftentimes be the most debilitating, even though it has the lowest probability of negatively impacting our livelihood. We humans care a whole lot what others think of us!
Speaking in front of an audience, showing your art to the world, sharing your authentic self with others, trying something that you might fail at… these are all examples of reputation risk.
Mitigations for reputation risk can include practicing and learning, in order to be most prepared for the scary thing, as well as building close friendships or communities to have your back. But even more than that, it involves understanding that no one thinks about you as much as you do.
If the worst case scenario for the big, scary risk you want to take is that you’ll look stupid if you fail, I would argue that it’s a risk worth taking. The more you fail, the more you realize that it generally doesn’t impact people’s perception of you, and you gain a whole lot of powerful experiences and lessons in the process. As long as you’re staying true to your values, your reputation isn’t truly at risk.
As long as you’re growing and challenging yourself, there will always be some level of risk and associated fear. And that’s a good thing. The key is in figuring out the right approaches to assess those risks, so that they don’t stop you from going after your aspirations. Be intentional, be bold, and move forward – you’ve got this!