6 Tips For Evaluating Risk vs. Reward
Patrick Nelson, September 26, 2016
“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sail. Explore. Dream. Discover.” – Mark Twain
I often hear people talking about things they’d like to do:
- I’d really like to go back to school. I only need 20 more hours to complete my degree.
- I’ve always wanted to own my own business.
- I’ve got a great idea for a book – I’d really like to write it one day.
As soon as I start asking questions about when they’re going to start pursuing their goals, they express their concerns and hesitations about starting right now. A lot of it has to do with their perception of the risk involved. It’s either going to take too much time, cost too much money, or they’re afraid because they might take a leap and fail at what they’re attempting.
This is pretty normal. Our brains are hardwired to avoid risk. We’re constantly telling ourselves to be safe. So even though our hearts might be telling us one thing, our brains are talking us out of it.
There’s a way around this. It begins by challenging your thought patterns, beginning with asking yourself: What’s the worst thing that can happen?
There are certainly risks in almost any pursuit, but it likely is not a matter of life and death. Challenge yourself to objectively assess what the true risk is as compared to the reward.
Here are 6 tips to help you keep things in perspective when deciding to take risks:
- Ask yourself “What’s the worst thing that can happen?” Compare that against the best thing that can happen. Is the risk of taking the chance worth more than the risk of missing the opportunity?
- Take the long view. Imagine you’re ten years older. What would your future self say about the risk you are contemplating? Will your future self applaud you for being courageous at this moment in time?
- Write it out. It may seem elementary but it helps to make a list of the pros and cons and evaluate the information. Seeing things written out is a great way to keep them in perspective.
- Listen. Seek out a trusted mentor who has your best interest in mind. Listen to someone that has been in a similar situation and get their thoughts.
- Educate yourself. Do your research and educate yourself on exactly what it is that you are contemplating. It can be easy to make decisions based off of emotions alone but the smartest decisions are well researched.
- Break the journey down. We often fail to start something because the goal seems overwhelming. When you break it down to small steps, the goal seems less intimidating. If you want to pursue a new career or a side business, the first step isn’t to quit your job and change your life. It could be something as simple as carving out 30 minutes every night to do research while you lounge on your couch.
There is always risk in whatever we do. As a leader, get comfortable with discomfort. The majority of our learning happens when we push ourselves to challenge our thinking and honor our intentions with action.