Judging Risk
I’ve been thinking about risk, and how we make the decision about the cost/benefit of our actions.
Having gone to law school, I think and act like a lawyer in much of my life, and that can drive some people crazy. You think you’re asking a simple question, and I give you a balanced assessment, and then let you choose the path you want to take. Yes, people want to be told what to do. Sometimes the path forward is crystal clear and being definitive is easy. Other times, multiple paths are available, but each has its own upsides and downsides, and as long as you are prepared for the downsides, each path is viable, reasonable and worth pursuing.
Sometimes, folks think I am risk adverse. The opposite is actually true. I’m happy to take chances. I’m happy to roll the dice. But when I do take a risk, I will fully admit I’ve almost always considered the consequences first. I’m risk aware. I’m not afraid, but instead, I realize that there’s always downstream rewards and potential consequences for choices you make, and I go into situations aware of as many of those as I can be.
Seth Godin has been talking about this sort of thing recently, in his posts on Surfing as a New Career and Are You An Elite? where its clear that taking chances is no longer optional but required. The point, of course, is to take risks, and not spend too much time in the worry or flailing stages, and instead get on to the doing and shipping stages of a project. You have to figure out when it’s a good time to bet the farm, and when it’s a good time to diversify your holdings, so to speak. I’ll always be surprised, from time to time, when the upside far exceeds my expectations, or circumstances make the downside a little more painful that we predicted. But 9 times out of 10, results come within spec.
So while I always want to know a chunk of the risks associated with, say, a new medication or surgery, I understand the math enough to know when to play the odds. Sometimes, people will focus on a quoted risk of 5% of extreme downside, ie. death, dismemberment, etc. and decide not to do something. But if you understand the math, often you find that the real attributable risk to you is so far below that, spending time worrying about it is not even worth the energy to consider the question in the first place.
Knowing and acknowledging risk can make some people to afraid to act. For me, it emboldens me to take the jump. I’m an optimist, and once I know what I’m facing, I take the challenge head on, and have confidence I can win. Even with odds stacked against me, I’d rather swing for the fences than never try at all.
We all know that “no good battle plan survives contact with the enemy”, which means we’re always going to have to improvise and tweek things along the way. There’s always something that changes, but by acknowledging that upfront, and having thought the plan through at the outset, improv off the planned path is so much easier- you rarely get totally lost in the rough with no map out.
Planning and thinking something through isn’t everyone’s style. It can seem plodding from time to time. It can seem boring. But I promise it’s rarely wasted time. Just like a business plan or a book proposal lays out the pathway for the finished product, thinking things through and acknowledging risk up front makes all the flying by the seat of your pants less panic inducing. However, if you love panic and adrenalin, by all means, please ignore this post and have a great day.
