Keys to Smarter Risk Taking
Updated: Jun 30, 2019
Embrace risk taking, but adorn it with prudence.
In an article published in Current Directions in Psychological Science, Mara Mather and Nichole Lighthall found that women are inclined to take fewer risks when they are under an acute amount of stress. When stress prompts a necessary decision, women are more likely to make a choice that involves less risk, even if that choice is not in accordance with their normal behavior. Nevertheless, Mather and Lighthall also found that stress enhances our learning process. Making decisions in stressful circumstances allows us to learn from those outcomes and approach future decisions with a stronger skill set.
Taking risks is essential to leadership. In order to grow, we must move beyond our comfort zones. Whether those risks involve taking on expanded responsibilities at work, embarking on a new venture, transitioning into a new market, transforming a business model, or changing industries altogether, we can’t grow if we don’t take risks.
Why Should I Risk It?
Risk taking involves embarking on an endeavor that makes it possible for something important or valuable to be destroyed, damaged, or lost.
Risk taking can separate the successful from the mediocre, and dreamers from doers. Those who are willing to risk will reap the benefits of their decisions. If you want to do something bold and audacious, you need to take some risks.
Still, there are several reasons why we choose not to take a risk.
We may fear change or the negative consequences associated with making a bold choice. In the December issue of Success Magazine, Jennifer Hyman, the founder of Rent the Runway said, “People are so uncomfortable with failing that it prevents them from taking the risks you need to have to pursue your best life.” Fear of failure is not an acceptable reason to avoid risk. Much like Mather and Lighthall, Hyman also sees risk as being essential to growth.
Immigration is probably the ultimate form of risk taking – leaving familiar surroundings, friends and family, in exchange for new opportunities. Excelling once here in the U.S. requires a good dose of daring. You need to be comfortable with change and innovation in order to take advantage of the enormous opportunities in the U.S. and bring yourself closer to your highest vision of yourself.
High risk decisions present a paradox. We need to take risks in order to grow and move forward, but we also need to be prudent when taking a risk. We need to embrace risk but adorn it with prudence. We need to discern which risks are worth taking. Below is a framework for deciding whether or not a risk is worth taking.
Four Strategies for Smarter Risk Taking
1) Know your why. Be clear about what’s important to you and why you are taking the risk. Are you making this decision because it adds remarkable value to your life? Are you passionate about this decision? Does it evoke deep curiosity and interest within you? Will it bring you closer to the highest vision of yourself? Will it bring you closer to the highest vision of your business or enterprise?
2) Analyze the risk. Don’t go into a new situation blindly. Evaluate the costs and benefits and real versus perceived risks to the decision. Consider the impact on those involved (e.g., significant other, family, friends, employees, clients, or colleagues) and the possible outcomes.
a. Identify the mitigants: What might ease this transition or the consequences of this decision?
b. Define the price: What’s the worst that could happen?
c. Clarify the cost: What resources are required? Which aspects of this decision rely on hope?
3) Create a strategy. Determine whether this risk is necessary for personal or professional growth, and develop a timeline or plan for executing your decision. Keep in mind that plans need to be continually re-evaluated. After a few weeks, review your strategy and course correct, reposition, and confirm what has worked and do more of it.
4) Don’t fear failure. Best-case scenario or not, there’ll certainly be lessons. Sometimes it can be better to regret something you have done rather than something you didn’t.
Understand that you may not have all the answers. We can’t always know every possible consequence of our actions ahead of time, but not knowing all outcomes shouldn’t keep us from moving in a beneficial direction.
As Steve Maraboli put it, “Cemeteries are full of unfulfilled dreams... countless echoes of 'could have' and 'should have'… countless books unwritten… countless songs unsung... I want to live my life in such a way that when my body is laid to rest, it will be a well needed rest from a life well lived, a song well sung, a book well written, opportunities well explored, and a love well expressed.”
Consider the risk, but don't be afraid to take it.
To your brilliant journey,