Is The Risk Worth It?
February 9, 2021
A couple of weeks I wrote about decision making and in the face of uncertainty. I said If you are not sure, the answer is a NO
I want to share a different perspective on the same issue.
Why do we struggle with deciding whenever we encounter some choices?
Because there is some Risk in the choices. Risk is a situation that exposes us to danger, harm, or loss of some sort.
- I want to quit my job and start a business. I am worried. There is a lot of Risk. In the corporate job, I have good security and stability. But, if I get into the business, I don’t know if it will succeed or not.
- I want to travel on work. But Should I? What if I contract Covid?
- I want to buy a bigger three-bedroom apartment instead of the two-bedroom apartment that I can afford. The down-payment is higher, and the Mortgage payments are steep. What if I get into a situation where I can’t afford the Mortgage.
There is always some Risk in every situation in our life, and it is this Risk we worry about when making decisions. We worry about the pain of the loss or harm that may come from the Risk.
What if the business doesn’t take off? What if I contract Covid? We struggle with such risk-based decisions because we try to derive the value of the Risk. How much money would I lose if the business doesn’t take off or what could the impact of contracting Covid be etc.?
Unfortunately, it is impossible to accurately impute the Risk associated with any decision.
More importantly, this Risk is entirely contextual to an individual, and no two individuals will see the Risk the same way. I may not want to travel and take the Risk of contracting Covid. Someone else may feel differently about traveling.
Is there some common principle that can help with assessing Risk based choices the right way?
From experience, I have discovered this simple principle.
Make the decision based on the upside and not based on limiting the Risk.
Ask yourself, “What is the upside of taking the risk, and is the benefit worth it?”
Focus on the benefit more than the Risk. The benefit is more tangible and measurable than the Risk, which is often hostage to our limiting beliefs and fears.
By focusing on the WHY of the decision, you can clarify your real motivations and intentions.
When I quit my corporate job to get into my entrepreneurial role, I looked at the benefits. The experience of starting something from scratch, the learning, the resilience, the personal growth, and of course, wealth creation. When I asked myself the question, “is the Risk worth it?” the decision was easy. The Risk was worth it. Even if I failed, I would come out being in a better place than where I was before. But If I succeeded, I would be where I want to be.
If you are struggling with some risky decisions ask yourself “Is the upside worth it?”