Few people would like to consider themselves as being risk averse. It sounds uncool.
I often fall into the risk averse category when making decisions.
The downside to being risk averse is that you often find yourself wasting time on small, insignificant optimisations rather than taking big steps forward.
Taking calculated risks
Calculated risk taking requires carefully considering the potential upside vs. the potential downside before making a decision.
Carefully considering decisions before diving into risk taking sounds like a smart thing to do, right?
However, the problem with being risk averse and taking calculated risks – is that you can often spend too long on the calculation and not enough time taking the risk!
Some upsides of taking calculated risks
Most of my business’s progress in 2020 originated from taking calculated risks.
I felt most uncomfortable when taking the following calculated risks:
– registering for VAT at the start of the year
– starting to sub-contract work to freelancers
– starting to share content on social media
However, these calculated risks had a big impact and grew the business by 20% each quarter during the year.
Two non-monetary benefits of taking calculated risks that I experienced were:
– your days become more and more exciting
– you experience rapid growth and self-development
Identifying the risks to take in 2021
You have probably already identified the risks that you need to take in 2021 – and have calculated the potential upsides vs. downsides to great lengths.
Some questions that I now ask myself to help decide if I have been calculating for too long and need to start risk-taking are:
1) Do the people who are most successful in your field do this thing?
If yes, it’s often a good sign and you should most likely proceed.
2) If all goes wrong, how long will it take me to get back to where I am now?
If it’s a small amount of time, you should most likely proceed. It’s usually surprisingly little time.
3) Do I fully believe and commit to this decision?
No matter how calculated and smart the risk you are taking may be, it will almost always require time and effort to implement correctly. Are you willing to do what it takes to make this calculated risk a successful one?
Conclusion
As a risk averse person, often the main reason why you are not proceeding with your calculated risks is due to fear and resistance to change rather than the calculation not making sense.
But as I am slowly discovering…
“All the best things in life are on the other side of risk, on the other side of fear.”
– Bugzy Malone
Thank you for reading,
Gary
