Leadership and Risk

By Jeremiah Wilson

Are you afraid of taking risks? You shouldn’t be.

Here’s why: What most people consider a “risk” isn’t risky at all. The way many define “risk” and think about risk-taking is fundamentally flawed.

Simply put, risk is not what people think it is.

How Most People Think About Risk

Here are a few very common definitions of risk:

  1. A state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome;
  2. A situation involving exposure to danger;
  3. The chance of loss or the perils of a decision.

Kind of depressing, right? Those definitions focus entirely on the negative; they contain very few positive words.

With this conception in mind, it’s no great surprise that so few people take risks. Humans have a negative view about risk. We don’t like it. We’re scared of it. We make decisions based entirely on avoiding it. We behave in ways that will minimize it.

For example, many managers will avoid risk by waiting to purchase a new product or make an investment in their company until the economy is “good” again. Businesses will avoid hiring a superstar employee who could be a game-changer until their company feels more “settled,” and perceived risk is diminished. These decisions are based on fear. They are based on avoiding risk.

They are also not necessarily good decisions for the company.

Hatin’ on Risk

An article in Time magazine said this about risk: “Risk-taking … defies logic. Reason can’t explain why people do unpredictable things — like betting on blackjack or jumping out of planes — for little or, sometimes, no reward at all. ”

My goodness, risk must be terrible! Those who take risks apparently “defy logic.” Evidently they “do unpredictable things.” It’s little wonder that many people bristle when someone even says the word “risk.” They view it as something wholly negative.  Heck, if you take any risk at all, you must be dumb!

It’s Better to Be ‘Controversial’ Than ‘Boring’

There’s an old adage used in the world of writing and journalism: “It’s better to be controversial and correct than boring and correct.”

This saying is interesting for a couple of reasons. First, in either instance it is best to be correct. The information you’re sharing had better be accurate — and true. But, once you know the information is correct, presenting it in a way that is interesting or “controversial” is preferable to presenting it in a way that’s bland or boring.

Here’s my point: Most people, with most decisions they make, err on the side of bland and “safe.” Very few people are interesting, and even fewer take risks.

Most people are content with working inside the box. They choose the safe path, the path of least resistance. They choose the path that’s boring and bland. They refuse to take the path that is less traveled, the path filled with risk and interesting decisions.

Certainly, some people do stupid things; they take unnecessary chances. However, far more people are afraid of making bold decisions. They are too frightened of risk to start their own company or invest money in their company, or change their career. They are frightened of the unknown. They don’t have faith.

For most people, risk avoidance is a much more common problem than taking too many risks. Simply put: Too many of us are too afraid of risk.

What Risk Isn’t

I am telling you that the established definitions of risk are wrong. I am telling you that the way most people think about risk is flawed. Risk is not what they think it is. Risk is something entirely different. As we discussed above, most people use the words “risk” and “danger” synonymously. They think of risk as a hazard, or a problem.

In reality, a risk is neither a hazard nor a problem.

A risk is not a gamble. A risk does not mean the outcome has to harm you or even could harm you.

What Risk Is

Risk is not “risky” when you have control over the outcome.

Let’s think about that further.

When I started ContactPoint, some people thought I was crazy. After all, I was taking a risk. The company could fail. I could lose everything. But here’s what those people didn’t understand: I could control the risk. I could control the outcome. I knew that if I worked harder and smarter, spent less money, and sacrificed my time and energy, I would succeed. And this “risk” wouldn’t be a risk at all. (Remember: if you can manage or control the outcome, a risk isn’t a “risk”).

I knew that I could control the outcome by modifying my behavior at any time; so, my “risk” wasn’t a risk, although everyone around me felt strongly that it was.

I knew that if my company was ever in danger or was ever struggling, I could simply work faster and push harder, and the risk would be removed.

Levels of Risk

It’s also important to point out here that there are different levels of effort necessary to overcome risk.

Before I take a risk, I determine if I’m willing to work hard enough to overcome failure. Usually, overcoming failure involves three levels of effort — A, B, and C.

I take the risk, and if things go as planned, my level of effort is A — I don’t have to do anything.

Level B springs into action when things don’t go quite right. I am forced to work harder and sacrifice more.

Level C is this: How much will I lose if it goes ALL bad? Even if it’s a Level C risk, I may still take it because I ask one question: “How bad could it be?” If I’m willing to accept the consequences of how bad it could be, then it’s really not a risk at all. It’s a choice to accept the consequences of having to work harder in Level A, Level B and Level C.

If there is no way for me to accept the consequences if things fail, then I won’t take the risk. That sounds reasonable, right? A risk isn’t a risk if you have control over the outcome.

“But,” I can hear you saying, “there are lots of things I don’t have control over, like the economy. I can’t control if my business succeeds, if the economy falters, or if I will succeed at my new job or my new marriage.”

This attitude is wrong. Yet most people think this way. They tell themselves they don’t have control over what happens to them. They can’t control if the economy crashes or if their business fails. They can’t control whether their boss likes them or if their marriage will work out.

People tell themselves they can’t control the outcome of a situation for one simple reason: to absolve themselves from responsibility. These excuses absolve them from taking risks. These excuses absolve them from expending more effort.

Think about it: How many people who have lost a business, lost a job or lost a marriage say “Yep, it was my fault?” Not many. Most people blame a circumstance that, in their mind, was beyond their control. They say the person they married was crazy, or the economy was just too tough. There’s always an excuse.

I’m here to tell you that you have control. In most cases, an excuse is just that — an excuse.

We humans have much more control over our lives than we think we do. The problem is this: We’re simply afraid of the work, the effort and the energy needed to control our life to the point that we remove risk. We are afraid of the work required to mitigate risk. Risk isn’t risky when you’re ready to work.

Remove Risk

Here’s the bottom line: Every great endeavor — a business, a career, a marriage, a family, buying a house, moving, etc. — begins with a “risk. ” So don’t view risk as a negative thing; view risk as a chance to work harder — if necessary — to achieve your goals.

Risk isn’t a “risk” at all. If you work hard enough, and smart enough, a “risk” becomes just another decision with a great outcome. An outcome you can control. An outcome that you will get even if circumstances don’t work out as expected.

You’re ready.

Jeremiah Wilson founded ContactPoint in 2001 with a patented device that records customer phone calls, allowing companies to hear what their customers hear. Prior to that, he specialized in logistics, customer service and sales training, and was assistant to the counselor of economics at the U.S. Embassy to the Czech Republic; he currently serves on the board of directors for various global companies.
Originally published: Oct 4, 2011

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