Living at risk is jumping off the cliff and building your wings on the way down. Ray Bradbury
The concept of risks and reward go hand in hand; the higher the risk the greater the reward. The trouble is that each one of us has a different perception of risk and obviously if we get it wrong then we are in real danger of paying a very heavy price. Many of us have flirted with this type of risk right from childhood; by banking on last minute studies to somehow cleat h exams and if lucky even do reasonably well too. Many of us despite getting into trouble by taking undue risks still thrive on skating on thin ice at great peril to ourselves. Speculators in general and gamblers in particular get a high by constantly wagering and taking chances.
Risk taking assumes that one has some safe guards put in place before we plunge into it. The more macho amongst us would have their ego tickled if told to ensure the mandatory safe guards and would probably rebel and perhaps heighten the risk factor to become a hero. They not only endanger themselves but put at risk others too by their irresponsible and often foolhardy behavior. What they fail to understand is that risk is quite different from a gamble or a lottery. A gamble or a bet is often impulsive, has a predominant financial angle to it and have far too many variables that have a major influence on the outcome. In the case of a lottery, the stakes are much lower, the rewards reasonable and luck plays the most important role in it.
Never put all your eggs in once basket is an old adage that succinctly captures a key element of risk viz. do not risk everything. Yet greed and power are two emotions that have a major bearing on how one perceives risks. When one is greedy our sense of reasoning is completely obscured by the lure of big returns and we ignore the risks involved or rationalize it conveniently. When drunk with power a person’s sense of control and influence takes on a falsely inflated proportion which when pricked can send things into a tail spin and a crash landing is the obvious ending. Often the arrogance of a person goads him/ her to take undue risks far beyond one’s own abilities and when things go wrong there is no safety net to cushion the free fall.
To take reasonable risks, one has to be pragmatic and at the same time have the courage to widen the scope of our comfort zone. When one is pragmatic the chances of ensuring that we have studied the risks carefully is very high. More importantly the true natures of the risks are clearly understood and a fall back/ safety mechanism is put in place. A pragmatic person will only have reasonable expectations and therefore take on only a reasonable amount of risk. To ensure that we get a decent reward one also has to be a risk taker. That is where courage counts. There is always some danger lurking around but once we know the extent of that danger, and we have made arrangements to minimize that, then one needs to have the courage to take the risk. Without courage there will not be any risks taken and then we would be risking not latching on to some fine opportunities.
Remember: “Thoughtless risks are destructive, of course, but perhaps even more wasteful is thoughtless caution which prompts inaction and promotes failure to seize opportunity.”Gary Ryan Blair
Try this:
- Evaluate your investments and outline your risk profile. Consult a good investment consultant to guide you about your risk profile and align it with your age profile. The younger you are the more risks one can take and as one gets older the mix changes.
- If you were forced to go with friends to a casino how much would you spend gambling? Will you get influenced by the high spending by some of your friends? Would you be under pressure to spend more by friends who chide you and suggest that you are stingy?
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