All of life is a risk. You take a small risk when you drive to work or walk across the street. You take a larger risk when you start a business or invest a sum of money. You take a risk whenever you venture into the unknown that cannot be exactly determined.
The issue, then, is not whether you take risks, but to have the skills and confidence to take the right risks for the right reasons in pursuit of the right goals.
There are five basic risks.
1. The risk that is not yours to take is the simplest. It is the decision you don’t have to make.
2. The risk that is unnecessary. You engage in an unnecessary risk when you act without sufficient information or taking the time to think it through carefully in advance.
3. The risk that you can afford to take. Calling on a new prospect, following up on a lead and exploring a new opportunity all are risks that you can afford to take. The cost of failure is very low, while the rewards of success can be very great.
4. The risk that you cannot afford to take. The consequences of making a mistake would be too enormous. You cannot afford to bet your whole company or your whole bankroll on a single speculation.
5.      The risk that you must take. The downside may be costly, but the upside is so exciting that the risk is very much worth taking.
Those who have achieved a high level of success are intensely realistic. They do not put their trust in luck. They carefully calculate every possible risk, and then prepare for those risks, which includes a backup plan, with options that take all kinds of variables into consideration.
Successful individuals engage in strategic thinking. They minimize risk by continually questioning their assumptions and asking themselves what they would do in the case of unanticipated delays, cost overruns or unexpected actions by their competitors. They are seldom caught unprepared because they have thought through the uncertainties that create unacceptable risks-risks they cannot afford to take.
One of the best of all exercises, in every situation involving uncertainty, is to assess and evaluate the worst possible outcome. Ask yourself, “What could possibly go wrong in this situation?”
When advising businesspeople, I suggest that they triple their very best estimate of breakeven for any business venture to calculate a more realistic number. They are amazed that, in spite of their best, initial calculations, it takes approximately three times longer to start to make money.
Once you have identified the worst possible outcomes, then make a list of what you could do to offset those negative factors. “Crisis anticipation” allows you to look to the future, and imagine every possible crisis that could arise as the result of changing external circumstances.
Develop your ability to take intelligent risks by consciously and deliberately doing what you fear, one step at a time. You don’t have to leap from an airplane without a parachute. That is not risk taking. What you must do is to resist your natural tendency to slip into a comfort zone of complacency and low performance.
Many of our fears of taking risks are unfounded. When you test them, you find that they don’t even exist. Set clear, written and measurable goals, and then review those goals regularly.
When you continually work on your clear goals and plans and evaluate your progress each day, you will see what you’re doing right and how you could improve your performance. You’ll become more thoughtful and reflective, and willing to take on even greater challenges. Your fears of taking risks will virtually disappear.
Learn how to take intelligent risks without fear by taking intelligent risks, and then analyzing what happened. When you have clearly identified the risks involved, you can plan and prepare to maximize your opportunities, while minimizing those risks. The more positive you feel about yourself, the more effective you will be. Your ability to take calculated risks confidently in the direction of your goals will ultimately lead you toward success.
