How to Cure Your Aversion to Risk According to Roch Parayre in Fast Company
Seven Ways to Cure Your Aversion to Risk
Being comfortable with risk means changing your mindset — here’s how.
We all have a tolerance for risk. Some of us need to build up courage to try something new, while others face fears head on, skydiving through life. The biggest risk, however, is avoiding risks altogether.
Leaders cannot stay safe and let the world pass them by, says Ram Charan, author ofThe Attacker’s Advantage: Turning Uncertainty Into Breakthrough Opportunities. “At the right moment, you need the inner strength and conviction to take a leap when the outcome is uncertain,” he says.
Charan says risk takers are catalysts, operating in offense mode. “They’re doers who take risks based partly on fact and partly on their imagination about what could happen when those forces combine in what others might later call a convergence,” he says. “The catalyst, in fact, is the one who often creates the convergence.”
Being comfortable with risk means changing our mindset, says David Silverstein, author of Three Steps Ahead and CEO of the strategy consulting firm BMGI. “Risk is a matter of perspective; it’s not an absolute concept,” he says. “When I started my business, people thought I was an entrepreneurial risk taker. I, on the other hand, felt like I was reducing my personal risk by taking control of my own destiny rather than leaving myself in someone else’s hands.”
If you weren’t born with a high tolerance for risk, there are seven things you can do to jump in before you feel ready:
1. START WITH SMALL BETS
Consider the risk to be an “experiment,” which can feel more palatable, says Roch Parayre, senior managing partner at the leadership consulting firm Decision Strategies International and teaching fellow at the Wharton School at the University of Pennsylvania.
“From a risk perspective, it allows leaders to test innovation but mitigate risk if things don’t pan out as planned,” he says.
2. LET YOURSELF IMAGINE THE WORST-CASE SCENARIO
Silverstein calls this the stoic philosophy. “You can steel yourself to risk if you are actually willing to think about it and what can happen, and realize that the downside possibilities aren’t the end of the world,” he says. “And the more you have thought about something negative, the less frightening it is when it happens.”
When Silverstein’s business went through a tough time in 2009, for example, he sat with his executive team and brainstormed what each would do if the company failed. “That gave them confidence that taking the risk of staying with the company while we worked things through would be okay,” he says.
3. DEVELOP A PORTFOLIO OF OPTIONS
If you’ve bet the farm on only one possibility, you probably should worry about it, says Silverstein. Instead, give yourself many possibilities for success, and you’re more likely to be optimistic about the possibility of at least one working out, he says.
Parayre calls this the law of large numbers. “Viewed in isolation, an individual initiative may seem to be too risky; if the initiative fails completely, you end up with nothing,” he says. “But if you aggregate all of the initiatives across a company, or a person’s career, the law of large numbers will kick in and you can expect a certain proportion of them to succeed.”
4. HAVE COURAGE TO NOT KNOW
Risk has a psychological component, says Charan, and you need a tolerance for ambiguity.
“Going on the offense almost always requires taking action before you have a crystal-clear picture of all the factors your success will depend on,” he says. “You must be willing to commit to a new path forward even when some things are fuzzy, knowing that you will adjust your path along the way.”
5. DON’T CONFUSE TAKING A RISK WITH GAMBLING
Going on the offense does not grant you permission to gamble a business on hunches or theories for which the possible consequences are not thought through, says Charan. “Becoming aware of and confronting your inner fears will allow you to see things more accurately, think more creatively, and move more decisively,” he says.
6. TAKE YOUR EYES OFF OF THE PRIZE
Embracing risk can also be intimidating if you only focus on the outcome, says Margot Micallef, author of It’s the Landing That Counts. Instead, break risk into multiple small steps.
“Taking the first step is often the most difficult,” she says. “The key is to continue to break the decision-making and the action items down into smaller and smaller decisions.”
7. BE COMFORTABLE WITH GOOD ENOUGH
Another thing that holds people back from taking a risk is the belief that you can’t start until conditions are perfect, says Micallef.
“To embrace risk, we need to have the courage to make decisions with imperfect information,” she says. “We have to be prepared to course-correct as more information becomes available or as we hit roadblocks. But we cannot wait to know everything—we never will.”