I might do something that could put either my company or my wife in danger. I’ve heard it described as, “I can only imagine the potential negative outcomes.
This is a broad generalization, but its usefulness is that it can be applied to almost any aspect of any situation. There are many different ways that risk can be defined. For me it was when I heard that the company I work for might fail.
If you have a boss who is overly confident about the future, you might be putting your company at risk. In that case, you might not be able to do the work you’ve been hired to do. You might be putting your wife at risk. You might be putting your children at risk. In other words, the amount of risk you’re willing to take in the moment depends on your temperament.
I hope that we can all agree that I’m not a risk taker. My temper is more of the “be very careful” variety. It’s also easy to be extremely overconfident and say that we can’t afford to take any risks, when really we can.
Risk is, in fact, a very subjective word. Its very difficult to define risk objectively. You may think that the risks you face are not worth worrying about, or that they are not worth the time and expense, or that you are not willing to take on risk at all. In fact, the most risk-averse people I know take on too many risks and just let that be their default setting.
Well, I have always been risk-averse. I’m not about to be one of those people that throws caution to the wind and takes on every possible risk possible. I try to avoid a lot of risk because I see it as an unnecessary risk. I am willing to take a lot of risk to get what I want.
A lot of risk is necessary. What’s not necessary is not worth taking. How you get from A to B, from A to C, or even from A to B is a different story. Risk management is something that is very different than taking risks. The two actually are quite different.
I think the difference is that Risk Management is what you do when you know that you are taking a risk, and Risk is not a decision that you make on a whim. Risk is something you consider. Risk is something you take into account. Risk is a probability; probability is a probability. And you consider the probability of your possible loss and you try to minimize it. A big part of Risk Management is taking a long, hard look at your risk to see if you can lower it.
Risk is a big part of our lives. People who are at risk for accidents are at risk for things like car crashes, cancer, heart attacks. All of those things are possible with risk, just like when we take our own life. And it’s also an absolute possibility that something bad will happen.
The problem with risk is that it’s always a question of probability. Our brains are built to make certain that we don’t have the potential to die in a horrible accident like a car crash. So we just do a little back-of-the-envelope math and calculate what the probability of it is. It’s not that we can’t really get killed in a car crash, but the odds are that we’ll die because of the impact.