How You Should be Defining Risky Moves
Updated: Aug 31
The definition of risk is a situation involving exposure to danger.
What do you consider danger?
For some, it’s an unsteady paycheck. For others it’s becoming homeless.
When you evaluate a risk how far down the danger rabbit hole do you go? I encourage you to go all the way down and take these tips with you.
Write it Out
Write it out and share it with someone. Prepare to have your theory come out looking like Swiss cheese. Someone not involved in the risky decision will be able to see the possibilities instead of danger.
Do the Math
The best formula that I’ve seen for risk is this one.
Risk = Probability X Loss
But what does it mean?
Probability = the likelihood of failure
Loss = what you stand to lose
I have found most people stop at the failure part and never calculate the loss.
For instance, you decide you’d like to look for a new job.
What is the probability of you not landing a new job? Let’s say 20% (it’s a great time to be looking)
What is the loss you would potentially face from looking for a new job? This answer is 0. You stand to lose absolutely nothing.
So is looking for a new job really a risk? NO!
If you’re afraid of taking a risk because of the failure involved don't forget about the success it could lead to.
Stop focusing on the failure and instead work on the plan around it to gain the success you're truly looking for in the first place.