600 Americans die falling out of bed each year (Time Magazine, Nov 2006). I guess I’ll be sleeping in from now on…

Seriously though, statistics like this belie the true facts. They can over-generalize and leave you with the wrong impression; in this case, the impression that trying to get out of bed can leave you dead which, while true, is a massive exaggeration. In truth, most of the people who meet their demise this way are much older or much younger than the average. Basically, it’s still okay for you to risk getting out of bed.

So it’s really about the idea of risk and whether the rewards of attempting something are worth the potential cost. The issue of risk has never been more relevant than it is today. I mean, we are slowly recovering (knock on wood) from the worst economic downturn since the Great Depression in the 1930s. It’s been bloody and painful to watch and experience it first-hand. Thus, it’s timely to bring up that old lovable-rogue, Risk. Why? Well, because he is mostly to blame for the BS we have all had to endure over the last year or so…if you believe most people. There are others in the line-up as well; Greed, for instance. However, Risk features prominently somewhere between cause and effect here.

I remember watching the United States’ Congress grilling the “Wall Street” CEOs after it was revealed that most of their philosophy for management seemed to be about maximizing risk and hoping for the best. Okay, not really; but most of these clowns were a bit rubbish, really. In any case, I was a little sad because I could see the effect such a spectacle (almost a public hanging, sort of) would have – not on the CEOs themselves; they might now be a little bit constrained in their current environment, but they will soon find other ways to express their dare-devil tendencies…or just retire with their massive bonuses – on those regular people at home who watched it; those who were reeling from the new harsh reality of living in tough economic times after years of prosperity; those who might decide that this was proof that taking risks is just not worth the trouble.

As I alluded to in the opening sentence of this article, risk-taking is inherent in our lives. There’s the whole having to get out of bed thing. There’s driving to work under the assumption that other drivers will be reasonable folks, not psychotic murderers out for blood. There’s eating out at a restaurant not knowing what the chef (or his prankster assistant) has put in your meal. I’m nitpicking here, I know; but it’s interesting how human beings can give a much higher risk weighting to one thing, completely ignoring the statistics, because of perception. For instance, I read an article in Time Magazine a little while ago that pointed out an interesting fact. As of the date of that article (Nov 2006), precisely no one in America had been killed by Avian Flu, which was busy inducing barely restrained panic in people. However, the common flu contributes to the death of over 36,000 Americans a year. Talk about misplaced fear (er…I have never taken the flu shot either, and Swine flu freaked me out completely earlier this year as well).

This phenomenon could have something to do with the “Devil you know” concept. The relatively unknown always seems scarier than the things we are familiar with. Aside from that, we tend to fear suffering, in most cases more than death itself. I mean I have thought to myself that I would like to go quickly when it’s my time (Not often. I’m not morbid! Honest!). Thus, we tend to have a greater fear of a long, drawn-out demise e.g. from AIDS; even though Heart Disease kills 50 times as many people (once again, American statistics).

This brings us back to the risks in finance. The idea is simple: if you screw up your finances, you are looking at possibly a very long, drawn-out period that would be spent answering for that. You might also have to drag your family along for the ride. It is not a pleasant thought. So, we would all do well to plan carefully and ensure that we don’t ruin ourselves. Security is the watch-word here, for ourselves and those we love. That said, how much security is too much security? I mean let’s try to be objective about it. In life, it seems that if you risk a little bit more, you raise the potential for gaining more…as well as losing more. So, there has to be a “middle-area”, right? Somewhere where the potential loss is not so big that we can’t get back on the horse again if the venture fails. Well, there is, in my opinion.

Those Wall Street CEOs…they had the right idea, before they put it on steroids. In order to effect real change, some risk-taking is required. That is how industry works. Google has launched an OS and Microsoft is stepping into the Search game again. Each of these is a risky venture, with the potential for much bruising down the line; but the game must be played. The concept of “security” might be enough to preserve the status-quo for a while, but progress requires shaking things up a bit. That’s part of the reason CEOs (not necessarily these chumps we talked about before…you know who you are!) get to earn as much money as they do; they have developed higher risk-tolerance, and an ability to “stick their necks out”. One might argue that it’s easy to do this if you’re already financially secure (as most of these folks are; darned bonuses!), but these ladies and gentlemen demonstrated those qualities long before they made it to the top. You see it at work, with the people who are more willing to take on responsibility with the risk of “screwing up” hanging over them. If things don’t work out, they might have to move jobs, but if they do, jackpot!

The idea of huge risks in “doing one’s own thing” is a also bit dated. This article on Time.com points out for instance that there isn’t nearly as much risk involved in entrepreneurship as one might think. It really comes down to planning. For instance, that’s what Business Plans are for. There’s also more opportunity to start with small things (not the 200 dollar “investment” in Blackjack in Vegas. I learnt my lesson from that one). Risk-tolerance is like a muscle. It needs exercise. You can flex it with inconsequential things at first, then up the stakes a little.

The most important thing is not to give into the knee-jerk reaction that comes when a little (okay, BIG)something like a recession comes along. One must not lose one’s objectivity in such situations. Investigate; do the research yourself. There are things that one can only learn by trying. The experience (along with prejudices and failures) of others can only carry anyone so far.

Besides, putting yourself out there makes you more alive. That’s partly what life is all about, you know?

You do yourself no justice if you don’t.

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