Risk tends to get a bad rap. We associate it with things like losing money in the stock market, or riding a motorcycle without a helmet. But risk isn’t the enemy—it’s a permanent part of life. In fact, being proactively intelligent about risk is a prerequisite for seizing those breakout opportunities. There’s competition for good opportunities. And because of that, if you can intelligently take on risk, you will find opportunities others miss. Where others see a red light, you’ll see green.
Every possible career move contains risk. If you don’t have to seriously think about the risk involved in a career opportunity, it’s probably not the breakout opportunity you’re looking for.
A basic definition of risk is it’s the downside consequences from any action and the likelihood those consequences come to be. Learning how to accurately assess the level of risk in a situation isn’t easy. Risk is both personal and situational. What may be risky to you may not be risky to someone else.
So here are a few rules of thumb for thinking about the risk associated with opportunities:
Overall, it’s probably not as risky as you think. We’re wired for evolutionary reasons to overestimate risk.
If you can tolerate the worst-case outcome, be open to it. If the worst-case outcome means death, homelessness, or being permanently unemployed, avoid it.
Can you change or reverse the decision mid-way through? If so, it’s lower risk.
Don’t conflate uncertainty with risk. There will always be unknowns. This doesn’t mean it’s risky.
You can never fully predict how or when ill-fortune will strike. Instead of placing faith in your ability to anticipate all that could go wrong, build up resilience to unimaginable blowup. Achieve stability by introducing low levels of volatility—by introducing small risks on a regular basis. Ideally, your day job has volatility built-in. A freelance editor has to hustle more day-to-day than the staff editor. An independent real estate agent goes hungry more days than the big-company agent. But those who regularly deal with small risks will never starve. They will never be engulfed by the big risks.
Understand that risk is a part of every opportunity and be able to recognize.
Know how to manage risk in your career decisions.
See opportunities where others misperceive risk.
Recognize that short-term risk increases long-term resilience.
Understand the connection between “volatility” and “resilience”.
Add topic questions to discuss during class and take notes in the Notes column.
Add a topic
What do your students think of when they think of risk or risky actions?
Does the upside of defaulting to “yes” outweigh the downside?
How do you determine whether a worst-case scenario is tolerable or not?
What is the difference between uncertainty and risk?
Do you consider yourself a “risk taker”?
What are the riskiest projects you’re involved in as well as the lowest risk projects you’re involved in? What are their real downside and upside possibilities? Might you be mistakenly ascribing risk?
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Risk Diversity. Students will work in small groups to study the risk tolerances of its members. What risks are shared? Which aren’t?
Risk Survey. Pose different scenarios to your students and see what risks they’re willing to take. Would they be willing to quit a job without having another job lined up? Who thinks starting a company is risky? Emphasize to your students that there’s no right answer; everyone’s risk tolerance is different.
Acceptable Risks. Students will identify risks they can take that differentiate them from others. In other words, are there risks that are acceptable to them (e.g. low status but high learning) that others are avoiding? If so, they should start going after opportunities with that type of risk.
Increased Volatility Plans. Students will make a plan to increase the short-run volatility in their lives. How can they take on projects — or a new job — that involve more ups and downs, more uncertainty?
Plan Z Review. Students will consider whether their Plan Z is it still viable and would keep them in the game if their Plan A were to unravel. Encourage them to consult mentors in their networks to help think through contingencies.