Intelligently Calculating Risk

image – Flickr / Margot Gabel

As I opened the door to the gym, I was mentally rehearsing my workout. It would be 5-3-1 for the bench press, and I would hit 205lbs on my final set. I was psyching myself up to get it done as fast as possible, since I was on my lunch break from work and only had a limited amount of time.

I approached the bench and left the bar empty for my warm-up set. 20 reps with nothing on the bar, then I would bump up to 185lbs for my first five. The last time I handled that weight I felt strong, but this week it felt a lot heavier. I got my five reps, but I struggled more than I thought I would. Chalking it up to that being my best today, I decided for safety’s sake (I didn’t have a spotter at the time) that I would do my set of three with the same weight, then increase to 195. Short of my goal, but better safe than sorry.

After some rest, I did my second set and went to add weight for the last one. I realized, as I went to add plates, that I actually had 205lbs on the bar the whole time. I went from thinking that I wouldn’t be able to hit my initial goal to shattering it. Amazed, I decided to bump up to 215 for my last set. I was overflowing with confidence afterwards. Then, it hit me:

“It’s funny how we often underestimate our own abilities. Sometimes, we must lose sight of those perceived limitations to find our true edge. The risk is worth the reward.”

Often, we place barriers on our abilities. Maybe it’s due to past experiences – the whole “don’t touch the stove when it’s on because it will burn you” lesson – or sometimes we are just unaware of our true capacity.

We need the information and insight gained from past experiences to influence our present decisions, in hopes to manifest our expectations. Your past influences your present, which in turn affects your future – all in a cycle. But what if the limits we set are too low? What if we’re selling ourselves short based on a bad day? This is where calculated risk – intelligent risk – comes in and it’s vital to our growth.

How do we calculate risk?

You can’t touch a hot stove without getting burned, but you can mitigate the heat by wearing something on your hand. This is the essence of calculated risk. We see a boundary (heat) and we have a safety net in place (a glove) to protect us from it. Now we can touch the stove with much less risk of getting burned. It’s in no way a fail-safe measure, but it offers protection while we push the boundary of what we weren’t able to do prior.

Let’s pretend that we’re starting our own business. We have our idea and business plan in place. You’re confident about the ideal, but you’re going to need time and some funds to get it going. Bills still have to be paid, food placed on the table, and we need a roof over our head. There’s not enough in our savings account at the moment to cover your expenses. There are a couple of options. You could let your dream sit on a shelf until you’re in a more comfortable place financially. Let’s face it though, many times that dream just stays on the shelf and goes nowhere else when we do that. It has the lowest risk and generally the lowest chance to yield the reward you desire.

You could take out a loan from a bank or friends/family – this to me is a slightly better option than the first because it allows you more freedom to pursue your dream. We’re going to assume you will use the money to leave your current job and focus completely on your new business to get it off the ground. This of course is very high risk, but with the possibility of a greater yield. If your business flops though, you’re stuck jobless and with a ton of debt. Not an ideal situation.

The third option would be to keep the job, and diligently work on your idea over time. The difference between putting your dream on a shelf and working at it over time is that you’re investing in your dream while you are still working. A lot of your spare income and time will go into your business. You risk losing sleep, friends and relationships from your devotion, as well as money if it doesn’t go well. But if it does, you’ve realized your dream and you still have a sort of safety net. Moderate risk, possibility of a greater yield. It’s a calculated risk. It’s an intelligent risk.

Before taking that risk, we would never have been able to start the business of our dreams. We would stay stuck in whatever life we were living. Maybe we would be satisfied, but what about that lingering feeling of “what if?” What if you had pushed your boundaries a little more, taken a bit more of a risk, moved closer to your own edge? You could have failed, or you could have succeeded. The only way to truly know  would be to push. Why not try?

The Flipside

Sometimes the glove doesn’t protect us from the heat completely and we still get burned (it may just be a crappy glove, but go along with me here). Lets take a look at this through the lens of a romantic relationship. To me, they can be seen as intelligent (sometimes!) risks. Most people, when they get together, do so with the knowledge in mind that it may end. And it could get ugly. But we take the risk anyway because we feel that there is a possibility of a greater reward.

Not too long ago I was in a relationship that didn’t end too well. At the time, we both knew that there was a possibility things wouldn’t work out. It was a long distance relationship, so on top of the regular trials that couples go through we had 800 miles separating us, with few chances to visit in person. We decided to go through with it anyway. At the time, we knew the risk – break up, possibly not speaking anymore, losing a good friend – but we felt there could possibly be something better from going through with it.

As I said before, it didn’t end too well. We don’t speak anymore. Hurtful things were said. C’est la vie. We took the risk and it didn’t work out. Was it all a loss though? Absolutely not. I learned a whole lot from it and grew from it. The entire experience – both the good and bad times – taught me how to be a better man and person. I wouldn’t take it back if I could.

Just because the risk is intelligent doesn’t mean it will yield the reward you seek. But that isn’t necessarily a negative thing. I believe that the greatest treasures are found through the journey, not so much the destination. You can’t even think of taking the journey or reaching the destination without taking a little risk, though. Take the plunge. Take the risk. Do it intelligently. You might get burned, but you might not.