the better you become at analyzing assessing risk as all top people are, and then avoiding as much of the risk as possible as all successful people do. The more competent and more capable you will become, the more risks you’ll be willing to take because they’re smart and the more successful you will be. Now there are basically five types of risk for you to consider.
The first type is the simplest
It Is The Risk That Is Not Yours To Take
It’s the decision that you do not have to make or a gamble that you do not have to engage in. Now every action has a consequence and it often creates the need for further actions either to follow up on or to remedy what happened. Whenever you can delegate an act entailing uncertainty you can reduce your risk of losing time and money and increase your likelihood of long-term success. Remember there are certain risks that are not yours to take. So don’t take them.
The second type of risk is
The Risk That Is Unnecessary
You engage in an unnecessary risk when you act precipitously without sufficient information or without taking time to think it through carefully in advance. Many of the mistakes that you have made and me for that matter have occurred because you acted without thinking. That is you acted without taking the time to minimize the risks involved. It’s been said that you should invest as much time and exact examining or exploring an investment as you spent earning the money to make the investment, you should do your due diligence, you should talk to experts in the field you should get as much information as possible, before you make an irrevocable decision.
The third type of risk is
The Risk That You Can Afford To Take
Calling on a new prospect, following up on a lead and exploring a new opportunity all are risks that you can afford to take. In these cases the cost of failure is very low while the rewards of success can be very great. Even putting together a detailed proposal for a prospective big sale, is a risk in terms of investing time and effort. But you can afford to take that risk because what are you going to be doing otherwise watching television? It’s worth taking because of the upside and there’s no real downside.
The fourth type of risk is
The Risk That You Cannot Afford To Take
The consequences of making a mistake would be too enormous. You cannot afford to bet your whole company or your whole bankroll on a speculation of any kind. You cannot afford to commit all your resources to a single project and have your entire success or failure hinge on the outcome of that project. I’ve seen many small companies that will spend a fortune on a big advertising campaign. Believe it in what we call the fallacy of big numbers. That if i magnetize massively i’m bound to get out several hundred or several thousand new customers. But very often it happens that you don’t get any at all and the company runs out of cash and goes broke. There are risks that you cannot afford to take.
The fifth type of risk is
The Risk That You Can’t Afford Not To Take
The downside may be costly but the upside is so exciting that it’s very much worth taking a chance to go after it. If you’re working on a big prospect whose headquarters are a long way from your main office, it’s certainly a risk to travel all the way there and back several times but it’s a risk you can’t afford not to take. If the prospect with the business materializes it can make a major difference to both you and your company. Remember your ability to collectively take calculated risks in the direction of your goals will ultimately lead you toward success.
So before you take a risk always ask yourself the worst possible option question.
“What’s the worst thing that can possibly happen if this risk doesn’t work out?”
If you cannot afford the worst possible thing that could happen don’t do it in the first place.