Balancing Risk

Life is full of risks. The risk to make a wrong decision. The risk to lose. The risk to fail. The risk to mention too many risks in the first paragraph of a blog post.

There are some risks that most of us understandably want to reduce as much as possible. The risk to die, for example.

Then, there are also risks worth taking. Why are they “worth” it? Not because there is no risk involved at all, but because the return, the utility, outweighs the potential damage. But because we are risk-averse beings, we overestimate potential losses and also the risk of losing in itself. Consequently, we often shy away to take even the smallest risks. Publishing that blog post? Singing a song at a birthday party? Speaking in front of people? This all can seem quite risky. But is it, really?

Risk can never be eliminated completely. So instead of not doing the things that include some risk, why not accept the risk and try to evaluate more closely? Just because something seems like it has a high possibility of failure, doesn’t mean it is not worth trying, for example. If the potential return is huge, ask yourself: What is the worst that could possibly happen? If “the worst” isn’t actually that bad, then maybe the risk is still worth taking.

We have to make many decisions every day, and if we can’t eliminate risk, the best strategy might be to balance the risks in ways that keep the big upside while reducing the downside.


This is the twelfth post of my 100 days of writing series. You can find a list of all posts here.


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