One of the axioms I use when providing financial mentoring is: “Learn to look beyond the risk to see the opportunity.” So many people are consumed by risk that they fail to see the transforming opportunities available to them. I am not suggesting that you should ignore the risks associated with specific actions, but to succeed you have to be able to look beyond them. When faced with a decision, you will either commit to the risk, thus giving risk the power over your decision, or you will commit to the opportunities and maintain power over your own decision. The great equalizer to risk is being comfortable with making mistakes. If you can make mistakes, admit them, and continue on without condemnation, then you reduce the impact of risk on your future decisions.
Taking risks is really about assuming the responsibility for potentially negative outcomes. It does not ensure or guarantee that the negative outcome will materialize. It simply means that the potential for a negative outcome exists. Risks should be evaluated by two measures. First, is it possible and second, is it probable? Given the current circumstances, given the current actions, given the current environment, is it possible that the risk will materialize? If your answer to this question is yes, then ask yourself, given the current circumstances, given the current actions, given the current environment, is it probable that the risk will materialize? These two questions will give you a better sense of the likelihood of adverse outcomes.
If it is possible but not probable, then taking the risks associated with the opportunities could be of greater benefit. If it is both possible and probable, then you should consider options for contingency and mitigation planning. Contingency planning answers the “if this, then that” type questions concerning the decision you make. An emergency fund is a form of contingency type planning. You set aside several months of cash equal to your monthly expenses, so that in the event you encounter an immediate need for financial resources, you can withdraw the required resources. A contingency plan is proactive and forward thinking. On the other hand, a mitigation plan is reactive and almost immediately focused on dealing with an emerging or developing gap in your current reality. The best way to think about these two realities is: Contingency planning is planning for the “What If” scenarios, whereas Mitigation planning is spontaneous adaptation to unplanned events.
In the absence of contingency and mitigation planning, when a risk is more probable than possible, it is wise to reconsider making a decision that will result in certain demise due to an elevated potential for failure. In either scenario, you have to understand your environment. In the contingency planning environment, risks are easily understood. The impact is predictive. You are motivated to pursue the opportunities. You also have the skills and tools necessary to anticipate potential problems. You can exercise your current skills and abilities unencumbered by fear of failure. You maintain or increase your position, power, or autonomy by freeing yourself to operate in an environment not paralyzed by risk. And you can implement the change in your current location and with your current logistics because you have anticipated and answered the “what if” scenarios.
In the mitigation planning environment, your decisions are influenced or impacted by external, unexpected events. External and unexpected developments create change that can be complex and not easily understood. It has an impact that is ambiguous and unpredictable. It will often de-motivate instead of invigorate. It can often require the need for new knowledge or skills. It requires personal behavior changes to adapt, adjust, and overcome. It has the ability to force dependence. And it can require a logistical shift in your current situation.
It is the person who can use contingency planning that often has the ability to look beyond the risks to see the opportunities. The ultimate question to ask when using contingency planning is: “Does every experience call for a reaction?” In the midst of executing your plans, do you need to react to every change in your environment? The answer is no. Changes in your environment, changes associated with risk, should not trigger an instant need to react outside of a need to properly evaluate the change. If there is no immediate impact, then continue moving towards the opportunity. If there is a potential impact, evaluate the change through the possible and probable filters. Is it possible to have an impact? Is it probable to have an impact? Is it more probable than possible? Once you determine the probability of impact, begin mitigation planning unless you have already established a contingency plan based on answering the “if this, then that” scenario.
Taking risks need not be paralyzing. It is a reality of everyday life. Driving across a bridge has inherent risks associated with it. However, you likely do not think about it because the potential of those risks materializing is more possible than probable. To draw a better picture between these intellectual tensions, consider the following word pictures. It is possible for a tornado to form in the State of Maine, but it is not probable. It is possible for a blizzard to hit in Texas, but it is not probable. It is possible for you to succeed, but it is not probable unless you take the risk. If you can learn to look beyond the risks of life to see the opportunities available to you, it is more probable that you will realize those opportunities than it is possible.
To learn how to increase the probability of success in your life, take the risk to finding a board certified life coach who can assist you in mapping out your strategy for success. Visit http://kenrupert.com for more information about how a life coach can help you identify your blind spots, navigate rough waters, and land upon the shores of your success. Feel free to “like” this post and share it with all of your Facebook, LinkedIn, and other social media friends. Your success could be one simple decision away. That decision being, to look beyond the risks of life and see the opportunities that await you.