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September 08,2022 Culture Leadership Development

On Becoming Risk Adverse

On Becoming Risk Adverse

On Becoming Risk Adverse

On Becoming Risk Adverse

A longtime friend of the family had always wanted to be an entrepreneur. Not only were their ideas brilliant, but they were also able to frame problems and solutions in a simple manner. At one point, they developed a business plan to create a local logistics company and had a bank lined up to fund this new venture. But they never went through with it. Self-admittedly, they got scared. Who would pay the mortgage if it failed?

They continued to work in their corporate career and retired in their late 50s. Subsequently, they got bored and started their logistics business. At that point, their mortgage had been paid off, and they were collecting a pension. They were playing with house money and couldn’t lose.

When I interviewed them years later, they spoke mostly of regret. They had found their passion in owning and running a small business. It was invigorating and made them feel alive. Their regret was that they hadn’t had the guts to bet on themselves and start their business earlier. Leaving them with the knowledge that they wasted much of their life working for someone else instead of doing what they loved.

Early Chance Takers

When I was younger, I wondered why someone would choose not to take a chance like this earlier in life. Then, when I reached my mid-20s and reflected on the same scenario, it all made sense. Prior to then, I hadn’t truly understood the weight of responsibility. The pressure to maintain stability and normalcy for those around you.

This pressure isn’t a burden that weighs you down but represents goals achieved that you never want to lose. It keeps you from living life as a hedonist. You delay gratification for the long-term payoff. But for those who want it all, this can also fill the mind with regrets.

As a child, you would do anything to a certain extent, consequences be damned. Then, as a teenager and into your early 20s, you knew the consequences but would still occasionally say, “Fuck it, let’s do it.” By the time you reached your 30s, your decision evaluation process changed dramatically as you pumped the brakes on making life-altering changes.

Prefrontal Cortex

There is a reason why soldiers are so young and why a person can’t rent a car until they are 25 years old. Their brain’s prefrontal cortex hasn’t fully formed yet. They are prone to making life-altering decisions with little consideration.

Is that better? What would the world be like if it were full of people who had unhealthy levels of risk tolerance? There are only a few people in the world with ultra-high risk tolerance. If they live into their 30s and 40s, they become either the great entrepreneurs or those struggling to pay the rent.

As people undergo brain development and encounter the external factors of loss aversion, they tend to naturally lower their risk profiles. If you have you ever lost a job or gone bankrupt, you can probably understand how this process takes years off your life through stress. But by limiting our risks, are we just controlling our lives for the sake of social norms in an effort to live safe and prudent lives?

Opening The Risk Profile

Some are okay with this transition, but others live in regret. Would my childhood self be disappointed with me? Or would my childhood self consider the sacrifices I’ve made to ensure that my family was always taken care of?

Many ask two questions while reflecting on their lives as they search for meaning and purpose: “Should I have done life differently? If I had done life differently, would I be able to live with myself if the outcomes were poor?”

Can a person open their risk profile as they reach middle age? The greater the risk, the greater the reward. Can a person find some level of comfort in what areas they choose to take risks with? Recognize the paradox that regret and security fall on the same scale. You can never satisfy your sense of security without feeling regret that you’ll never achieve true security by living a regret-free life.

References

When Every Employee Is A Risk Manager

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