Would you accept an offer to teach in your field at a university in Dubai for two years at three times your current salary? Would you take advantage of an opportunity to be a business partner with a trusted friend in an enterprise that already has several million-dollar orders booked? Would you cancel a lunch with a long-time client for an opportunity to meet with a major business guru from the field you’ve been trying to break into? Each of these situations pose an opportunity as well as varying degrees of risk. Risk is a part of daily life, not just these big decisions. Every day involves risk.
Dan Gardner, author of Risk: The Science and Politics of Fear says that risk reality and risk perception do not match and occasionally they are vastly different.1 For example, we all know someone who fears air travel despite all the science and statistics that demonstrate how safe it is. For these people, the perception is more significant than the reality and this produces a fear reaction.
A more mundane, and perhaps much more common, example is people who do not like social situations. For many of these folks there is a perceived risk in having conversations with others. They fear awkward situations such as not knowing what to say, or saying the wrong thing. Yet the reality is that many of the potential conversation partners perceive the same or similar risks and sense the same fears.
What causes these perception-reality gaps and the resulting fear? Gardner suggests three common sources: risk marketers, media, and psychology.
- Risk marketers—organizations that have legitimate and not-so-legitimate reasons for bringing attention to risk (politicians, governments, corporations, and NGOs).
- Media—news and entertainment outlets that make money with bad news that highlights the nature of risk-laden situations, events, and activities.
- Psychology—the human mind is the most significant element in the risk perception-reality gap and operates on two levels, conscious and subconscious.
The psychology of risk is a complex subject. Many books and scholarly articles have been written on the subject. Amidst the complexity of the topic, it helps to know the basics and one of the most important truths to understand is that the subconscious mind operates extremely fast and provides initial impressions of the risk. This is where your “gut feel” comes from . The conscious mind, however, is much slower and kicks in after the subconscious has already sent its strong and powerful input. The conscious mind gathers information and providing you an opportunity to confirm or adjust the original impression.
It is my observation that most people do not actively engage both the subconscious and conscious minds to make effective decisions. Most of us use the gut feeling provided by the subconscious and stop there. For highly experienced, mature, and emotionally intelligent people, a lot of wisdom will come from the subconscious. At this phase of my life (i.e. somewhere near “half time”), I realize more and more that my initial impressions of situations, opportunities, and challenges are more trustworthy than they were 10 and 20 years ago. Nevertheless, depending on the situation, I often gather additional facts.
Recently, I started reading a book by Jason Jaggard, Spark: Transform Your World, One Small Risk at a Time. Jaggard’s basic message is that taking small, healthy risks can be highly rewarding and truly transformative in your life and in the lives of others around you. I’ve just started the book and I am intrigued so far. I am by nature slightly risk tolerant. What I hope to accomplish with this book is to learn how to make wiser risk choices and how to help others do the same. Hopefully, I will have more to share in the coming weeks.
In the meantime, please share with me your own approach to taking risks. How do you assess risk and what do you do to bring others who are more reluctant along for the ride?
1: “Author Dan Gardner Talks Risk, Decisions and Psychology at the 2012 RIMS Canada Conference” retrieved from http://www.riskmanagementmonitor.com/author-dan-gardner-talks-risk-decisions-and-psychology-at-the-2012-rims-canada-conference/