What's Your Risk Profile?

Trying new things requires a willingness to take risks. However, risk taking not binary. You probably feel comfortable taking some types of risks and find other types quite uncomfortable. In fact, you might not even see the risks that are comfortable for you to take, discounting their riskiness, but are likely to amplify the risk of things that make you more anxious. For example, you might love flying down a ski slope at lightning speed or jumping out of airplanes, and don’t view these activities as risky. If so, you’re blind to the fact that you’re taking on significant physical risk. Others, like me, who are not physical risk takers, would rather sip hot chocolate in the ski lodge or buckle themselves tightly into their airplane seats than strap on a pair of ski boots or a parachute. Alternatively, you might feel perfectly comfortable with social risks, such as giving a speech to a large crowd. This doesn’t seem risky at all to me. But others, who might be perfectly happy jumping out of a plane, would never think to give a toast at a party.

On reflection, there appear to be five primary types of risks: physical, social, emotional, financial, and intellectual. For example, I know that I’m comfortable taking social risks but not physical risks. In short, I will readily start a conversation with a stranger, but please don’t ask me to bungee jump off a bridge. I will also happily take intellectual risks that stretch my analytical abilities, but I’m not a big financial risk taker. On a trip to Las Vegas I would bring only a small amount of cash, to make sure I didn’t lose too much.

I often ask people to map their own risk profile. With only a little bit of reflection, each person knows which types of risks he or she is willing to take. They realize pretty quickly that risk taking isn’t uniform. It’s interesting to note that most entrepreneurs don’t see themselves as big risk takers. After analyzing the landscape, building a great team, and putting together a detailed plan, they feel as though they have squeezed as much risk out of the venture as they can. In fact, they spend most of their efforts working to reduce the risks for their business.

Put me in, Coach!

Speaking of podcasts... Almost two years ago one of our Entrepreneurial Thought Leaders speakers canceled at the last minute. This always creates a problem and a whirlwind of activity in an attempt to fill the spot. I decided to volunteer myself to give the talk. This took a lot of chutzpah since the speaker lineup includes icons such as Carly Fiorina, William Perry, and John Doerr.... But, since there wasn't an easy alternative, my colleagues put me in.

I decided to craft a talk called "What I Wish I Knew When I Was 20...", based on a list of lessons I hoped to impart to my kid as he left for college. In fact, one of the lessons in the talk is "Don't wait to be anointed." That is, don't wait for others to ask you to take on a challenging role, but just do it!

Essentially, being entrepreneurial demands you to print your own business cards. It requires the confidence to take leaps that others might find daunting. I involves taking risks, some of which are small and others which are mighty big.

Risks come in all different forms. For example, some people are comfortable taking financial risks, others are comfortable taking physical risks, and others are comfortable taking social risks. I was pretty comfortable taking the social risk of getting up in front of the class and giving a talk, but I would never have been comfortable taking the risk of jumping out of an airplane.

It is pretty easy to teach yourself to be more comfortable with risks. The trick is to take small risks at first and to build confidence. And, it takes a willingness to fail sometimes. In fact, I often ask my students to write "failure resumes" where they have to outline all their biggest screw-ups, personal, professional, and academic. They have to describe the failure and what they learned from it. The lesson is that if you aren't failing sometimes, you aren't taking enough risks.