Use The Time-Tested Method For ‘Neutralizing’ Almost Any Kind Of Risk
Transform risks that do occur from potential nightmares/disasters and painful negative surprises into mere inconveniences and even potential opportunities, by following this simple and powerful process.
Risks that we’ve…
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Identified
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Fully understand
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Are thoroughly prepared for, in advance
with very few exceptions, can be neutralized.
Using this straightforward approach allows anyone to demystify risk and reduce the uncertainty, fear and risk associated with risk management, and to “tilt” the normal risk/reward relationship (Greater rewards requires taking greater risks) to their personal advantage.
Although risk can never be totally eliminated, by identifying the risks involved, fully understanding them and thoroughly preparing for those risks in advance, one can actually tilt the normal risk/reward equation to their benefit by neutralizing and reducing the risks involved relative to the higher returns they’re seeking.
An example of tilting the risk/reward equation to our advantage:
Just think about the enormous inherent risks involved in open-heart surgery. Those risks have been identified, thoroughly understood,and fully prepared for to the point where thousands of such surgeries are now conducted successfully every single day. The risks relative to the benefits have been enormously reduced, resulting in dramatic improvements in the quality of life of patients who’ve undergone this procedure that in the mid-1940s was considered “just too risky” to even attempt.
Five Steps To Demystify Risk And Risk Management
1. Understand “Risk Basics” — How risk really works — What’s actually going on?
2. Conduct and utilize personal risk assessments
a. Identify risk
b. Understand risk
c. Prioritize risk
3. Prepare and plan for risk in advance
4. Utilize effective ongoing risk monitoring and risk decision making
5. Continuously learn and adapt (based on your actual experiences)
Special Note: For this discussion we’ll focus on the first two points since they directly address the demystification of risk. Points 3-5 which are focused on the demystification of risk management, will be addressed in a follow-up article.