Taking risks in life is a skill we’ve been learning since before we could walk. When a baby gains enough confidence to go from crawling around the house to walking with confidence, that first step is a big risk to them.
That first risk usually ends in failure, which then leaves the child with a decision. Do I try to take a second step knowing the risk involved? Senior citizens also make risk management decisions that they did not have to contemplate as young men or women. Every person to one degree or another uses this skill to make the best possible choice for themselves.
The most important thing to keep in mind when looking at this subject is that when applied correctly, you are ensuring yourself a much more favorable outcome than if you were to proceed without caution.
Whenever the topic of risk management is brought up, most would immediately think about the financial sector. Truth is, risk management happens in our everyday lives, from something as mundane as grocery shopping, to buying a car. We are presented with choices so frequently and regularly that by learning where this skill can be best practiced and applied it can give you fantastic results.
We can start with a risk that is common to most men and women, a decision most people think of at least once in life; the decision to get married. Since it’s tradition for a man to ask a woman for her hand in marriage, we will look at this subject from the male perspective.
For most men, asking someone to marry you is perhaps the most nerve-wracking thing you can do. There’s no guarantee short of hearing her say the word, “Yes”. So why do men take the plunge while there is a risk of rejection? – for a better life. It’s as simple as that. Sure, you don’t know for certain that she’ll say “Yes”, but assuming you’ve done everything else right up to this point, the chances should surely be in your favour.
Let’s take a few steps back before the big question and look at the initial dating stage. Chances are, you asked her out without knowing whether or not she felt the same, but you did it anyway. Any it paid off big time because now you’re dating the girl of your dreams. If you hadn’t taken that risk, well, you’d still be single and never knowing the awesome future that could’ve happened.
When a man asks a woman to marry him, how is risk management applicable? We can start with the obvious, how well you know the person. Let’s say you met a girl that you really like and you’ve spoken to her a few times. You are aware that you haven’t spoken to her enough for her to know you’re interested and not enough for you to get a feel for what she thinks of you. Finally, after a few of these occasions, you decide the next time you see her, you’re going to ask her out.
Of course, don’t lose sight of the fact that in both of the above scenarios, she too is using her risk management skills to determine whether or not you’d be a good partner. If anything, in regard to relationships, women are usually more conscious about the potential risks and their risk management skills are always engaged.
Now that we’ve talked about a few everyday examples where risk is involved, let’s take a look at how risk management occurs in a common form of entertainment – sports wagering. Essentially a form of gambling, you are taking a risk whenever you place a wager. However, that risk/reward balance can he heavily shifted in your favour if you do your due diligence such as understanding the NFL odds before betting on who you think will be the winner.
One reason that sports is a good place to practice your risk management ability is you have total control over how much risk is involved. With that in mind, a wager is a great way to put this life skill into practice.
If you place a $10 wager, you aren’t as likely to put as much thought into the risk involved as you would when placing a $100 bet. In this scenario you’ve used your risk management skills subconsciously. The amount of money you are risking doesn’t scare you, so that’s it. Your decision has been made without using your skill to it’s full potential.
If you take the same scenario but treat your $10 with the same respect you would $100, you are then opening yourself to a great tool to practice your risk management abilities. Using things like the past performances of the team or individual you would like to bet on is a good start. Eventually at some point, you might even become good enough to start betting $100 because you are on the path to better decision making which leads to improved results.
Throughout the course of our lives, we make choices that can be assisted by our ability to sharpen this important skill. One of the best ways to improve your risk management abilities is to practice the art of self reflection.
If you take the time to look within and question why you’re making certain choices, you will begin the process of evaluation that will naturally lead you down the path of risk management. This is something that when practiced correctly, can assist us with improving the quality of our lives.