What is risk?

There’s a great quote that I once heard from Tim Ferris a while back. He was interviewing for a podcast (I don’t recall which) where he and the interviewer were talking about productivity and success. One line that he said rang so true to me that it has stayed with me since and has had a significant impact on my thinking and actions. The interviewer asked Tim if he had any fear or apprehension on trying new things. Tim’s response couldn’t have been more perfect. He replied that he wasn’t afraid to try new thing because very few things are risky. He then went on to define risk as something that has the potential for an irreversible negative outcome.

This idea that very few things are risky is so simple, yet not immediately intuitive unless you spend some time exploring the concept. The implications of fully understanding it has been profound for me.

The keyword here is irreversible. We can always point out the potential dangers of doing something. It’s easy to create a long list of things that could go wrong, but how many items on that list are realistic? Of the remaining options, how many of those are actually irreversible? Irreversible meaning that there is no chance for recovery? The answer is not many. After thinking about this quote for a while, the idea became much clearer to me. Of course, very few things are risky, things that could lead to permanent negative consequences. Consider everything a typical person might want to do but might have some fear of pursuing. These can be starting a business, traveling the world, creating youtube videos, or introducing yourself to a stranger. How risky are these things in reality? What are the adverse outcomes, and can you recover from them?

Let’s assume you want to solo travel, for a short while. What are some of the specific potential outcomes?

  • Loss of a job from taking excessive time off
  • You spend a lot of money from traveling
  • You get lonely and don’t meet anyone
  • You have a great time
  • You meet a lot of amazing people
  • You make new friends

Some outcomes are positive, and others are negative. All of the adverse outcomes are easily remediable. Some will take a little more work to fix than others, but none of these are irreversible.

  • Loss of a job – Your education and previous job experience don’t lose any value. Plus it says a lot about someone who can travel the world and meet new people. You are still at worst as employable as before, and more likely than not more employable after traveling.
  • Loss of money – We are always making and spending money in our day-to-day lives. The real question is, what are you spending your money on. Do you value the experience that you’ve gained from your expenditures? If yes, then it was well spent.
  • You get lonely and don’t meet anyone – This is highly unlikely. From my brief experiences traveling Europe, you practically have to go out of your way to not meet new people, especially if you choose to stay at hostels.

Everything else is a positive outcome.

  • You have a great time – AWESOME!
  • You meet a lot of amazing people – Look at you!
  • You make new friends – Free place to stay next time you visit their country, YAY!

Let’s look at another situation, what if you want to introduce yourself to someone that you have no shared connections with

  • They can ignore you – This rarely happens, especially if you walk up to someone directly, look at them face-to-face then stick your hand out and say “Hi, My name is….”. Nearly 99.999% of people will respond after being approached like that. If they don’t, I will consider if they are someone worth getting to know in the first place. Either way, this is not some irreversible harm to your being.
  • They can respond positively – AWESOME!!! Meeting new people is fun.
  • They can respond negatively – See the first example.

In fact, most of the ‘negative’ outcomes from directly walking up to someone will put you in the same situation as if you have never tried to introduce yourself in the first place. That’s the very definition of nothing to lose but everything to gain. These are just a couple of examples of Tim Ferris’s thinking in action and how it can help clarify the outcomes of whatever it is you want to do. To apply this to other situations in your life, it helps to break it down into two distinct and actionable steps.

  1. List out every possible outcome, both good and bad.
  2. For each negative outcome ask yourself and answer the following two questions
  • Can I reasonably recover, given a reasonable amount of time and effort? 
  • What’s the probability of this occurring, low or high? 

You can apply this process any time you’re feeling scared or hesitant about making a decision. Sometimes your fear is well-founded, and there are outcomes that have a high chance of occurring, and you can’t recover from. These are high risk ‘risky’ actions and should be avoided. However, what you’ll likely observe is that most items will fall in the low-risk category.

The idea isn’t that we can or even should do everything we want to do. Some things DO have inherent risk in them. I wouldn’t try to climb Mount Everest without doing any training or preparation. But by changing your mindset, you will start to open mental doors that were previously closed to you. More opportunities will open up for experiences, and in the end, isn’t that what we all want, more opportunity and experiences?