Risk: Is It Worthwhile? – How to Analyze The Real Cost
In business, as well as in life, the potential outcome of a risk can outweigh the risk itself. The problem is determining which are worthwhile risks and which risks simply have a cost that is too high. When I refer to cost I don’t necessarily mean in a monetary sense, either. Yes, some risks may involve a monetary cost but others can have a more abstract cost, too.
Risk Cost vs. Satisfaction
When I was younger I was a daredevil. No risk seemed too great. I didn’t shy away from anything. I was unflinching no matter what came my way. It wasn’t until I was a mother and someone else’s livelihood was attached to my own that I started weighing the risk cost vs the satisfaction.
I remember the first family vacation we took after my daughter was born. We were in South Dakota and we rented a pontoon boat for the afternoon. After a while, we came upon a cliff. Everyone was swimming to shore, climbing the rocks, and jumping from the cliff. All my brothers and sisters decided we should jump from the cliff while I sat for the longest time looking at my 2-year-old daughter thinking “What if I dove in and hit my head on a rock?”
It wasn’t until that moment that I considered the cost associated with taking risks. With any risk, you must put on your analytical game face and take a long hard look at the cost vs potential benefits and weigh them against the situation. Is the dollar you spend on a lottery ticket for the chance to win $300 million worth the risk? What if you only have $5 to your name? It is a different story then, right?
Is it worth spending $200 in marketing expenses a month when there are so many forums that allow for free marketing (i.e. social media, blogging, etc.)? What if you’re a one-man show and the $200 allows you more face time with actual clients and produces more revenue? I can’t give you a hard rule to follow here, it’s tough. But, the risk is an unavoidable part of life.
Is It Worth It?
If you get married, will it last forever or will you waste ten years of your life on something that will end in disaster? It goes on and on with each decision we make there are associated costs and desired outcomes. The question you need to ask yourself is “Is the risk worth it?”
So was the risk worth it for me on our family vacation? Yes! I did finally jump off the cliff but only because my mom called me a chicken. I figured if she wasn’t worried, I was probably just overthinking it!
Looking for more great tips? Check out our other blogs here.
#satisfaction #Risks #riskanalysis #worthwhilerisks #benefit #riskcost #potential