I’ve been thinking a lot about risk lately. In all fairness, as I near the end of my second month in quarantine I have been thinking a lot about all kinds of things – poetry, weasels, gymnastics, pancakes, mulch, and you get the idea. But as far as business goes, my brain keeps circling back to the idea of risk – what it is exactly, and whether or not we can get rid of it.
Because that seems to be a major goal for a lot of people – not to mitigate risk, but to eliminate it entirely. My wife and I recently had a conversation about our finances, which I’m certain has been a common topic for millions of others in recent weeks. The majority of my year is traveling around the country speaking to live audiences about their business challenges. Now of course there are still virtual event opportunities, but with travel halted and conferences postponing until later in the year my wife very understandably wanted to know what this meant for us. I primarily handle the finances in our family, so I laid out our current situation and tried to reassure her that everything would be fine. She responded with a barrage of questions. What if your speaking engagements are postponed later than anticipated? What if they’re cancelled through the rest of the year? Through next year? What if my company furloughs me – what then? What if both of us end up without jobs and can’t find new ones?
Ultimately I had to tell her that I wouldn’t answer every possible scenario she was posing to me. Not that I couldn’t answer it – it’s fairly straightforward to look at a family budget, adjust the amount of money coming in, and then make decisions about what we can afford to do and what we’d have to sacrifice. I could have told her how many months or years we can afford to live off our savings if her worst fears were realized and both of us were suddenly and permanently unable to earn any money at all. But I decided not to, because what she was really asking me was this: “How can we prevent anything bad from happening to us?”
There is no solution I can offer that can effectively answer that question, because the only real answer to that question is – We can’t. It isn’t possible to eliminate risk, and that isn’t the answer she wants to hear, so she keeps asking the same question in different ways to see if maybe she’ll eventually get a different answer.
I don’t mean to single out my wife here. All of us do this from time to time. We worry that something bad might happen, and so we look for ways to prevent the possibility that they will. But it simply isn’t possible. Every business runs the risk of wasting time and money on new projects and ideas that don’t end up working out, and every business also runs the risk of sticking with business as usual for so long that more forward-thinking competitors come along and eat into their market share or drive them entirely out of business. Right now, in the midst of the coronavirus, going out in public invites the possibility of getting sick, and not going out in public invites the possibility of isolation, depression, and a shuttering of our economy that is ultimately unsustainable.
Even simple decisions are essentially a balancing of risks. If you go parachuting, you run the risk that your parachute doesn’t open; if you don’t go parachuting, you run the risk of regretting that you were too cowardly to go parachuting. If you go on a date, you run the risk that it will be awful; if you don’t go on a date, you risk never finding the person you’re looking for. Being active and doing something is not inherently riskier than sitting at home and doing nothing; the two activities simply involve a different collection of risks. All of us are constantly deciding which risks we are and aren’t comfortable with, and we often do things to minimize risk as much as we’re able. But we’ve never come anywhere close to eliminating it.
I would love to be able to assure my wife that we aren’t going to be eaten by bears while camping or swallowed by a sinkhole while sitting in our living room. But maybe the solution is to accept that risk exists, and our job is to choose which risks we want to assume. I think the simple act of admitting that risk is always with us does something to lessen its power over us. If you think of risk as an enemy that must be defeated, then you worry it might defeat you. But if you realize it’s going to be there no matter what – well, then you just learn how to live with it.
All of us are currently analyzing more risks than normal, and so I hope this helps make the ones you’re facing seem more manageable.
Excellent article! Thanks for the reminder. I am sending to lots of young people who need this.
That’s great, thanks Diane!
Very well stated Jeff. It puts in real terms, real life. I hope the conference business returns at full strength because people need people. Online is not the same. We will always have risks as you stated and we should manage them and I manage mine by turning off the news, limiting social media, and focusing on the positive data not predictive models and what ifs. Thank you!