Monday, June 25, 2007

Risk vs Reward

I was reminded today that everything should be looked at in a risk-reward trade-off. As soon as you forget this basic rule, you start taking on unnecessary risk. In reality, your mind should subtley be judging every word you speak and every action you take in terms of the risks you take and the rewards offered. I had forgotten this simple fact and taken on some unnecessary risks that a friend kindly reminded me to avoid.

Risks come in all flavours. There is, of course, the simple financial risk taken by people every day in the markets, but there are many other forms. Operational risk effects the ability of an entity to perform it's daily routines. Reputation risk effects how people will view you in the future. Career risk effects how you might be viewed in the office. Personal risks effect your personal life (perhaps whether or not you score that hot date). Risks come in all forms, and throughout life you should be analyzing the risks involved in your life. I know when I take the time to think about it, I take on a lot more risk every day than I normally realize.

The NYC subways now have an ad campaign that states something along the lines of "find the upside of risk." You should never be afraid to take risk, for with no risk comes no reward, but take constant calculated risks and make sure you're never blindsided.

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