What If You Thought About Risk Differently?

How often do you think about risk?

Do you consider yourself a risk taker? Or are you more likely to choose the safe route?

This week, I attended my first risk-a-thon in Denver. Think hackathon, but instead of teams solving a technology problem, a group of insurance and risk professionals examined six relatively new businesses looking for risks the entrepreneurs may not have considered.

The entrepreneurs were appropriately called the “risk takers.”

Their businesses were very different. One entrepreneur had created an app that helps parents find camps for their children. Another helps companies protect intellectual property and digital assets they may assume they own. There was an MGA focused on the beverage industry and even a company that gamifies risk management.

For each business, volunteers asked questions, identified potential risks, and plotted them on a grid based on two things: How likely is this to happen? And if it does, how

significant would the impact be?

But what struck me wasn’t just the risks we uncovered. It was the willingness of these entrepreneurs to ask:

What am I not seeing?

If you’re an insurance nerd like me, that probably sounds like a pretty good day.

If you only think about insurance when your premium comes due, you might prefer a colonoscopy.

But stay with me.

Because you don’t have to own a business to benefit from asking the same question.

Every day, we make decisions that involve some degree of risk. We start businesses.

Change jobs. Invest money. Have difficult conversations. Try something we’ve never done before. Or sometimes, we decide not to do any of those things because the risk feels too great.

I consider myself a moderate risk taker. I ski and downhill mountain bike. I travel to foreign countries and try foods I can’t pronounce. A significant portion of my investments is in stocks.

But I don’t take risks simply for the thrill of taking them. I calculate them.

I wear a helmet when I ski and mountain bike. I do some research before I travel. I diversify my investments. I think about what could go wrong and decide whether I can live with the consequences.

That’s risk management.

In the insurance world, there are several basic ways we think about managing risk: Avoid. Reduce. Retain. Transfer. Monitor.

What if we borrowed those same principles for decisions that have absolutely nothing to do with insurance?

Consider a difficult conversation you know you need to have with an employee, coworker, friend, or family member.

Avoid.

You could decide not to have the conversation. Sometimes that is the right choice. Not every irritation needs to become a confrontation. But if you’re avoiding an important conversation simply because it makes you uncomfortable, the risk may actually increase the longer you wait.

Reduce.

What could you do to reduce the likelihood that the conversation goes badly? Choose the right time. Think through your words. Ask questions instead of making assumptions. Listen before responding. You can’t eliminate the discomfort, but you can reduce the risk of making the situation worse.

Retain.

What part of the risk belongs to you? Maybe you contributed to the problem. Maybe you need to acknowledge a mistake, apologize, or accept that the other person may not respond the way you hope. Retaining risk means recognizing the part you are willing, or need, to own.

Transfer or share.

Do you need help? In the workplace, that might mean involving HR or asking a manager for guidance. In a personal situation, perhaps you seek advice from someone you trust. You still have to participate in the conversation, but you don’t necessarily have to navigate it alone.

Monitor.

Having the conversation doesn’t necessarily eliminate the risk. Did anything change? Do you need another conversation? Did the two of you follow through on what you agreed to do? Sometimes managing risk requires paying attention long after the initial decision has been made.

The risk-a-thon reminded me of something else.

Sometimes the problem isn’t that you aren’t paying attention. It’s that you can’t see something from where you’re standing.

The entrepreneurs knew their businesses better than anyone in the room. But the rest of us brought different experiences and perspectives. We could ask questions they hadn’t thought to ask and identify possibilities they hadn’t considered.

That’s true for the rest of us, too.

Sometimes we need another perspective to help us see the risk, or the opportunity, differently.

And sometimes we focus so much on what could go wrong that we overlook another kind of risk entirely: the risk of doing nothing.

What happens if you don’t have the conversation?

Don’t make the investment?

Don’t apply for the job?

Don’t start the business?

Don’t try the thing you’ve been thinking about for years?

Avoiding risk is still a decision, and sometimes it carries its own consequences.

I left the risk-a-thon reminded of something those of us in insurance have understood for a long time.

We don’t hate risk. We simply want to understand it.

Because the goal isn’t to eliminate every risk from our lives. If we did that, we might eliminate some of the opportunities too.

The goal is to recognize the risk, consider the options, and make a decision with our eyes open.

So, what risk are you facing right now?

Before you immediately ask, “Should I do it or not?” perhaps start with a different question:

What am I not seeing?

Then consider your options. Can you avoid the risk? Reduce it? What are you willing to retain? Where could you share or transfer it? And if you move forward, how will you monitor it?

You may discover that thinking about risk differently changes the decision you make.

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