How to Manage Life Risk
How to Manage Life Risk
You may hear the term risk when talking about money, but I want to talk about life risks. The risks that matter if you decide to do something or not. These choices and decisions can potentially have a huge impact on the life you live each and every day.
The choices you decide to go through with in your life can make a big difference in many areas. For example, a risk could be moving to a new city, across the country, or even to a new country for a career. Whether you know it or not there are certain big decisions where you will need to understand, mitigate, and manage risk as much as possible.
Today I want to talk about how to manage some of life's risks and why it’s important to you. Without wasting any more time let’s get right into it!
Understanding Life’s Risks
Risk in your life can mean so many different things. This could be a risk like a career change or move, a financial or investment risk, deciding to move to a different location to live full time and more.
Understanding what risk you are up against is important to make an informed decision. All risks aren’t bad and everyone at some point in their life will be asked to make a choice and assess risk.
In order to understand risk, we must first do what’s called a risk assessment. This is writing down what the situation is and understanding the pros and cons of it.
Let’s go back to our previous example about moving due to a career change or position change. We can write out a list of the benefits and the negative things you don’t like about the situation.
Career move or position move:
-a new exciting experience
-don’t know anyone
-have a family
Once you write out the pros and cons, you will understand and see what the risk is more clearly to help you make a better decision about it. This allows you to see and understand a simple list.
How to Mitigate Risk
Mitigating risk means ensuring you are lessening the effects and risks of your decision. This ties directly into understanding risk and making an informed decision.
When deciding to do something, you want to make sure your pros or benefits outweigh the cons or negative effects of the decision.
Mitigating risk is key to financial decisions as well as general life decisions. The best way to mitigate risk is to ensure you have more benefits than negatives.
This can be done easily through the pros and cons list as well as another method. I like to use this other method to mitigate risk is to think long-term. Will the decision you are looking to make be beneficial only in the short-term or also the long-term?
Most of the time you want to have a long-term vision. The things that take time usually are going to benefit you the most over time. The effect of compounding is huge when it comes to long-term growth.
The last point I want to touch on today is managing risk. Managing risk ultimately leads to the risks you want to take and the ones you don’t want to take. Without risk, there is no reward (or very little) at least.
There will no doubt be many times throughout your life when big decisions can lead to even bigger results. Don’t be fooled though because things won’t always work out in your favour. This is why understanding the risk and mitigating the risk beforehand will help you to manage the risk as best as possible.
Making an informed decision is often the best thing you can do in any situation. Seeing the whole situation as it is on paper may help you to see it and weigh out the odds more clearly. Having a plan and dealing with things as a system will help you to make the best decision possible.
People who avoid risk altogether usually don’t see many rewards or gains from their lives. Risk is necessary and an important factor in your life. Learn to make the best decisions possible by following the steps provided.
Chris M Wilson
Entrepreneur & Purpose Coach
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