Calculated Risk

Positioning ourselves to have the most upside when we make decisions is a strategy we should deploy into our lives. Decisions that present an opportunity for upside are not typically decisions coming without risk. With these types of decisions, the amount of risk can be compared to the relative amount of potential upside. When there is more perceived risk than upside we can call those decisions to be “asymmetric downside.” When there is more upside, or reward, than the potential risk, these are “asymmetric upside” opportunities. By finding the opportunities that present the most asymmetric upside we can accept the risk and push for the success.

Our chosen opportunities having asymmetric upside provide us with the best opportunity for minimizing the true downside to our choices. By increasing the frequency we make decisions based on asymmetric upside, the more calculated we can be with the risk we incur in our own lives. One of the simplest opportunities that is an example of asymmetric upside is going on a first date. The risk is you do not enjoy the date or do something embarrassing. The upside finds you in a new relationship, with someone you connect with, that could lead all the way to marriage. This choice is slight embarrassment (risk) versus finding your potential soulmate (upside). Another example is the decision to produce content via different forms of media. The risk is people do not like it and it does not provide anything for your life. The upside gives you a platform, a new potential revenue stream, a following of people who look to you for advice, new connections, and the ability to work for yourself. This choice is negative feedback (risk) versus potential infinite opportunity (upside). Thinking of decisions in this way helps provide perspective on what choices should actually be made.

Choices need to be made in order to grow and reach new areas of opportunity. Without choices, we are stuck in the same place as we already are. With each choice, there is risk that must be navigated. By properly assessing how far the downside (risk) could take us, we are better able to decide if the potential upside is worth it. If the risk is outweighed by the potential gain, we can hold solace in our ability to make the decision. Through proper risk calculation, decisions for our upside can be made. Without risk, there is no growth. With too much risk the upside can be imaginary. Find the decisions where the risk is outweighed by the upside and live in that world. Calculate the asymmetric upside and then make the choice.