Too Practical: The pros and cons of risk aversion

My sister once told me I was too practical.

In the middle of a fight she looked at me and told me that my problem was that I am too practical. It was the first time that I had ever been told that my practicality was a negative personality trait. I’ve always been referred to as “responsible” and “practical” in such positive terms that I was taken aback by this new interpretation. Once I entered the world of business ownership, however, I did start to see another side to the practicality coin: Risk Aversion.

Investments are about Risk Management.

Investments in money and in life are all about risk management. Small and steady contributions will yield a small but steady return. If you bet small, you are less likely to lose much, but you are also unlikely to win big. I lose the term “investment” loosely to cover a variety of choices you might make to change your life. This could mean moving to a new city for better work opportunities, going back to school to study something you always dreamed of, putting in an offer on your dream home etc. A risk-taker may feel comfortable making these decisions without giving any of the potential outcomes much thought. While this could mean getting that dream job or house, it could also mean being stuck in an unfamiliar place with no money and no or support. A risk averse person, however, may spend so much time worrying about the potential negative outcomes to try something new at all. While this means they will not end up in an unfamiliar, uncomfortable situation, it also means staying in the same bad spots and missing out on positive changes as well.

Risk Aversion gets a bad rap.

While it is true that “you miss 100% of the shots you don’t take”, it’s also important to remember that gambling is an addiction that cause many people to lose everything they have, and more. It’s easy to praise the risk taker for their innovation and bravery, but it’s harder to praise the risk-averse for their caution and stability. For example, when was the last time you thanked the accountant at your company for turning down a new ping-pong table in the break room because it wasn’t in the company’s budget? It’s far too easy to look down on the “boring”, “practical”, “stick-in-the-mud”, who refuses to try anything new. But, we often overlook the value they do provide. The risk averse are the ones who take the time to fully flesh-out new ideas. They are the ones who create detailed plans when new ideas are announced, and backup plans in case those new ideas fall through. They are the ones who keep things running smoothly day-to-day, and look to the future for long term success, instead of just short term gains. They make take a while to get around to a new idea, but they are the ones who can turn those new ideas into a viable reality. Shouldn’t that get a little more credit?

Is it better to be risk averse, or risk positive?

Both risk taking and risk aversion have their place. Like everything else in life, you must find a balance of both traits to live the best life you can. Some people love the thrill of taking a chance, and we need those people to make create, discover, invent, and entertain. Other people like to weigh all options before they make a decision, and we need those people to plan, delegate, manage, and solve. One trait is not better or more important than the other, as long as neither is taken to extremes of carelessness or neuroticism.

So what am I learning?

I pride myself on my ability to have a plan and backup plan in all circumstances, but I hate that my anxiety often makes me feel ill. I love the stability my risk-aversion offers, but worry that it takes me complacent. I praise my steadiness and thoughtfulness when it comes to work, but also realize my fear of taking risks means missing out on opportunities to grow. In a way, my sister was right that my practical nature does hinder me in some ways, but it also serves as a source of steady strength. Since I now notice my fearful tendencies, I am doing what I can to take small, measured risks in places I was too afraid to before. I’m learning to turn some of my concerns on their head, and ask “but what if I did?” Learning to take the careful and planning nature I already possess, and apply it to calculated, decisive action is still scary. However, the fear I feel about trying something new and asking for more allows me to feel a level of growth and pride I would have otherwise missed. Risk aversion doesn’t have to be a roadblock. It can be a slower, but steady path to success if you let it be.

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