So I’m leaving Ireland on Friday, starting out on my round-the-world trip without flying. I’ll be traveling through many countries where I won’t know a soul, a few Middle Eastern countries that talking heads claim to be highly dangerous, I have no idea how I’ll cross the two biggest oceans in the world, and I’ll likely be away from home for three years or more.
Oh, and I only have about €3500 in the bank, and have yet to figure out how to generate enough income to cover my on-going expenses.
So you might say I’m taking a bit of a risk here.
“You can’t get what you want in life without taking risks”
One of the best videos I’ve come across online recently is the following from Tynan, where he talks all about risk. I encourage you to watch the whole thing (40 minutes), as there’s a lot of great stuff in there that I don’t mention below.
For me, the key takeaway from all that is the use of payoff and probability to assess a risk. As Tynan says, “you don’t use your gut, you don’t use fear, and you don’t use what other people think.” All you need to consider is payoff and probability.
To determine the payoff of taking a risk, you ask yourself four questions:
- What is the worst possible likely outcome?
- What is the best possible likely outcome?
- Is it likely that I’ll regret this, if I do it and it turns out poorly?
- Is it likely that I’ll regret not doing this, if I pass it up?
Probability is more difficult to determine, especially in real life situations that don’t have strict rules and predictable outcomes. However, you can usually do some research and make an educated guess at the probability of a risk turning out well.
Let’s use my round-the-world trip as an example. First I need to determine the payoff, so I ask myself those four questions:
1) What is the worst possible likely outcome?
The key word here is likely. While it’s possible that I could get kidnapped, tortured and beheaded in the Middle East, I don’t think that’s very likely, especially if statistics like this are to be believed, and if I do my best to heed the warnings and avoid troubled areas. A more likely worst possible outcome is that I run very low on cash before the end of the year and have to pick up some grunt work on the far side of Europe to get back on my feet.
(If you’re interested in further viewing related to this, I highly recommend you check out this quick speech by Josh Fraser, in which he so brilliantly highlights the disparity between things that scare us and things are actually dangerous.)
2) What is the best possible likely outcome?
The adventure of a lifetime, many new friends, rich and unforgettable experiences, many lessons learned, lots of great stories to tell, unprecedented levels of self-confidence and personal empowerment, inspiring others to live their dreams, etc.
3) Is it likely that I’ll regret this, if I do it and it turns out poorly?
I very much doubt it. Even if that likely worst case scenario were to occur, methinks the experience would be something akin to what Mark Webster went through when he ran out of money on his travels and ended up driving tractors in Australia for a few weeks. Not much fun, but not the end of the world either.
4) Is it likely that I’ll regret not doing this, if I pass it up?
Absolutely. If I were to suddenly pull the plug on this trip for no good reason, I don’t think I’d like myself very much. I’d forever wonder where the trip would have led me, and about the type of person I would have become along the way.
So after asking those four questions, it’s pretty obvious that the positive potential payoff far outweighs the negative for me.
But what about probability? What if there was a 99% chance of that worst possible outcome actually happening? Would I still take the risk?
No, that would be pretty stupid.
But I’d estimate that the probability of me running out of money — of me not being able to earn enough as I travel to cover my expenses — to be more in the region of 10-20%. As a freelance web designer, I should be able to hustle and pick up gigs via Elance and oDesk. Even if those gigs pay far below my usual hourly rate, thirty hours of hard graft per week should be enough to keep me afloat, especially when I’m living and traveling in cheaper countries.
So, having considered the payoff and the probability, it’s pretty much a no-brainer for me to go ahead and take this risk. In fact, I’d be stupid not to.
Have you assessed your risk?
You know that big crazy adventure you have in the back of your mind? Run it through the payoff and probability process above and see what you get.
You may well find that it wouldn’t be a smart risk to take, and that’s perfectly fine. At that stage you might realize that you’re better off forgetting all about it and investing your time and energy elsewhere. But having identified that worst possible likely outcome and the probability of it occurring, another option is to get busy changing the odds.
Ask yourself what you can do to increase the chances of a positive outcome. Maybe you could save up a bit more money before taking the leap, or perhaps you need to acquire more skills in a specific area.
I believe a big reason not many of us define our fears is because they let us off the hook. Mostly, those abstract monsters are only scary because we don’t take the time to examine them. It’s so easy to let them lurk in the shadows and not shine a light in the corner to see what they’re really made of, to see that they’re not so scary at all. Many of us like that uncertainty. It’s a good excuse. We say something’s too risky, but usually because we haven’t sat down to weigh the pros and cons. Or else we’re just not willing to work hard and put ourselves in a better position to succeed.
Tell me: What’s stopping you from taking that risk?