14 Tips for Smart Risk-Taking

The approach you take while taking risks in any aspect of your life greatly influences your ability to reach your goals. Taking risks means stepping out of your comfort zone to seize new opportunities and achieve greater rewards.

This often requires overcoming personal emotions and investing time, effort, and sometimes money to improve your life. Risk-taking doesn’t mean being reckless; it means making calculated decisions.

In this article, you'll discover the differences between positive and negative risks, understand the benefits of taking risks, identify obstacles that usually hold us back and—above all—get tips on taking calculated risks and gaining from them.

Why Do People Take Risks?

We take risks when we face a situation that requires a decision, yet its outcome is uncertain. Before deciding on what we think is the best course of action, we usually consider all of the available options and compare the benefits and drawbacks of each. Some people play it safe, making low-risk decisions with limited consequences in case of error, while others intentionally opt for riskier decisions to reap their potential benefits.

The above applies to positive risk-taking. However, sometimes people take negative risks because they haven’t thought things through and act recklessly or because they make decisions while still knowing the potential for significant negative outcomes.

Comparing Positive and Negative Risks in Goal Setting

Your goals should involve some risk to move you from your current state to a better one. However, there’s a difference between calculated risks and reckless risks when it comes to setting your goals.

What Is a Positive Risk?

A positive risk is one you take after gathering all the information and dedicating enough time to consider the potential outcomes. A positive or calculated risk involves weighing all potential outcomes and planning for possible issues, including the worst-case ones.

Positive risk-taking, or opportunity risk, can lead to significant personal or business growth. Achieving high-risk goals is never easy, but the potential rewards can be substantial. These risks push you out of your comfort zone and require effort, but they are necessary for achieving big dreams.

Examples of positive risks include

• Investing in modern technology that could boost your business’s efficiency and profitability.
• Taking a new job that offers better prospects for your future, even if it pays less initially.
• Adjusting your product’s design to use more sustainable materials in hopes of attracting a broader customer base.
• Finding and working with a mentor to advance your career.

What Is a Negative Risk?

Negative risks are those in which decisions are made without considering the possible bad consequences. You might be excited about the potential positive outcomes of a new idea but fail to consider the possible losses if things don’t go as planned.

In other words, you think about the potential consequences but don’t prepare solutions for the worst-case scenarios. When you take on negative risks, you don't have a safety net and are ill-prepared to deal with any unfavourable outcomes.

This type of risk can lead to financial losses, wasted time, damaged reputations (both personal and professional), compromised happiness, or the loss of previous progress.

The Benefits of Taking Positive Risks

It usually takes some risk to get the life we want. Success and lasting happiness don’t happen by chance; we sometimes need to embrace change and welcome new ideas to live a happy life.

Successful entrepreneurs, for example, take positive risks and make calculated decisions to turn their creative ideas into profitable ventures. Starting a new business is a risk, but if it succeeds, you and your family can become financially independent and go from being employed full-time to being self-employed.

Keep these five benefits of positive risk-taking in mind:

1. Personal and Professional Development

Pursuing further education or earning a degree in a specific field requires time, money, and effort, but it drives personal and professional growth. This is a risk worth taking- in terms of time, effort and money. 

Trying new things can open up more opportunities, introducing you to more potential. This makes you eligible for new roles, leadership positions, starting your own business or simply feeling satisfied by honing a skill.

2. Boosting Self-Confidence

Overcoming fear or self-doubt significantly boosts your self-confidence. This boost is especially evident when you succeed, but it also comes from embracing new opportunities, accepting change, stepping out of your comfort zone, and opening yourself to new horizons.

Self-confidence can become an essential quality through measured risk-taking. Often, risk-takers find more meaning in life because it helps them discover what kind of life they want and the steps needed to achieve it.

3. Reinforcing Leadership Skills

Taking risks fosters personal development, which naturally leads to improved leadership skills. Increasing your self-confidence helps you lead others and assist them in their personal development.

During this process, you develop personal traits that make you a better leader, such as empathy, creativity, decisiveness, and a sense of responsibility. For instance, experiencing failure helps you understand what others feel when asked to take on new roles or lead projects. As a risk-taker, you can use past experiences to help others overcome their aversion to risk, learn precise planning, and distinguish between bad ideas and those worth pursuing.

4. Creating More Opportunities

Positive risks, also known as opportunity risks, open new doors to success, whether in your career or personal life. Investing your money wisely can increase your net worth, providing financial stability and new opportunities. Overcoming fears and applying innovative ideas to a new business can make you a leader in your field. Employers are more likely to hire and promote risk-takers because, even if they fail, their willingness to take risks is valuable.

5. Sharpening and Developing Skills

Stepping out of your comfort zone as a risk-taker helps you acquire and refine new skills. This holds true for your relationships, creative skills, academic success, profession, physical health, etc. Successful people see opportunities for positive outcomes through risk-taking as a way to overcome obstacles.

Obstacles to Taking Risks

Most people prefer to play it safe and avoid taking risks altogether, despite the benefits it can bring. A major USA insurance company study found that the average comfort level associated with financial risk-taking is 4.9 out of 10, with 1 indicating being extremely cautious and 10 indicating being highly risk-tolerant.

The study also revealed that 65% of Americans prefer the stability of staying in one job over chasing new opportunities, and 76% would rather live their entire lives in one place, even if moving offered new professional opportunities and other positive outcomes.

Additionally, 72% of people focus on personal interests that involve no risk, while 66% avoid social risks like making new friends or building new relationships. The fear of failure is a major reason we avoid risk, but there are other barriers as well, such as:

1. Fear

Fear can take many different shapes. You might avoid risks out of fear of failing, humiliation, criticism, or rejection. Some people's fear of success even keeps them from moving forward because they can't stand the changes and fresh viewpoints that come with it. Fear can be so overwhelming that it blinds us to positive outcomes and justifies our reluctance to accept them by concentrating only on the bad things that might happen. You can be reluctant to take chances for fear of upsetting, offending, or frustrating someone. When we give in to these fears, we allow others to control our decisions and how our lives unfold.

2. Chasing Perfection

Chasing perfection is an irrational habit that makes us think we need to do something perfectly or that it’s not worth doing at all. This mindset wears you out. It can prevent us from taking any chances because we are afraid of failing, and it can get us tangled in the details to the point that we are unable to complete a task, reach a goal, or take the required chances to improve our lives.

3. Procrastination

Taking positive risks is often hampered by postponing or refusing to take advantage of possibilities. Procrastination keeps us uncertain, convincing ourselves that we’ll start our project when the market is better, when we learn a new skill, or when we have more time.

The truth is, right now is the best moment to take on a goal that can improve your life. As long as you have the resources and capabilities, taking the risk is better than remaining inactive.

4. Overthinking

Overthinking is characterised by getting mired in the details rather than the big picture. You allow tiring thoughts to prevent you from taking major steps when your mind is dominated by fears or by one single idea. Overthinking hinders you from making important decisions and robs you of the joy of living in the moment and achieving success.

Another sign of overthinking is viewing an experience from the perspective of risk rather than potential benefits and constantly worrying about things going wrong while ignoring possible rewards.

Imagining the worst-case scenarios without planning how to handle them, endless doubt without making a decision, and judging future opportunities based on past mistakes and experiences are all signs of overthinking.

5. Denial

Often, you need to take a certain level of risk to solve a problem. However, denying the existence of the problem limits your ability to make progress towards success, happiness, or satisfaction.

Denial is a defence mechanism—a psychological trick we use to cope with threatening situations—that provides temporary peace of mind by giving us a false sense of security as the problem remains unsolved. Refusing to discuss the issue, justifying one's actions, and placing the blame for the issue on other people or outside circumstances are examples of denial.

To overcome an obstacle and achieve greater success, you must have the courage to admit the problem and accept responsibility for finding a solution. In this case, the biggest risk is not taking action at all, even though some dangers may be involved.

6. Excessive Caution

People who take risks understand the importance of making uncomfortable decisions that can lead to better outcomes. However, being overly cautious can lead us to minimise or avoid risks altogether. Even in difficult circumstances, most people would want things to remain the same, according to mental health specialists.

We often lean towards what’s familiar and feel more comfortable with it than the unknown. Familiar situations offer security because we’re used to them, but this is a false sense of security. Sometimes, making a change is better than staying put. Taking risks improves your daily life and helps you build a future full of relationships, financial wealth, professional success, and increased happiness.

14 Tips for Smart Risk-Taking

The more you understand how to take calculated risks, the better you will differentiate between unsound and worthwhile ventures. Expert risk-takers know there’s a process for taking smart risks that increases the chances of success and reduces the likelihood of failure. Here are fourteen tips for smart risk-taking:

1. Clearly Define What You Want to Achieve

Setting an ultimate goal or objective is the first and most important stage in taking risks. Think about this from a wide perspective in terms of the kind of life you wish to lead and the precise outcomes you hope to achieve through choosing a course of action or resolving a particular issue.

Identify your guiding principles and ensure the intended result is consistent with them. This will give you the confidence and bravery to take the chance and keep you on the success path.

2. Come Up with New Solutions

The next step is to brainstorm all possible solutions to your problem. When contemplating a risk in your career, team, family, or any other setting, consult with everyone who could be influenced by your choice.

Group brainstorming is quite beneficial since it enables you to generate and assess fresh concepts from many angles. For an effective brainstorming session, avoid judging any idea at this stage. An idea that initially seems risky or unconventional might turn out to be the best solution.

3. Assess the Risk

Once you’ve come up with as many ideas as possible, assess them based on the criteria you’ve previously set. This includes how well these solutions align with your values and goals. This is the best time to assess your ideas by taking into account every situation, even the worst-case scenarios.

The goal is to narrow down your list of potential solutions to up to three or five that could lead to the best outcomes. Categorise your ideas based on potential risks—high-risk, low-risk, high-reward, and low-reward. Think about long-term versus short-term rewards as well.

4. Take Lessons from Past Experiences

Experience makes us wiser, so think about the lessons you’ve learned from your past experiences. This includes experiences that may not be directly related to the current problem and those involving uncertainty or risky decisions. Ask yourself if you’ve faced a similar situation before, how you handled it, what mistakes you made, and what you learned that can help you avoid repeating the same mistakes.

Learning from others’ experiences is also wise. Explore the available resources, such as the internet, coworkers, mentors, and other helpful people. Learning how others dealt with similar situations can significantly reduce the likelihood of negative outcomes, help overcome uncertainty, and help achieve success.

5. Determine If the Situation Is Worth the Risk

Having assessed all your ideas and considered the potential outcomes, you now have the information to decide whether the situation is worth the risk. Instead of concentrating on the feelings sparked by the situation—such as fear, perfectionism, procrastination, overthinking, denial, and a false sense of security—focus on the truth. Think about the positive aspects of the change and ensure you have a practical plan for handling worst-case scenarios or situations where things don't go according to plan.

6. Devise a Practical Plan

Create a plan that helps you transition from your current situation to your desired one. Write down your plan in detail to make it easier to implement step by step. Consider the resources, information, and people who can help you take action, and use these resources to minimise the risk of failure. Next, describe what you would do in case things didn't work out as you had planned.

7. Evaluate the Outcome

After implementing your plan, it's important to evaluate the outcome. This will help you achieve greater success in the future when you take more risks. Whether your plan worked as intended or seemed to fail, you will learn a lot by carefully analysing the outcome. Failure is a fundamental component of success; you learn how to succeed through your failures. Ask yourself these questions:

• What did I learn from this process?
• What would I do differently next time?
• What went well, and what obstacles did I encounter?
• How did I overcome these obstacles?
• Did I receive the necessary support to succeed?

Now that you understand the process of smart risk-taking, you can start enhancing your skills to take successful risks. Apply these tips daily so you can easily follow the necessary steps to take risks that lead to desirable outcomes.

8. Expand Your Horizons

Start by thinking about the chances you might have if you take risks to make things better for yourself. Instead of focusing on potential risks, focus on the positive outcomes if everything goes well. Be prepared to seize greater opportunities, step out of your comfort zone, think big, and believe that you deserve success. You can think of and implement new ideas with the right information, support, and understanding of calculated risk-taking.

9. Embrace Change

Humans are typically uncomfortable with change; being creatures of habit, we frequently choose safety over creativity or stepping into the unknown. However, we naturally can change and evolve. When we resist this, we feel discouraged and dissatisfied over time and may blame others for our current situation.

This mindset is greatly flawed, but we can all decide how our lives will turn out. Taking calculated risks is one way to help you reach your goals. It's also helpful to keep in mind that most changes are temporary. If you're not satisfied with your change, do what you need to do to change it again. The more you accept change, the more capable you will feel of achieving the life you desire.

10. Seek Help from Others

Ask for help when you face a situation that requires risk and support from others, whether it’s your team or those close to you in your personal or professional life. You don't have to handle things on your own. You will feel more at ease knowing that the people you trust understand what you are going through, your goals, and what you need to succeed.

11. Practice Mindfulness Meditation

Mindfulness meditation helps you assess situations wisely without overreacting or getting confused. Make peace of mind your primary goal and organise your entire life to achieve it. Practice mindfulness meditation to clearly understand your emotions and spontaneous reactions.

Identifying your true emotions is crucial to achieving your life goals and making decisions that lead to personal and professional success. You can practice this kind of mental activity very effectively by practicing meditation and solitude; therefore, plan some time each day to reflect in silence and spend time by yourself.

Every day, set aside a few minutes for solitude and quiet when you're anxious or trying to make a decision. Then, learn how to take action based on the insights you gain during meditation, as this will refine your skills for taking smart risks.

12. Take Short Breaks

Temporarily shift your focus from the problem until you feel mentally clear. When your mind is crowded with ideas and you feel stuck, you can also postpone the decision to clear your head and get fresh inspiration from within. These breaks help you gain perspective, which enhances your ability to take smart risks, leading to greater success.

13. Practice Risk-Taking

Taking calculated risks requires a lot of practice, so start gradually until you become accustomed to this process and overcome the fear you might feel when making decisions involving some degree of risk.

Start with small risks that have minimal negative consequences. For instance, if you want to start your own business, begin as a side project instead of quitting your job entirely to pursue your dream. Then, practice mental visualisation and imagine what you want to achieve. Imagine yourself living in the desired situation and enjoying the desired results. Visualising the desired outcomes will help you program your subconscious mind to work towards effective solutions.

14. Grow out of Your Fear and Negative Mindset

The most effective solution for fear and a negative mindset is a positive mindset and optimism. Practice positive affirmations every morning, as they help you keep your thoughts, emotions, and behaviours filled with optimism throughout the day.

An optimistic mindset boosts self-esteem and draws attention to greater opportunities. Make it a daily routine to feed your mind with positive concepts, phrases, music, books, podcasts, and visual aids.

In Conclusion

These tips will help you develop the mindset and self-confidence needed to take smart risks and embrace positive change. Remember that you learn how to take calculated risks by applying these smart tips and then analysing the results.

When you clearly identify the risk involved in a situation, you will be ready to plan and take the necessary actions to increase the chances of success and reduce the likelihood of failure.

You will fulfil your dreams if you can take calculated risks with confidence and in a way that increases your chances of success.  This is the key to living a successful life.