How does risk make you feel? Do you try to avoid risk if at all possible?
Most people will advise you that unnecessary risks are a bad idea and they should be avoided. It seems like sensible advice. But on the other hand, the most successful people in the world didn't get where they are by playing it safe. Does it seem to you that some people can just take any old risk and it always pays off? Or do you think it's just less of a risk for them? They have more money so they can afford to lose a bit if a risk does n't pay off after all. But did they all start out with enough money to reduce the magnitude of these risks?
Maybe it's down to their experience. It's not a risk for them because they know what they're doing by now.
When was the last time one of your parents said something like "take lots of risks today"? I'd bet they never have. I'd bet the only advice they've ever given you on the subject of risk is something like "be careful, don't do anything I wouldn't do". I bet you've given the same advice to others.
And it's great advice for most people. But then most people aren't interested in becoming a huge success. Most people aren't even interested in bettering their lives at all. Most people are content to just trundle along in their lives, leading nowhere.
If you're content to be most people, then stick with that advice. Because unless you are 100% determined to take positive action, what I'm about to say will be very dangerous to you. They say a little bit of knowledge is dangerous, and in this case they're dead right. Please stop reading now, otherwise you'll only have yourself to blame.
How many people have ever advised you to learn to manage risk instead of avoiding it? I'm assuming not many, if any. It's just not the kind of thing you hear very often, and yet it's something that you've been doing all of you life in areas that you no longer consider to be a risk.
Take crossing the road. That is a risk. People die every day just because they were crossing the road. And yet nobody ever taught you to not cross the road. On the contrary, you were taught the green cross code (or similar road safety program in your area). You were taught to look both ways, to only cross in a safe place, not between parked cars, and to stop, look, listen and THINK. You were taught to manage the risk of crossing the road rather than avoiding the risk.
On a similar note, driving is an obvious risk that is managed reasonably effectively (in some countries at least). Nobody ever says "don't drive it's too dangerous", yet it is very dangerous. If you don't believe me, just try driving in a country where a driving licence isn't a legal requirement yet.
In order to manage the risk of driving, you take driving lessons, take your test, and after you've passed your test, you continue to learn and improve don't you. I said, don't you? :-) Unless you drive a BMW or Mercedes, of course, when it's perfectly acceptable to drive like you never passed your test. :-)
Flying is the same. Except I doubt that you'd get into an aeroplane if the pilot flew like you drive. :-)
It's the same with business risks, and other risks in life. Some risks aren't worth taking and are best avoided, but other risks are acceptable if you can manage the risk effectively.
This is a key principle in the Rich Dad Poor Dad* philosophy. So many people mistakenly belive that rich people just take more risks. So, they think that if they take more risks, they will become richer too. And in some cases people have been rich because a risk they they took (not managed) just happened to pay off. But in general, the long term rich people don't just take more risks, they learn to manage them. And the Rich Dad Poor Dad* series emphasise this constantly.
For example, buying a house as an investment is a risk. Most people hear that it's a good way of getting rich, so they take the risk. However they don't learn to do it the way the rich do it. They don't manage the risk, so if it doesn't pay off and it fails, it completely destroys them. I've seen several "property investors" on TV recently who have lost hundreds of thousands, sometimes millions, in the credit crunch because they took all the risks and didn't learn to manage those risks. Most of them kept saying "this is just a glitch, as soon as the economy turns around I'll be back on my feet and making millions again". Unfortunately, they haven't even learned from their experience and they think they've just been unlucky. The truth is that real property investors make money in up markets and down markets because they manage the risk.
When you are taking a risk, you should be conscious of the risk you are taking. You should be completely aware of what the risk is, what the possibilities are and then you should be able to define how you are managing that risk. I urge you to become more aware of how you are managing your risks, if at all, and learn to manage them effectively.
