What keeps most people from taking risks? Fear! The fear of losing money: “What if I lose all my bets?” The fear of losing prestige: “What will people think of me if I fail?” The fear of losing self-esteem: “If I fail, I won’t be able to look myself in the mirror.”
Balancing your fear of loss with your search for security is like walking a tightrope, especially during difficult economic downturns like we’re in these days. In Taking Risks, psychiatrist David Viscott offers a five-step plan to help you decide whether taking that walk is worth the risk.
• Evaluation: Ask yourself several questions to help get a fix on why you should or shouldn’t take a chance. “What do I want to accomplish? Why is this risk necessary to attain my goal? What are the consequences if I fail? Is the possible loss greater than the potential gain?”
Suppose you’re playing in a hold’em cash game on short money. On the turn you hold a four-flush, someone raises, and a player behind you is already loading his chips to either call or raise. Your goal is to win the pot, but you must risk getting trapped in the middle of two aggressive players, not making your draw, and losing all your bets. How much money do you stand to gain if you win? If you lose, will it break you?
• Preparation: Ask yourself, “What do I need to know before I take this risk? Which of my current activities do I need to set aside so that I’ll have enough time and energy to take this risk? What are my fears about taking this chance—and am I willing to act in spite of them?”
• Committing: Viscott suggests that if you can’t accept losing the risk, you don’t really understand it yet. To gain a deeper insight into the consequences of taking the chance, ask, “Have I prepared enough? Is it too late to turn back? Will taking this risk ever become easier than right now?”
• Point of No Return: Viscott compares this stage to driving behind a slow cement truck on a congested, two-lane highway. A chance to pass the truck finally arises, but halfway through passing, you see an oncoming car barreling down on you. It’s too late to turn back, so you step on the gas and complete the maneuver, narrowly avoiding a collision.
If you call your opponent’s raise on the turn, will you be at the point of no return in the hand? Knowing that you may draw a blank on the river, is the pot laying you enough odds to continue with the risk?
• Accept Consequences. In contrast to a poker player whose risk is over when he completes the hand, people in business are sometimes unsure of whether their investment risks are done with, and what their next logical step should be. Viscott suggests asking yourself: “If the results of this risk are negative, what have I learned to help me next time? Am I ready to take on the challenge of the new risks I need to take?”
For gamblers, these questions are important in conducting post-mortems on bets won or lost. If you decide you’ve been playing badly, are you ready to take on another session? Or do you need to take a break to recoup your confidence?
Using Viscott’s five-point plan for taking risks can lead you to the success you want and deserve, whether in business or in gambling. “It’s always a risk to change anything about your life,” he says, “but you can take the fear out of the unknown by taking risks intelligently.”
When you do, you’ll have The Gambler’s Edge.