#189: What About The Upside?
It is time to unlearn the way we define and manage risks. It pays off to increase our exposure to both negative and positive events.
I have been a risk manager most of my professional life, which has taught me to see, feel and sense risks in all areas of life.
We worry about probability and impact, spend time and effort on predictions. Mostly, we focus on downside risks. What could possibly go wrong? Then we try to protect ourselves and our assets from the negative consequences of such events. The premium we pay shouldn’t possibly exceed the amount of the potential loss. Obviously.
What is less obvious is how we benefit from a potential exposure. Interestingly, such upside can be the result of a negative or a positive event.
Imagine the scenario of you walking on a sidewalk and a brick falling on your head. That would be quite unfortunate in more than just one way. You could suffer a scull fracture, end up in hospital, undergo emergency surgery and spend a few nights on the ICU. And ultimatiely, that would be where you met the love of your life.
On the other hand, the scenario of you catching a bouquet of flowers while walking on the sidewalk is equally possible. Now imagine further that this was the bouquet tossed by a bride celebrating her wedding on the rooftop terrace of the building you were just walking past. The bride would have passed along her good fortune to you, which dramatically and unexpectedly changed the course of your life as you were about to run into a the love of your life with those beautiful flowers in your hands.
Those might not be the best two examples to illustrate my point. However, we should ask the question if there was a way to prepare ourselves for that brick and bouquet of flowers moment?
I can only speak for myself, but I am definitely seeing something I hadn’t seen in more than 20 years of professionally managing (financial) risks.
I am finally seeing lots of upside.
All it takes is the right mindset and quite a bit of preparation.