During the 1994 Los Angeles earthquake, my house convulsed in the dark. I leaped from my bed to the hall doorway moments before a bookcase fell across the spot where I had been sleeping. Was my action a gamble or a calculated risk? Was I lucky? When we buy stock, change jobs, buy more computer technology, get married or buy a lottery ticket are we gambling or taking a calculated risk? What’s luck got to do with it?
In these turn of the century years, chaos and change bring disruption and opportunity to almost every area of our lives. Job security, gender roles and viable opportunities are in continual change. To keep our balance, survive and thrive we need to be clear and focused in our actions. Every choice we make, including the choice to do nothing, involves some kind of risk. A gamble has a high probability of loss. A calculated risk has a much higher probability of a positive outcome. Knowing the difference is essential to our success.
To make successful decisions and take positive action we must be in the realistic present. Emotional decision making can be lethal when governed by unexamined personal weaknesses and wounds from childhood. Finding and resolving old patterns of emotional highs and lows increases our ability to make a calculated risk. Even if old patterns are not resolved, acknowledging them and setting them aside during decision making can create better chances for being a winner.
Here is a comparison check list of traits and tendencies for gamblers and calculated risk takers.
Looks for excitement and danger.
Jumps in with the crowd momentum, not wanting to be left out or left behind.
Blames others or luck for bad outcome.
Lingers over losing choices and wins not taken.
Is influenced by unacknowledged fantasies of what is possible.
Will risk more than can afford to lose.
Acts on impulsive decisions.
Is unaware of unconscious motivations.
Acts out of sense of superiority or magical thinking.
Gets high and feels powerful on a win. Gets low and feels worthless and small on a loss.
Lacks discipline and invests on wishful fantasy rather than recognizes reality.
Hides losses and is secretive about taking chances.
Procrastinates (building up excitement levels).
Follows a favorite method no longer useful or relevant.
When losing will take increasingly bigger risks to catch up.
Looks for the one big win that will result in bliss.
Calculated Risk Taker
Contains and manages emotions.
Is aware of irrational factors swaying a crowd.
Takes responsibility for results.
Does not waste time with what might have been.
Acknowledges personal fantasies and resolves them or disregards them.
Risks a tiny fraction of equity on any individual choice (equity meaning time, money, relationship, self esteem, skill etc.).
Concentrates on a realistic long-term strategy.
Knows personal abilities and limitations.
Is hardworking and open to new ideas.
Stays emotionally even during wins and losses.
Easily resists risks that do not fit within defined risk limitations.
Is open about risk taking.
Proceeds in a serious intellectual manner.
Stays alert to present trends.
Follows predetermined guidelines of safety.
Analyzes situation, observes own reactions and makes realistic plans.
Being human, we will identify with some qualities on both lists. We will also lack some qualities on both lists. Our responses give us an indication of where we can congratulate ourselves and where we can apply effort.
Calculated risk takers use as much energy analyzing themselves as analyzing opportunity. In this way the realist is able to appraise the specifics of possible choices rather than be carried away by glamorous promises, inflated feelings, the desire to win a competition or seek revenge.
Actions taken on decisions made in the moment, like my leaping out of bed during the shake, may seem to be thoughtless impulsive acts. But what an action looks like is not a measure of its risk factor.
Two people spend $1000 on the same stock. One buys because it’s a hot tip that will be exciting to watch go up. The other buys because he’s a trend watcher and is placing a planned percentage of his equity in what looks like an uptrend breakaway.
The first bought based on his emotions and will sell based on his emotions.The second had a purchase plan and knows in advance at what point he will sell. The initial purchasing action of both looks the same. Their background decision making is very different and will determine who is the lucky one.
To be a reasonable risk taker we must address each tendency within us that propels us to gamble. Once we can create and follow our own reasonable guidelines we can take calculated risks. Then, like me under the doorjamb during the earthquake, we position ourselves for the best outcome possible and help make our own good luck.