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Do You Overestimate Risk And Underestimate Yourself?

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Why is it that we so often know what we should do but just don’t do it?

Give critical feedback?  Ask for what you really want? Introduce yourself to a decision maker? Ask for a promotion? Stand up to your boss? Make a change to your work?  Forge a new path entirely?

You could argue there’s a lot of different reasons. Laziness. Procrastination. Pride. But the truth underneath them all is one simple reason. We’re afraid it's not worth the risk. We human beings are endowed with a range of cognitive biases that drive us to avoid taking actions – even the ones that would make our lives better – for fear of the risk of the pain and discomfort we might feel if things don’t go well. In fact, advances in brain imaging technology have found that we are hardwired to steer away from situations where we face the possibility of losing something we value (pride, money, sense of security, reputation).

The only way to overcome our bias against risk is to build self-awareness of how it’s impeding how accurately we judge it. Below are the four core ways we tend to misjudge risk, and why the odd of your risks paying off are actually better than you think.

  1. We Overestimate The Size Of Risk

Often the risk of something not working out is not nearly as high as we think, and the odds of it working out well are often far better.  As Nobel Laureate and noted psychologist Daniel Kahneman found through years of research (which he details in Thinking,  Fast and Slow), when we're assessing risk, potential losses loom larger than potential gains. That is, we tend focus more on what might go wrong – what we might lose– than what might go right. What we focus on magnifies in our imagination, and it causes us to misjudge (and over-estimate) the likelihood of risks.

  1. We Catastrophize The Consequences Of Risk

As I share in the video below, when I was launching my first book Find Your Courage, I would wake up with nightmares of being on the front page of the New York Times with the caption “World’s Worst Author.” While it’s easy to laugh at the ridiculousness of this (particularly now that its printed in 6 languages), it reflects just how much our fear of failure and ridicule can spawn melodramatic catastrophic outcomes should our efforts fall short. It’s what I referred to in that very book as ‘catastrophizing.’ When it comes to conjuring up worst case scenarios and stirring up anxiety, fear can be a potent elixir.

  1. We Underestimate Our Ability To Handle Risk

Hand in hand with the above, most of us underestimate our abilities. If you’re a woman, then even more so! Too often we let our misgivings get the better of us. The result is that we often avoid taking on new challenges or proactively pursuing new opportunities because we don’t trust sufficiently in our ability to rise to the challenges they involve. The truth is, you are capable of more than you think you are (and if you’re a woman, double that!), which includes your ability to manage risk and to intervene in the event that plans start derailing.

  1. We Downplay The Cost of Inaction

It’s not so bad” “Hopefully things will just work themselves out” Better the devil you know than the devil you don’t.” How often have you heard people justify their inaction with comments like those above? Deluding ourselves that things will just ‘get better’ on their own is a common phenomena. So too is failing to be brutally honest with ourselves about the cost (as measured by our emotional well being , physical health, financial, mental anxiety) of sticking to the path of doing nothing. Let’s face it, when it comes to self-delusion, many people are masters of it!

Among our cognitive biases are the Confirmation Bias, where we actively seek information that confirms how we want to see things, and the Perceptual Defense Mechanism that actively defends our view of reality and diminishes facts that may contradict it. It’s why people stay in jobs and marriages and careers they hate for decades – continually trying to convince themselves that it’s the better "more sensible" option. In reality, things that aren’t working out well for us now only tend to get worse over time, not better, and issues that remain unaddressed in our relationships and lives tend to grow larger, not smaller.  Delay grows increasingly expensive. So how do we overcome our tendency to lean away from risk, in order to take smart risks? Start by asking yourself these questions: 

a) What do I have to gain from taking this risk?

b) How will not taking this risk cost me, as measured by what matters most to me?

As I wrote in Brave: 50 Everyday Acts of Courage to Thrive in Work, Love & Life, a book I wrote to help people take smarter risks in their everyday lives, the reality is that nothing worthwhile is achieved with a guarantee of success.  In other words: No risk. No reward.

So consider where you need to lean toward risk rather than away from it. Even if things don’t go exactly to plan, you’ll still be better off. Every time you take a risk, you improve your ability to discern risk, your competence to manage it,  and your courage to take them more often.

You are braver than you think and can do more than you know.

Take that chance, make that change, and take that risk. The odds are better than you think. If you need a little help with being brave, I invite you to join the Train The Brave Challenge. 

 

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