The Timeless Concept of Risk And Reward In Decision Making

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Do you dive in and do what is right or do you calculate risk and reward? What does it take to make you act?

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I was going through my emails this morning and saw this question. I knew I had to share my opinion on the vital points raised —risk and reward. The concept of risk and reward has been around for as long as the world has existed. It's a part of our lives even when we don't realise it. Our actions are guided by these two terms in the pursuit of our objectives.

^{Image: Towfiqu Barbhuiya via Unsplash}

Every step we take, every choice we make, every action we execute are centered around risks. There is nothing on earth that is risk-free. From relationships to careers, family, travels, education, business, inventions and so on, they are all surrounded by risks. Some risks may weigh more than others. Some risks may be heavy while some may be mild.

Self preservation makes us prefer things that are less risky, meaning we care about our lives and would not want to get hurt or lose it. Despite this popular view, we have some people who would go for the high stakes. They do not care how dangerous the risk is, their eyes are on the prize (reward) and so they would push through the risk to get what they want.

Then we have a small percentage of people who would rather stand aloof or sit on the fence and remain stagnant, unwilling to take any risk for fear of losing what matters to them. This group does not care about the rewards, even though they may desire it. The reward is not worth the risk or they rather have the reward for free, without taking the risk. Is there anything free in this world? For these people, life stands still for them.

Question: Which of these groups of people do you belong to?

From the main questions, I see two distinct groups of people: the quick-to-act/impulsive people and the slow-to-act/careful people. There are situations that call for impulsive (dive in) action while some require us to take a moment to calculate the risk and reward before acting. Still, it's important to consider the risks and the reward before taking any action.

We should consider questions like:

• Is the risk worth taking?
• Will the reward cover the risk?
• And will there still be something extra left over from the reward (profit)?

^{Image: Firmbee.com via Unsplash}

Applying the concepts to business and investments, a large percentage of people consider the worth of the reward before investing. In the area of cryptocurrency, due to FOMO, some people 'dive in' without considering the risk-reward and most times, it often leads to loss.

Guided by our answers to the above questions, we are prepared for whatever the rewards may turn out to be. Most times, I consider the risks and rewards before I make any decisions. The times I dived in, the risks were great and the rewards, unsatisfactory such that I wished I had not been impulsive.

To avoid pitfalls, we must never stop learning and patience is key. Let your actions be guided by due consideration of risks and rewards because the outcome is what determines your success or failure in life.

Thank you for visiting my blog.

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