It should come as no surprise that if you’re not working toward your destiny, you’re left feeling less than fulfilled. Your soul knows you’re on the wrong path even if you yourself cannot find the words to express the root of your meh.
The good news is this can be treated. So how do you start? We crave it, and even obsess about it. So what is it? The filthiest four- letter word you can think of is R-I-S-K.
Most of us equate risk with danger—something to be avoided altogether. But think of risk like oxygen. It’s neither good nor bad. It’s essential and inescapable. Either too much or too little can harm you, but no matter, as a human, you’re already breathing oxygen and taking risks everyday just by being alive. It’s unavoidable. And just like food, you can make better choices about the risks you choose to consume.
It is helpful to think about risk in our personal lives and careers the same way Wall Street thinks about risk in stocks. Roughly speaking, there are two types of risks in the stock market. The first type, “idiosyncratic risk,” means that there is a chance that something—maybe it’s good, maybe it’s bad—happens with any one company. Good news! The company has figured out a way to allow you to carry all of your music with you in your pocket. You’re so smart for having bought Apple stock! Uh oh! The CEO has been cooking the books and the company is going bankrupt. Shouldn’t have bought that Enron stock! That’s idiosyncratic risk.
The second type of risk, “market risk,” reflects the broader risk that all companies face. The economy is booming, so people want to buy more stuff. Great! Stocks go up. There’s a terrorist attack that devastates a major city. Horrible! Stocks go down.
If you hold enough risk in your stock portfolio, you actually don’t bear any idiosyncratic risk. If something bad happens to one stock, others likely benefit. For example, when oil prices spike, the transportation companies in your portfolio might suffer, but the energy companies in your portfolio will surely benefit. This sort of risk diversification is exactly what top-tier investment firms do. They buy more total risk to take on less downside risk. This means that, theoretically, the more risks you take in the market, the less risky investing actually is overall.
Look at the risk we have in our own lives. When it comes to our life choices, a lack of appetite for the right type of risk makes us unhealthy. We must take on the right type of risk to develop options. We’re not advocating you strap into a flying squirrel suit and jump off the edge of a Norwegian fjord so you can glide along a ridgeline at Mach 3. Rather, we are saying that you should take on the right type of risk and develop upside optionality, the ability to capture and profit from random fortuitous events.
For those of us who work in large organizations, we must ask these questions: What are we missing by not taking on that challenging project? What are the opportunity costs of not getting a promotion, or of not even fighting for one? How might we benefit by going that extra mile, staying a few hours later, and buttoning up a project extra tight? What if we swam against the corporate cultural tide in our efforts to defend an intriguing yet unproven product? What if in a moment when we felt suffocated by our colleagues’ silent judgments we tried to blaze our own path instead of joining the herd?
The more right risk we take on, the more our downside risk diminishes as we answer the questions we put to ourselves when we look in the mirror of experience.
