What's the worst that could happen?
You are a risk manager of your own life. Time to think like one.
The sky is falling. Okay, maybe it’s not. But for a minute there, people thought it was. Since last Friday, I’ve been held hostage to my husband’s booming voice on Twitter Spaces as he pontificates about banks collapsing around our house. We workshopped his newsletter about it. My social media feeds—which display friends, food, fashion, and finance, in that order—are flooded on the topic. My industry friend meme’d, in essence, that he felt like Big Bird sitting in a boardroom with everyone else opining on banking and financial policy. Personally, I identify more as Oscar the Grouch, but the sentiment hits. I am more equipped to form an educated opinion on the #Scandoval than this.
But one word keeps peeping its way into the narrative, armchair experts tossing it around like abundant croutons in a bottomless Olive Garden salad bowl: risk.
Everyone has something to say about risk, whether in reference to a bank’s miscalculated risk in its investment strategy or a founder’s failure to diversity where his funds were being held. I’ll spare you the details—I am aware my audience is more SJP than SBF and SVB. But I do know more about risk than most of the twenty-somethings named Tristan on Twitter. So poised with the opportunity to glean meaning from current events that may otherwise not matter to you, I want to examine risk, how it appears in our lives, and how we can evaluate it to reach more informed decisions that we can live with.
Before my career pivot, I spent 12 years as a lawyer in various roles in the insurance industry. I observed the way companies assessed and then mitigated the risks they faced. I mapped out decision trees for the businesspeople I supported. Into every complicated discussion, I took with me a phrase my ethics professor sang on repeat: it’s all about your “appetite for risk.” This was the earliest concept that ever clicked, even as a young lawyer with no real appetite for taking risks of my own. But as I move through my personal and professional life, I’ve had many instances to make my own assessments.
Risk involves questions of chance. Will I succeed if I do this? What will happen if I don’t? Think back to a time you engaged in risky behavior as a kid, like jumping off steps. The risk was not making it and hurting yourself. The reward was bragging rights. Quickly, your mind calibrated: maybe I should push off harder, maybe I should move down a step. We are pretty good at simple risk calculations. Yet, we don’t always think critically enough about risks that matter.
We are all risk managers of our own lives.
Our decisions warrant dynamic thinking. Almost nothing is black and white, and the sooner you see it that way, the sounder your judgment will be. And if things don’t go as planned, you can at least find solace in the fact that you considered this could happen. You envisioned it. Planned for it. The alternative didn’t catch you by surprise.
Insurance, for example, is what you buy to offset financial risk. The more insurance you buy, the less risk you keep. This is, of course, an insane oversimplification. But it’s an important baseline to remember when you’re faced with an important personal decision like selecting a health insurance plan. I have helped dozens of friends select their health insurance plans over the years, and I write this with much love and respect, but almost no one looks beyond co-pay amounts to even begin assessing what they can and cannot tolerate in terms of risk. I ask, do you and your family get sick often (parents of small kids, this is a loaded question)? Do you see many specialists? What would you do if your plan had no out-of-pocket maximum, or cap? Could you financially withstand a catastrophic medical bill in the wake of an emergency, or would you prefer to offset that possibility by paying more upfront each month? I’ll be honest. My tolerance for risk in this area is very low. I have two small children who are walking petri dishes. I have a pre-existing condition, had two complicated pregnancies, and suffered from health issues for years. I live with a bit of fear over my health. That fear drives our choice to purchase more expansive healthcare coverage for our family. I want the best coverage I can afford.
Don’t ignore your emotions. They are a core component of the analysis you’ll make. When you equip your emotions with a real assessment of what outcomes are likely (or not) to occur, you can actually use them to reach informed decisions—or at least, decisions you can live with.
During the pandemic, many parents had to consider their appetites for risk when deciding where to send their kids to school. We were very lucky to have our oldest daughter attend in-person pre-K during peak pandemic times, but in January of that year, we had to decide where to enroll her for kindergarten. We had always planned to transition her to public school for kindergarten; however, the public schools were running on a hybrid-learning schedule and making no promises for the fall. If we kept her at the early learning center she’d been at for years, we’d pay another year of tuition, but that tuition would come with the certainty she would have classroom learning. Friends asked me what they should do. I couldn’t answer for them, but I could ask them questions: What would you do if your child wasn’t learning in person next year? Would you be at risk of losing your job? Would you have to hire childcare, anyway? We kept her there for one more year until the dust settled. It ended up working out that the public schools did return in-person, but that didn’t make our decision wrong. Keeping our daughter in private kindergarten insured against our worst-case scenario.
The actual outcome is less important than the planning you do to prepare for any outcome.
So I ask this, to make you think. What is your worst case scenario—physically, emotionally, financially, or professionally? What are the outer limits of what you can handle or are willing to tolerate? Envision what that feels like. How much are you willing to pay to offset the risk of finding yourself there?
Now, imagine the opposite. What is your best case scenario? How much are you willing to pay to get there instead?
I don’t just mean pay, like in dollars, from the examples above. I mean pay, in terms of sacrifice. You pay in the form of missed opportunities when you take no risks at all.
My husband and I played this out as a team for years. He assumed a great amount of risk by starting his own wealth management firm the same year we had a baby. I held down my stable, uncontroversial jobs at insurance companies. We couldn’t both be cowboys. Together, our risk tolerance lived in balance, until it no longer did. The more successful his business became, the more restless I grew. He wore the comfort of my corporate salary and health benefits well. I feared the time to pull my safety net would never come. I’m not sure I would’ve ever left my prior employer if they didn’t want me back in the office so often. But we took it as a sign of our risk pendulum swinging. In keeping my old job, we were sacrificing the opportunities we’d always dreamed of landing together. With our eyes wide open, we had to at some point take that chance.
Every day, we face many risks in our lives. More than all the soup, salad, and breadsticks we could ever eat. It’s easy to make rash, knee-jerk decisions and then lament about what you should’ve done. It’s harder to have the tough conversations and play out these scenarios. Sometimes, you are spot on. Sometimes, you calculate wrong. But I would never wish to eliminate all risk if it meant forfeiting possibility. That is what we live for.
What is your appetite for risk? Have you ever thought about it? Let’s chat: averagejoelle3@gmail.com.
The little things
I don’t know if it’s late-winter blues or what, but I’ve been in the deepest funk. My days are rushed, my body is tired, my mind is frazzled. I am truly aching for more sunny and social times ahead. But instead of spiraling into self-pity, I did something about it. I booked a weeknight babysitter and we went for hour-long foot rubs followed by a low-key dinner. What a welcomed break from what we’d normally do on nights out, where we often come home more tired than when we left. This was just what the doctor ordered.
Also
I read:
What We Still Don’t Understand About Postpartum Psychosis – The New Yorker
How to Escape ‘Faux Self-Care’ – The New York Times
Our last visit, on death row – Salon
Off-Label Ozempic Use Is Fueling Our Culture of Disordered Eating – Jezebel
I cooked:
A version of shrimp gumbo that would anger all the grandmas in Louisiana past and present. I won’t even share the recipe. I’m sorry to everyone involved. If you have a gumbo recipe, please share.
I tried on:
Wide leg pants so the rest of you don’t have to. I’m committed to finding us flattering but on-trend options! We ride at dawn!
Your wins
Christina made Magnolia Bakery’s famous banana pudding at home, and it was *perfect* on her first try. YUM.