Risk On

Why are some people risk takers and others not so much? Why am I even thinking about risk in the middle of the night, might be an even better question? But risk is a funny two-edged sword that we all confront on a daily basis whether we realize it or not. Risk tolerance varies dramatically between people due to a fascinating interplay of biological, psychological, and environmental factors.

Biological influences play a significant role. Some people are born with genetic variations that affect how their brains process dopamine and other neurotransmitters involved in reward-seeking behavior. I have often said that I am blessed with what seems to be an excess of natural dopamine in my system, so I am quite aware of this. The prefrontal cortex, which handles decision-making and impulse control, develops at different rates and functions differently across individuals, and in me it developed risk-taking prevalence from an early age. Even testosterone levels can influence risk appetite – higher levels are often associated with greater risk-taking, and I suspect that in my youth my T-level was quite high. Risk-taking behavior reveals quite a lot about how someone’s mind works and what drives them. Cognitive patterns become visible through risk choices. Heavy risk-takers might have optimistic bias, believing good outcomes are more likely for them personally and for the world (which is certainly my bias). They may also have different time horizons, focusing more on immediate rewards than long-term consequences (I am nothing if not all about instant gratification). Some show what psychologists call “illusion of control,” overestimating their ability to influence outcomes. I believe in the power of positive thinking and always have. Conversely, risk-averse people often excel at spotting potential problems and thinking through scenarios systematically. I like to think my planning instincts afford that, but I have contrary evidence around that as well. Emotional regulation shows up clearly in risk behavior. People comfortable with uncertainty tend to handle ambiguity and stress well, while those who avoid risks might have lower tolerance for anxiety or unpredictable situations. However, excessive risk-taking can sometimes indicate difficulty with impulse control or emotional regulation rather than confidence, which is a fair enough question about how I make decisions.

Early life experiences shape our relationship with uncertainty. Children who grew up in unpredictable environments might become either highly risk-averse (seeking stability) or more comfortable with uncertainty. Growing up all over the world and in exotic places like Venezuela and Costa Rica surely drove my acceptance of risk in my life. My mother’s adventurous spirit was familiar to me from my earliest thoughts. Family attitudes toward risk, cultural background, and early successes or failures with risky decisions all left lasting imprints on how I approached uncertainty as an adult and my survival of first the tropics and then the frigid northern Midwest hardened my risk-based steel.

Personality traits also matter enormously. People high in sensation-seeking tend to crave novel, intense experiences and are more willing to take physical, social, or financial risks to get them. The stimulation I received from the earliest age helped make me an adventure seeker. My confidence in my ability to handle negative outcomes also influenced my willingness to take chances. However, being more sensitive and less of a “tough guy” did moderate those somewhat. Higher anxiety levels about things like personal comfort often cause risks to be perceived as more threatening and influence our willingness to be exposed to them.

Ongoing life circumstances affect risk tolerance too. Having the benefit of substantial financial security might make one willing to take entrepreneurial risks rather than someone living paycheck to paycheck. But financial security that is personally achieved rather than inherited makes one both more cautious AND, in my case, more comfortable that such security can be obtained again if lost due to a bad risk. Age often brings changes in risk appetite, and that belief in regenerating financial security is a perfect example of why that might happen. Young adults frequently take more risks than older individuals who have more to lose and less opportunity to make it back. Another interesting thing is that risk tolerance isn’t uniform across all areas of life. Someone might be extremely conservative financially but take big social risks, or be adventurous physically but cautious in relationships…or vice versa. Our risk profiles are surprisingly complex and context-dependent, making them fluid and yet somehow consistent through life by dint of our underlying personality

I have often said that I refuse to accept regrets as part of my life. The relationship between regret and risk-taking is one of the most powerful psychological dynamics at play in decision-making. Anticipated regret heavily influences risk choices. People who are less concerned about potential regret often take more risks because they’re not paralyzed by “what if” scenarios. They might think “I’d rather try and fail than wonder what could have been.” Meanwhile, those who deeply fear regret often avoid risks to prevent the possibility of looking back and thinking “I should have been more careful.” But there’s a fascinating twist…regret avoidance can actually push people in opposite directions. Some people take risks specifically to avoid the regret of missed opportunities. They’re more afraid of regretting inaction than poor outcomes. Others avoid risks to prevent regretting bad decisions. The fear seems the same, even though it can drive completely different behaviors, and that may be because the cause of the fear (failure, physical pain, emotional loss, etc.) is quite different. Some people have developed what you might call “regret resilience”. They’ve learned that most regrets fade with time and that perfect decisions are impossible anyway. That is certainly one of my philosophies. They might think “every choice has trade-offs, so I’ll make the best decision I can with current information.” This mindset liberates them to take more risks. Healthy risk-taking requires making peace with the inevitability of some regret. Both action and inaction can lead to regret, so focusing on making decisions aligned with one’s values is simply better than trying to guarantee regret-free outcomes. They say that people typically regret things they didn’t do more than things they did, especially as they get older, which might explain why I continue to prefer risk-taking to risk and regret avoidance.

Values and priorities are therefore often reflected in my risk choices. My life philosophy emerges through my risk patterns. Some people view life as an adventure to be explored, while others see it as something to be carefully managed. I find that there is something liberating about accepting and embracing risk and that feeling seems to outweigh the potential for failure. Consequently, I think I accept and move on from failure more easily than most. Risk-averse individuals might prioritize protecting what they already have and find failure a much harder outcome to accept. Risk-oriented people like me are also very good at rationalizing their choices…

I believe that adaptability and resilience often correlate with moderate risk-taking and that they are important traits in life. People who take calculated risks usually have sufficient confidence in their ability to recover from setbacks and adapt to changing circumstances. Risk-taking exists on a spectrum, and the healthiest approach often involves taking thoughtful risks in some areas while being appropriately cautious in others. The trick is that everyone’s perception of risk varies enough that defining what is a thoughtful risk or an imprudent risk is more subjective than not. The nature of man is that he spends his life playing the risk game and the risk meter, while somewhat variable, says Risk On at both ends of that spectrum.