teaching risk tolerance

Risk is the possibility of an event occurring that will have an impact on the achievement of objectives. Risk is measured in terms of impact and likelihood. (from Wikipedia)

That’s the definition from my profession, auditing. Basically risk is the possibility of something bad happening. It does not necessarily follow that if the risk event doesn’t happen, something good will happen – simply that the negative outcome won’t. Most people have a subjective perception of risk.

For example: you and I may perceive bungee jumping in vastly different ways. Let’s say that 1 out of every 1 million bungee jumps goes really wrong – it snaps and the jumper dies. If it does not snap, you get your thrilling giant rubber band ride up and down. For me, the 1 in a million chance of death renders the benefit of the jump (a thrill) as unacceptably risky. For you, 1 in a million may not be enough to make you forgo the benefit. You have what is known as a higher risk tolerance.

I think that risk tolerance and lack of fear is key to achieving great things. Don’t assume this means being a risky adventurer like Steve Fossett. This simply means not being afraid to risk failure. Most of the great entrepreneurs and thinkers have been characterized by a boldness and lack of concern about risks in their personal and private lives. They were not afraid to fail. Their willingness to accept a potential negative outcome was much higher than the average individual’s.

So my question would be a simple one: is risk tolerance learned or inherited?
I’ve been wondering about this as we start teaching my still-less-than-2-years-old son about ‘danger’ – don’t jump off the stool! Don’t touch hot stuff! Slow going down the stairs! Don’t jump around in the tub! While you certainly would never want to encourage risky behavior, is this teaching him to be less risk tolerant and more fearful? And – I mean this very seriously – is this good or bad? Should we encourage fearlessness, risk-taking and boldness? If so, how do you know it’s not too much, making your children reckless? And it extends beyond children, too: how could I teach myself to be more fearless and risk-tolerant in my old age? Should I?

What do you think?

5 Replies to “teaching risk tolerance”

  1. You ask is risk tolerance taught or learned? I think the better question would be, is risk tolerance something you are born with or do you acquire it with life experince. Not sure it can be taught. If you have a risk adverse personality not sure any amount of teaching can make you change your thinking to the point of truly being comfortable with risk.

  2. I think it’s a combination of both heredity and experience, but then again, that can be said of so many things.

  3. I figure my job as a parent is to “scaffold” the risks. For example, my 1 year old son loved to climb the ladder (really high) – I would encourage it, but stand underneath to catch him if he fell. Eventually, after doing it enough times, he learned what he could and couldn’t do, and I didn’t need to stand there any more. On the flip side, I never “encourage” him to do things he doesn’t want to do (for example, at a “play gym” class, this woman kept insisting that it’s “going through tunnels day” and that that’s what I should make him do – NO! He was clearly afraid to do so, and pushing him would ruin the whole experience – when he was finally ready to climb through tunnels, it was a great, enjoyable experience) – I think it’s SO important to let them work out what they feel safe with and what they don’t. Other parents are often horrified when I let him do supposedly dangerous things, but I know he’s capable, because he’s practiced all those things in a safe environment (ie. with me) first. He now knows what risks he can take, and those he can’t. I never say “don’t do that”, I say “how can you do that safely?” (perhaps accompanied by an explanation of the risks, if he doesn’t yet understand them).

    Just my thoughts 🙂

  4. Julie, I agree completely. I find that one of the toughest things as a parent is to overcome the judgments of other parents as to what YOUR child should do and not do. I try to remind myself that he’s an individual and has to find his own risk tolerance level, even if other adults give ME a hard time about it. It’s tough to do, and I don’t always win that battle (tunnel day is a good example – sometimes I feel I have to push him to do things like that, exactly like you said)!

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