By definition, risk aversion refers to how people generally prefer certainty over uncertainty. In other words, it refers to how people would rather minimize the possibility of getting exposed to negative outcomes. So, a person who is risk-averse might prefer having a secure low-paying job, for example, as opposed to having a personal business with the chance to earn a lot of money. This is because the latter usually comes with various risks of losing investments in both money and time.
On that note, a person who is risk-averse might also prefer to have low yet guaranteed rates of return, like on bank accounts, as opposed to having higher possible rates of return, like on equities. This is because the latter can be negative and highly variable.
Most of the people out there who are risk-averse tend to focus on the worst outcomes possible, too – even if the chances of those outcomes happening are actually quite rare.
Most of the time, risk aversion is greatly influenced by a person’s experiences, though – particularly the economic environment that they lived through when they were younger. This is why people of different economic backgrounds tend to look at money management very differently.
Take the people who experienced the Great Depression, for example. As adults, this entire group ended up being very conservative in terms of money and extremely risk-averse in terms of career and job changes. In fact, a lot of them ended up avoiding stocks altogether.
In today’s day and age, however, more and more people are welcoming risks due to the challenges that come therewith. Yes, despite the uncertainty that breeds from risk nowadays, more and more individuals are starting to compete with other people on a global scale with hopes of reaping the benefits from it. Of course, it would be important to manage risk, too. In other words, if you want to take risks, you will have to mitigate them whenever you can and monitor them very closely whenever you can’t.
The fact is: you have to start embracing risks as soon as possible because the world’s population is becoming more globalized by the day. However, before you can actually start taking risks, you will have to make sure you are prepared to do certain things first. You have to make sure you can move fast, get up the minute you fall and avoid doing the same mistakes again and again. You also have to make sure that you are ready to work with people you have never met before and who might be living in countries you have never visited before.
These changes will come with one particularly great advantage, though: traditional program and project management will change dramatically with them. That’s right. Management styles will become more creative, thanks to the limitless amounts of project resource options that are popping up. Online communities, practice communities, client level communities and project levels will all prevail, as well, the more people choose to avoid risk aversion. How great is that?