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22 - How To Define Risk?

People talk about risk all the time. This investment is risky. I see lots of risk in that area. What the heck are they talking about when they say the word risk. I thought the exact same thing and simplified what risk is for myself so I could think a little faster on my feet. Risk, for me means two things. It means money and time. That's about it. Yes someone could potentially risk something else like pride or personal information, but for the most part when people say risk they mean time and money. A risky investment could require lots of time until it pans out. This could mean either losing or spending time that would far outweigh the reward.


On the other hand, you could risk losing money. When you for example put money up to either buy a company, create a new product, or buy a real estate project, you are risking your money. You may never recoup that money back if the project doesn't pan out. That's really it. Risk is time and money. You will be smart to understand if your project will require lots of time. You will also be smart to understand how much money you will need to bring the project to completion.


When someone says there will be lots of risk, ask them what they mean exactly. Sometimes it's good to push back on people when they use these terms to see if they actually know what they are talking about. Sometimes people use these terms to confuse so never feel bad if you think you are missing something or don't fully understand. Risk is exactly one of those terms that may seem confusing on the surface but in reality only means time and money.


Alright, thinking about making an investment or starting a new project. Let's talk about the risk and how you can decrease the amount of time spent on the project and the amount of money spent on the project. By limiting these two areas we can make your project less risky and increase the chances of completion. I enjoy talking about risk so please don't hesitate to ask me if you have any questions.

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