Calculated risk is a concept frequently discussed in various aspects of life, from financial decision-making to healthcare choices. Defined as taking action that has potential negative consequences but also offers a chance for positive outcomes, calculated risks can significantly impact overall health, happiness, stress, and wealth.

Taking a calculated risk is more likely to result from inherent behavior and is less situational than one may think. If individuals know this about themselves, they can manage risk safely. This is where I offer a word of caution: Do not confuse perceived risk with calculated risk.

How can you tell the difference?

Perceived risk is more of a subjective judgment, resulting in either overreacting or underreacting to the potential outcomes of a decision. Your emotions, contextual factors, and personal experiences are not always aligned with actual risk. Calculated risk is just that—calculated. It means you are carefully analyzing risks to rewards, and your behavioral preferences influence both. I know it sounds like there is a fine line between the two, but perhaps the easiest way to think about it is that perceived risk is reactive, and calculated risk is proactive.

Taking it one step further, your propensity for wealth creation (increasing capital and generating income) and proactive steps to get there are intertwined with your instinctive behavioral style and your relationship with money, which includes risk-taking. Achievement will vary based on discovering your Money Energy potential.

Exploring Success: A Case Study on Calculated Risks and Growth Acceleration

Allow me to introduce Robert Davis, a 39-year-old entrepreneur who heads a successful telecommunications business. Robert has secured contracts with leading telecom providers to market and install their services. Known for his Initiator DNA Style, Robert is a natural leader who sets the pace, communicates directly and isn’t afraid to take risks.

Despite his lavish lifestyle, which includes toys, cars, boats, and multiple properties, Robert is meticulous in his financial planning. While, to others, he may appear to live on the edge, every move he makes is carefully calculated to achieve his well-defined goals. Robert is highly regarded for his philanthropic contributions to the community, and his life motto is “work hard and play hard,” a principle he lives by.

When his newly married sister asked him to invest in a business she and her spouse were starting, Robert didn’t listen to his normal “hard-wired” financial behavior. He skipped the proactive analysis that would prompt him to check, research, and plan. Instead, he acted upon emotional connections, saw the opportunity as a low perceived risk, and didn’t hesitate to invest. Unfortunately, after less than a year, his sister’s enterprise failed, leaving him with a financial investment loss and her debts.

Of course, he stepped up and met his obligations, but it was a wake-up call that cost him a significant amount of money energy causing stress and a period of unhappiness, poor eating, and lack of exercise.

Robert has since overcome this temporary setback and learned from his experience. The moral of this story is that when perceived risk and emotions are combined, they can reduce your Money-Energy potential but unite calculated risk with healthy financial behavior, and they can add to it.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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