Risk Averse Quotes

A good investor is prudent but not risk averse.

Fear and anxiety affect decision making in the direction of more caution and risk aversion... Traumatized individuals pay more attention to cues of threat than other experiences, and they interpret ambiguous stimuli and situations as threatening (Eyesenck, 1992), leading to more fear-driven decisions. In people with a dissociative disorder, certain parts are compelled to focus on the perception of danger. Living in trauma-time, these dissociative parts immediately perceive the present as being "just like" the past and "emergency" emotions such as fear, rage, or terror are immediately evoked, which compel impulsive decisions to engage in defensive behaviors (freeze, flight, fight, or collapse). When parts of you are triggered, more rational and grounded parts may be overwhelmed and unable to make effective decisions.

I'm still prone to periods of isolation, still more fearful of the world out there and more averse to pleasure and risk than I'd like to be; I still direct more energy toward controlling and minimizing appetites than toward indulging them.

This notion that the leader needs to be “in charge” and to “know all the answers” is both dated and destructive. Its impact on others is the sense that they know less, and that they are less than. A recipe for risk aversion if ever I have heard it. Shame becomes fear. Fear leads to risk aversion. Risk aversion kills innovation.

This is the essence of risk aversion—that is, how far we are willing to go in making decisions that may provoke others to make decisions that will have adverse consequences for us.

If the risk takers are punished, then you will retain in your ranks only the risk averse.

You can’t write novels about people who are timid, risk-averse and passive. Or you can, but they’re called literary novels.

The secret killer of innovation is shame. You can’t measure it, but it is there. Every time someone holds back on a new idea, fails to give their manager much needed feedback, and is afraid to speak up in front of a client you can be sure shame played a part. That deep fear we all have of being wrong, of being belittled and of feeling less than, is what stops us taking the very risks required to move our companies forward. If you want a culture of creativity and innovation, where sensible risks are embraced on both a market and individual level, start by developing the ability of managers to cultivate an openness to vulnerability in their teams. And this, paradoxically perhaps, requires first that they are vulnerable themselves. This notion that the leader needs to be “in charge” and to “know all the answers” is both dated and destructive. Its impact on others is the sense that they know less, and that they are less than. A recipe for risk aversion if ever I have heard it. Shame becomes fear. Fear leads to risk aversion. Risk aversion kills innovation.

No one could have handled the stress that Michael was under perfectly, but optimism in a leader, especially in challenging times, is so vital. Pessimism leads to paranoia, which leads to defensiveness, which leads to risk aversion.

As our schools become more feelings centered, risk averse, competition-free, and sedentary, they move further and further from the characteristic sensibilities of boys.

There was nothing less imaginative or more risk averse than the bureaucratic mind.

We're all risk averse creatures, aren't we? Like turtles, hiding in our little shells, trying to protect ourselves - never quite realising that we're protecting ourselves from the good stuff as well as the bad.

we can grasp the full meaning of the Resurrection, we first have to witness or experience crucifixion. If we spend our lives so afraid of suffering, so averse to sacrifice, that we avoid even the risk of persecution or crucifixion, then we might never discover the true wonder, joy and power of a resurrection faith. Ironically, avoiding suffering could be the very thing that prevents us from partnering deeply with the Risen Jesus.

Human individuals and human organizations typically have preferences over resources that are not well represented by an "unbounded aggregative utility function". A human will typically not wager all her capital for a fifty-fifty chance of doubling it. A state will typically not risk losing all its territory for a ten percent chance of a tenfold expansion. [T]he same need not hold for AIs. An AI might therefore be more likely to pursue a risky course of action that has some chance of giving it control of the world.

optimism in a leader, especially in challenging times, is so vital. Pessimism leads to paranoia, which leads to defensiveness, which leads to risk aversion. Optimism sets a different machine in motion. Especially in difficult moments, the people you lead need to feel confident in your ability to focus on what matters, and not to operate from a place of defensiveness and self-preservation. This isn’t about saying things are good when they’re not, and it’s not about conveying some innate faith that “things will work out.” It’s about believing you and the people around you can steer toward the best outcome, and not communicating the feeling that all is lost if things don’t break your way. The tone you set as a leader has an enormous effect on the people around you. No one wants to follow a pessimist.

In general, risk-averse behavior has been common among all groups that operated along the margins of survival. The sheer challenge of survival in premodern societies always constrained the behavior of the poor.

Entrepreneurs who kept their day jobs had 33 percent lower odds of failure than those who quit. If you’re risk averse and have some doubts about the feasibility of your ideas, it’s likely that your business will be built to last. If you’re a freewheeling gambler, your startup is far more fragile.

No one could have handled the stress that Michael was under perfectly, but optimism in a leader, especially in challenging times, is so vital. Pessimism leads to paranoia, which leads to defensiveness, which leads to risk aversion. Optimism sets a different machine in motion. Especially in difficult moments, the people you lead need to feel confident in your ability to focus on what matters, and not to operate from a place of defensiveness and self-preservation. This isn’t about saying things are good when they’re not, and it’s not about conveying some innate faith that “things will work out.” It’s about believing you and the people around you can steer toward the best outcome, and not communicating the feeling that all is lost if things don’t break your way. The tone you set as a leader has an enormous effect on the people around you. No one wants to follow a pessimist. —

The more risk averse a person is, the higher his or her religiosity [...]. In other words, risk-averse people don't want to take a chance on getting on the wrong side of god.

Simple. There are many clever, cunning and adept people who are risk averse. You are not risk averse because you are dedicated to becoming rich.

people tend to be risk averse in the domain of gains and risk seeking in the domain of losses.

Risk aversion and fear of the unknown are direct symptoms of a lack of context, and are the polar opposites of audacity.

Risk aversion will damage the long-term health, even survival, of the organization, because it will undercut disciplined but unregimented thinking.

Like the rich boarding school kid who gets away with a hit-and-run, getting away with it doesn’t mean that you’re lawless but that you are above the law. The bad-boy artist can do whatever he wants because of who he is. Transgressive bad-boy art is, in fact, the most risk-averse, an endless loop of warmed-over stunts for an audience of one: the banker collector.

Bernoulli’s model lacks the idea of a reference point, expected utility theory does not represent the obvious fact that the outcome that is good for Anthony is bad for Betty. His model could explain Anthony’s risk aversion, but it cannot explain Betty’s risk-seeking preference for the gamble, a behavior that is often observed in entrepreneurs and in generals when all their options are bad.

Hello Goodbye Goodbyes take a great deal of courage, but what takes even more is the hello that comes next. To cast your aversions aside despite all you have suffered and take a chance on somebody new. To risk it all again because you see that human connection is precious and rare and always worth the risk.

Although hindsight and the outcome bias generally foster risk aversion, they also bring undeserved rewards to irresponsible risk seekers, such as a general or an entrepreneur who took a crazy gamble and won.

The scarcity mindset in dating often goes hand in hand with the sunk cost fallacy. The sunk cost fallacy says that it is bad to lose something we have invested time, money, energy or emotions into, regardless of whether that something is still actually doing anything for you. Humans are highly risk averse creatures, so we tend to prefer NOT losing something over potentially gaining something, even if we don't like what we would lose.

Decision makers tend to prefer the sure thing over the gamble (they are risk averse) when the outcomes are good. They tend to reject the sure thing and accept the gamble (they are risk seeking) when both outcomes are negative.

One might think that a generation that has heard endlessly, from their more ideological teachers, about the rights, rights, rights that belong to them, would object to being told that they would do better to focus instead on taking responsibility. Yet this generation, many of whom were raised in small families by hyper-protective parents, on soft-surface playgrounds, and then taught in universities with “safe spaces” where they don’t have to hear things they don’t want to—schooled to be risk-averse—has among it, now, millions who feel stultified by this underestimation of their potential resilience and who have embraced Jordan’s message that each individual has ultimate responsibility to bear;

I’m having yet another dinner, but this time with more of the working-level capital markets origination bankers. These guys are considerably more risk averse; they don’t have the stomach for sales and trading and lack the smarts for M&A.

Nobody likes to fail, but there is a difference between a normal aversion to failure and an intense fear of failure. Aversion to failure motivates us to take necessary precautions and to work harder to achieve success. By contrast, intense fear of failure often handicaps us, making us reject failure so vigorously that we cannot take the risks that are necessary for growth. This fear not only compromises our performance but jeopardizes our overall psychological well-being. Failure is an inescapable part of life and a critically important part of any successful life. We learn to walk by falling, to talk by babbling, to shoot a basket by missing, and to color the inside of a square by scribbling outside the box. Those who intensely fear failing end up falling short of their potential. We either learn to fail or we fail to learn.

She’s suing him for alimony. She would actually like to settle, but he prefers to go to court. That’s not surprising—she can only gain, so she’s risk averse. He, on the other hand, faces options that are all bad, so he’d rather take the risk.

You never get poor by taking a profit." It would follow that cutting your losses is also a good idea, but investors hate to take losses, because, tax considerations aside, a loss taken is an acknowledgment of error. Loss-aversion combined with ego leads investors to gamble by clinging to their mistakes in the fond hope that some day the market will vindicate their judgment and make them whole.

The U.S. has so many rules and regulations, because of fear of being sued, that kids give up on the opportunity for personal exploration. A pool has to be fenced so that it’s not an ‘attractive nuisance.’ Most New Guineans don’t have pools, but even the rivers that we frequented didn’t have signs saying ‘Jump at your own risk,’ because it’s obvious. Why would I jump unless I’m prepared for the consequences? Responsibility in the U.S. has been taken from the person acting and has been placed on the owner of the land or the builder of the house. Most Americans want to blame someone other than themselves as much as possible. In New Guinea I was able to grow up, play creatively, and explore the outdoors and nature freely, with the obligatory element of risk, however well managed, that is absent from the average risk-averse American childhood. I had the richest upbringing possible, an upbringing inconceivable for Americans.

Whether one becomes irrationally risk taking (failing to shift strategy in response to a declining reward rate) or risk averse (failing to respond to the opposite), one is incorporating new information poorly. Stated most broadly, sustained stress impairs risk assessment.

The example also shows that it is costly to be risk averse for gains and risk seeking for losses. These attitudes make you willing to pay a premium to obtain a sure gain rather than face a gamble, and also willing to pay a premium (in expected value) to avoid a sure loss.

Decision makers tend to prefer the sure thing over the gamble (they are risk averse) when the outcomes are good. They tend to reject the sure thing and accept the gamble (they are risk seeking) when both outcomes are negative. These conclusions were well established for choices about gambles and sure things in the domain of money.

You do not need to be clever. You do not even need to be that adept. You need only a little cunning and massive determination to become rich. Providing you can pay much cleverer but risk-averse people properly, and promote them and lead them in such a way that they are all rowing in the same direction, they will sign on to your little ship.

20th Century 21st Century Scale and Scope Speed and Fluidity Predictability Agility Rigid Organization Boundaries Fluid Organization Boundaries Command and Control Creative Empowerment Reactive and Risk Averse Intrapreneur Strategic Intent Profit and Purpose Competitive Advantage Comparative Advantage Data and Analytics Synthesizing Big Data

Since the 1980s, Attention Deficit Disorder (ADD) has been on the rise, not just among children, but now among the adult population as well. The sudden rise of adult ADD, while it may have genetic components, certainly receives a major boost from our kinetic, hyper-speed, information-bombarded society. Victims of adult ADD are likely to initiate more tasks and projects that they'll ever finish, get bored easily, seek thrills readily, have a propensity to be late while loathing having to wait, and not be averse to taking foolish risks.

Study skills really aren't the point. Learning is about one's relationship with oneself and one's ability to exert the effort, self-control, and critical self-assessment necessary to achieve the best possible results--and about overcoming risk aversion, failure, distractions, and sheer laziness in pursuit of REAL achievement. This is self-regulated learning.

To tell a lie is to risk being caught out and there’s excitement in avoiding traps: it was an aspect of my childhood I was perhaps averse to relinquishing.

Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands.

Those whom even love cannot shake from their habitual aversion to risk and inertia are those who are truly unredeemable.

risk-averse decision maker will choose a sure thing that is less than expected value, in effect paying a premium to avoid the uncertainty.

Instead of focusing on the opportunity at hand, risk-averse leaders get treed by the potential risk, and fall victim to the greatest operational failure of all: the failure to try.

Kahneman and Tversky conclude that people are not risk-averse across the board, though they are loss-averse: they seek risk if it may avoid a loss.29

Entrepreneurs who kept their day jobs had 33 percent lower odds of failure than those who quit. If you’re risk averse and have some doubts about the feasibility of your ideas, it’s likely that your business will be built to last. If you’re a freewheeling gambler, your startup is far more fragile. Like the Warby Parker crew, the entrepreneurs whose companies topped Fast Company’s recent most innovative lists typically stayed in their day jobs even after they launched. Former track star Phil Knight started selling running shoes out of the trunk of his car in 1964, yet kept working as an accountant until 1969. After inventing the original Apple I computer, Steve Wozniak started the company with Steve Jobs in 1976 but continued working full time in his engineering job at Hewlett-Packard until 1977. And although Google founders Larry Page and Sergey Brin figured out how to dramatically improve internet searches in 1996, they didn’t go on leave from their graduate studies at Stanford until 1998. “We almost didn’t start Google,” Page says, because we “were too worried about dropping out of our Ph.D. program.” In 1997, concerned that their fledgling search engine was distracting them from their research, they tried to sell Google for less than $2 million in cash and stock. Luckily for them, the potential buyer rejected the offer. This habit of keeping one’s day job isn’t limited to successful entrepreneurs. Many influential creative minds have stayed in full-time employment or education even after earning income from major projects. Selma director Ava DuVernay made her first three films while working in her day job as a publicist, only pursuing filmmaking full time after working at it for four years and winning multiple awards. Brian May was in the middle of doctoral studies in astrophysics when he started playing guitar in a new band, but he didn’t drop out until several years later to go all in with Queen. Soon thereafter he wrote “We Will Rock You.” Grammy winner John Legend released his first album in 2000 but kept working as a management consultant until 2002, preparing PowerPoint presentations by day while performing at night. Thriller master Stephen King worked as a teacher, janitor, and gas station attendant for seven years after writing his first story, only quitting a year after his first novel, Carrie, was published. Dilbert author Scott Adams worked at Pacific Bell for seven years after his first comic strip hit newspapers. Why did all these originals play it safe instead of risking it all?

Bernoulli observed that most people dislike risk (the chance of receiving the lowest possible outcome), and if they are offered a choice between a gamble and an amount equal to its expected value they will pick the sure thing. In fact a risk-averse decision maker will choose a sure thing that is less than expected value, in effect paying a premium to avoid the uncertainty.

our society seems to have become ever more risk-averse, full of helicopter parents who try to shield their children from all risks—which is impossible—rather than purposefully exposing them to reasonable risks.

before we can grasp the full meaning of the Resurrection, we first have to witness or experience crucifixion. If we spend our lives so afraid of suffering, so averse to sacrifice, that we avoid even the risk of persecution or crucifixion, then we might never discover the true wonder, joy and power of a resurrection faith. Ironically, avoiding suffering could be the very thing that prevents us from partnering deeply with the Risen Jesus.

At a higher level of abstraction, the behavioral correlates of life history strategies can be framed within the five-factor model of personality. Among the Big Five, agreeableness and conscientiousness show the most consistent pattern of associations with slow traits such as restricted sociosexuality, long-term mating orientation, couple stability, secure attachment to parents in infancy and romantic partners in adulthood, reduced sex drive, low impulsivity, and risk aversion across domains. Conscientiousness and (to a smaller extent) agreeableness are also the most reliable personality predictors of physical health and longevity; the contribution of neuroticism is mixed and may depend on the specific facets considered. The life history correlates of neuroticism are much less straightforward; for example, high neuroticism tends to predict increased short-term mating in women but reduced short-term mating in men, with much cross-cultural variation. There is also evidence that slow life history–related traits can be associated with social anxiety and insecurity, which is consistent with a general profile of risk aversion and behavioral inhibition. As a first approximation, then, metatrait alpha can be treated as a broadband correlate of slow strategies, with the caveat that neuroticism may be elevated at both ends of the continuum.

Now, it has been independently shown that people hate to lose something more than they enjoy gaining it. For example, they don't mind paying for something with a credit card even when told there is a discount for cash, but they hate paying the same amount if they are told there is a surcharge for using credit. As a result, people will often refuse to gamble for an expected profit (they turn down bets such as "Heads, you win $120; tails, you pay $100), but they will gamble to avoid an expected loss (such as "Heads, you no longer owe $120; tails, you now owe an additional $100"). (This kind of behavior drives economists crazy, but is avidly studied by investment firms hoping to turn it to their advantage.) The combination of people's loss aversion with the effects of framing explains the paradoxical result: the "gain" metaphor made the doctors risk-averse; the "loss" metaphor made them gamblers.

we quickly realized that we were just as risk seeking in the domain of losses as we were risk averse in the domain of gains. We were not the first to observe risk seeking with negative prospects—at least two authors had reported that fact, but they had not made much of it. However, we were fortunate to have a framework that made the finding of risk seeking easy to interpret, and that was a milestone in our thinking. Indeed, we identified two reasons for this effect.

When you take the long view of many similar decisions, you can see that paying a premium to avoid a small risk of a large loss is costly. A similar analysis applies to each of the cells of the fourfold pattern: systematic deviations from expected value are costly in the long run – and this rule applies to both risk aversion and risk seeing. Consistent overweighting of improbable outcomes – a feature of intuitive decision making – eventually leads to inferior outcomes.

What’s ensued is a battle over ethical conduct, artistic freedom, and censorship in which every side—the activist zealots who threatened violence, the shock-tactic artists, and the controversy-courting, then risk-averse museum—has come out a loser.

Over time, big industries tend to get flabby and uncreative and risk-averse—and if the right outsider company has the means and creativity to come at the industry with a fresh perspective and rethink the whole thing, there’s often a huge opportunity there.

More alarming than this, overthinking can completely warp your perception of events in time, shaping your personality in ways that mean you are more risk averse, more negatively focused and less resilient. When you’re constantly tuned into Stress FM you are not actually consciously aware and available in the present moment to experience life as it is. You miss out on countless potential feelings of joy, gratitude, connection and creativity because of your relentless focus on what could go wrong, or what has gone wrong.

In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that’s been good enough in the past. Their work will be derivative, not innovative. But if you can foster a positive understanding of failure, the opposite will happen.

In this chapter I focused on the dopamine-driven reward system and its role in delivering life's goodies. But there's a mirror-image brain network, often called the loss avoidance system, whose job it is to call our attention to risk. If the reward network chases shiny fruit, the loss avoidance system worries about bad apples.

For most modern humans in the developed world now, losing some money generally means that they might have to scale back some aspects of their lifestyles. Losing resources in the Pleistocene epoch might have meant starvation. Thus, extreme aversion to loss also made good sense. When the alternative is an almost certain death, taking a risk doesn’t seem so foolish.

But when something like Angelina's murder happens," the doctor told him (Decker), "it's human nature to assume a bunker mentality. Let's shore up our defenses and put up our guard so that when something like this happens again -- when, not if -- we won't be blindsided. Problem is, we become so risk averse, we cut ourselves off from the potentially dangerous things that could bring great happiness and joy. We stop taking chances, and without those sometimes risky chances, there's no way we can win big. Our best case scenario become losing not /too/ badly. /At least no one died/ becomes our mantra. Yes, we're trapped here in this prison that we've made, where we can't possibly be happy, but at least we're not devastated by our loss and our grief.

availability bias—making decisions on the basis of more recent and more accessible information loss aversion—the strong preference to avoid a loss rather than to make an equivalent gain selective cognition—taking on board facts and arguments that fit with our existing frames risk bias—underestimating the likelihood of extreme events, while overestimating our ability to cope with them.

framed (people place greater value on moving from 90 percent to 100 percent—high probability to certainty—than from 45 percent to 55 percent, even though they’re both ten percentage points). Prospect Theory explains why we take unwarranted risks in the face of uncertain losses. And the most famous is Loss Aversion, which shows how people are statistically more likely to act to avert a loss than to achieve an equal gain.

There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. It is really that simple. The greatest challenge is maintaining the requisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants.

When safety becomes our god, we worship the risk-free life. Can the safety lover do anything great? Can the risk-averse accomplish noble deeds? For God? For others? No. The fear-filled cannot love deeply. Love is risky. They cannot give to the poor. Benevolence has no guarantee of return. The fear-filled cannot dream wildly. What if their dreams sputter and fall from the sky? The worship of safety emasculates greatness. No wonder Jesus wages such a war against fear. His

We were making a historic leap from one continent to another, yet we were an extremely risk-averse family. Many immigrants carry these twin traits within themselves and some even pass them on to the next generation. As risk takers we leap far from the safety of home. Having left the comforts of home we know all too well that there is no safety net of kinship or citizenship to catch us should we topple. This makes us cautious. We check the lock on the door three times before going out. We save more than we spend. We collect sugar and ketchup packets from McDonald’s and cannot throw anything away. At work, we beat every deadline in the office and never pass up a second gig to make extra money. We tell our children to keep their heads down, study hard, and always look for a bargain. As risk-averse immigrants, we do not rock the boat. If you were a trapeze artist without a net below you, wouldn’t you act the same way? Anything else would be irrational.

The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of broad framing while also saving time and agony, by reducing the frequency with which they check how well their investments are doing. Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough, and may be more than enough for individual investors. In addition to improving the emotional quality of life, the deliberate avoidance of exposure to short-term outcomes improves the quality of both decisions and outcomes. The typical short-term reaction to bad news is increased loss aversion. Investors who get aggregated feedback receive such news much less often and are likely to be less risk averse and to end up richer. You are also less prone to useless churning of your portfolio if you don’t know how every stock in it is doing every day (or every week or even every month). A commitment not to change one’s position for several periods (the equivalent of “locking in” an investment) improves financial performance.

Management gurus push employees in large companies to be bolder and more entrepreneurial. The reality is: employees tend to be risk-averse. From their perspective, this aversion makes perfect sense: why risk something that brings them, at best, a nice bonus, and at worst, a pink slip? The downside is larger than the upside. In almost all companies and situations, safeguarding your career trumps any potential reward. So, if you’ve been scratching your head about the lack of risk-taking among your employees, you now know why. (However, if employees do take big risks, it is often when they can hide behind group decisions.

The biggest adjustment I had to make on moving from New Guinea to the U.S. was my lack of freedom. Children have much more freedom in New Guinea. In the U.S. I was not allowed to climb trees. I was always climbing trees in New Guinea; I still like to climb trees. When my brother and I came back to California and moved into our house there, one of the first things we did was to climb a tree and build a tree house; other families thought that was weird. The U.S. has so many rules and regulations, because of fear of being sued, that kids give up on the opportunity for personal exploration. A pool has to be fenced so that it’s not an ‘attractive nuisance.’ Most New Guineans don’t have pools, but even the rivers that we frequented didn’t have signs saying ‘Jump at your own risk,’ because it’s obvious. Why would I jump unless I’m prepared for the consequences? Responsibility in the U.S. has been taken from the person acting and has been placed on the owner of the land or the builder of the house. Most Americans want to blame someone other than themselves as much as possible. In New Guinea I was able to grow up, play creatively, and explore the outdoors and nature freely, with the obligatory element of risk, however well managed, that is absent from the average risk-averse American childhood. I had the richest upbringing possible, an upbringing inconceivable for Americans.” “A frustration

I’ve written about the giving of trust as though it were a simple formula for building loyalty. But it isn’t simple at all. The talent that is an essential ingredient of leadership tells the leader whom to trust and how much to trust and when to trust. The rule is (as with children) that trust be given slightly in advance of demonstrated trustworthiness. But not too much in advance. You have to have an unerring sense of how much the person is ready for. Setting people up for failure doesn’t make them loyal to you; you have to set them up for success. Each time you give trust in advance of demonstrated performance, you flirt with danger. If you’re risk-averse, you won’t do it. And that’s a shame, because the most effective way to gain the trust and loyalty of those beneath you is to give the same in equal measure.

This book is about introversion as seen from a cultural point of view. Its primary concern is the age-old dichotomy between the “man of action”and the “man of contemplation,”and how we could improve the world if only there were a greater balance of power between the two types. It focuses on the person who recognizes him- or herself somewhere in the following constellation of attributes: reflective, cerebral, bookish, unassuming, sensitive, thoughtful, serious, contemplative, subtle, introspective, inner-directed, gentle, calm, modest, solitude-seeking, shy, risk-averse, thin-skinned. Quiet is also about this person’s opposite number: the “man of action”who is ebullient, expansive, sociable, gregarious, excitable, dominant, assertive, active, risk-taking, thick-skinned, outer-directed, lighthearted, bold, and comfortable in the spotlight.

I think it’s important to reiterate here that I didn’t start out wanting to be a gardener, or a designer for that matter. It was all trial and error and figuring things out. And sometimes you’ve got to try something outside of your comfort zone to figure out what it is that you truly love. Well, you could say that about you and me right from the start. You were never looking for the loud guy, and I certainly wasn’t looking for the quiet girl. Now I look back and go, “If I would’ve ended up with that quiet guy or that stable guy or that safe guy, I would never have been able to pursue any of these dreams, because no one would have pushed me to these new places I discovered in myself.” Those other types of guys might have allowed me to stay in that safe place. They wouldn’t have drawn you out. That’s interesting. And if I had wound up with some cheerleader who was always the life of the party, I don’t think I would have found my way, either. I needed you for that. Nowadays when I think about the name Magnolia, I think about it in terms that refer to much more than the blossoming of our business. I think about the buds on the three, and how they really are just the tightest buds--they look like rocks, almost. And I feel like when Chip and I met, that tight little bud was me. I was risk averse, and in some ways, I don’t think I saw the beauty or the potential in myself. Then I wound up with Chip Gaines and-- You bloomed? I did. If I hadn’t married Chip, I might not have ever bloomed. I can’t imagine what my life would be if we hadn’t traveled this road. We celebrated our twelfth anniversary recently, and my dad said something that I thought was really beautiful. He said, “Chip, I always thought, when I was out on the baseball field hitting you those grounders, that I was training you to be the next greatest baseball player. But now, looking back and seeing the person you’ve become, I was really training you to be the next greatest dad.

In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that’s been good enough in the past. Their work will be derivative, not innovative. But if you can foster a positive understanding of failure, the opposite will happen. How, then, do you make failure into something people can face without fear? Part of the answer is simple: If we as leaders can talk about our mistakes and our part in them, then we make it safe for others. You don’t run from it or pretend it doesn’t exist. That is why I make a point of being open about our meltdowns inside Pixar, because I believe they teach us something important: Being open about problems is the first step toward learning from them. My goal is not to drive fear out completely, because fear is inevitable in high-stakes situations. What I want to do is loosen its grip on us. While we don’t want too many failures, we must think of the cost of failure as an investment in the future. I

them. By far the best theory for describing the principles of our irrational decisions is something called Prospect Theory. Created in 1979 by the psychologists Daniel Kahneman and Amos Tversky, prospect theory describes how people choose between options that involve risk, like in a negotiation. The theory argues that people are drawn to sure things over probabilities, even when the probability is a better choice. That’s called the Certainty Effect. And people will take greater risks to avoid losses than to achieve gains. That’s called Loss Aversion. That’s why people who statistically have no need for insurance buy it. Or consider this: a person who’s told he has a 95 percent chance of receiving $10,000 or a 100 percent chance of getting $9,499 will usually avoid risk and take the 100 percent certain safe choice, while the same person who’s told he has a 95 percent chance of losing $10,000 or a 100 percent chance of losing $9,499 will make the opposite choice, risking the bigger 95 percent option to avoid the loss. The chance for loss incites more risk than the possibility of an equal gain.

Rejecting failure and avoiding mistakes seem like high-minded goals, but they are fundamentally misguided. Take something like the Golden Fleece Awards, which were established in 1975 to call attention to government-funded projects that were particularly egregious wastes of money. (Among the winners were things like an $84,000 study on love commissioned by the National Science Foundation, and a $3,000 Department of Defense study that examined whether people in the military should carry umbrellas.) While such scrutiny may have seemed like a good idea at the time, it had a chilling effect on research. No one wanted to “win” a Golden Fleece Award because, under the guise of avoiding waste, its organizers had inadvertently made it dangerous and embarrassing for everyone to make mistakes. The truth is, if you fund thousands of research projects every year, some will have obvious, measurable, positive impacts, and others will go nowhere. We aren’t very good at predicting the future—that’s a given—and yet the Golden Fleece Awards tacitly implied that researchers should know before they do their research whether or not the results of that research would have value. Failure was being used as a weapon, rather than as an agent of learning. And that had fallout: The fact that failing could earn you a very public flogging distorted the way researchers chose projects. The politics of failure, then, impeded our progress. There’s a quick way to determine if your company has embraced the negative definition of failure. Ask yourself what happens when an error is discovered. Do people shut down and turn inward, instead of coming together to untangle the causes of problems that might be avoided going forward? Is the question being asked: Whose fault was this? If so, your culture is one that vilifies failure. Failure is difficult enough without it being compounded by the search for a scapegoat. In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that’s been good enough in the past. Their work will be derivative, not innovative. But if you can foster a positive understanding of failure, the opposite will happen. How, then, do you make failure into something people can face without fear? Part of the answer is simple: If we as leaders can talk about our mistakes and our part in them, then we make it safe for others. You don’t run from it or pretend it doesn’t exist. That is why I make a point of being open about our meltdowns inside Pixar, because I believe they teach us something important: Being open about problems is the first step toward learning from them. My goal is not to drive fear out completely, because fear is inevitable in high-stakes situations. What I want to do is loosen its grip on us. While we don’t want too many failures, we must think of the cost of failure as an investment in the future.

a young Goldman Sachs banker named Joseph Park was sitting in his apartment, frustrated at the effort required to get access to entertainment. Why should he trek all the way to Blockbuster to rent a movie? He should just be able to open a website, pick out a movie, and have it delivered to his door. Despite raising around $250 million, Kozmo, the company Park founded, went bankrupt in 2001. His biggest mistake was making a brash promise for one-hour delivery of virtually anything, and investing in building national operations to support growth that never happened. One study of over three thousand startups indicates that roughly three out of every four fail because of premature scaling—making investments that the market isn’t yet ready to support. Had Park proceeded more slowly, he might have noticed that with the current technology available, one-hour delivery was an impractical and low-margin business. There was, however, a tremendous demand for online movie rentals. Netflix was just then getting off the ground, and Kozmo might have been able to compete in the area of mail-order rentals and then online movie streaming. Later, he might have been able to capitalize on technological changes that made it possible for Instacart to build a logistics operation that made one-hour grocery delivery scalable and profitable. Since the market is more defined when settlers enter, they can focus on providing superior quality instead of deliberating about what to offer in the first place. “Wouldn’t you rather be second or third and see how the guy in first did, and then . . . improve it?” Malcolm Gladwell asked in an interview. “When ideas get really complicated, and when the world gets complicated, it’s foolish to think the person who’s first can work it all out,” Gladwell remarked. “Most good things, it takes a long time to figure them out.”* Second, there’s reason to believe that the kinds of people who choose to be late movers may be better suited to succeed. Risk seekers are drawn to being first, and they’re prone to making impulsive decisions. Meanwhile, more risk-averse entrepreneurs watch from the sidelines, waiting for the right opportunity and balancing their risk portfolios before entering. In a study of software startups, strategy researchers Elizabeth Pontikes and William Barnett find that when entrepreneurs rush to follow the crowd into hyped markets, their startups are less likely to survive and grow. When entrepreneurs wait for the market to cool down, they have higher odds of success: “Nonconformists . . . that buck the trend are most likely to stay in the market, receive funding, and ultimately go public.” Third, along with being less recklessly ambitious, settlers can improve upon competitors’ technology to make products better. When you’re the first to market, you have to make all the mistakes yourself. Meanwhile, settlers can watch and learn from your errors. “Moving first is a tactic, not a goal,” Peter Thiel writes in Zero to One; “being the first mover doesn’t do you any good if someone else comes along and unseats you.” Fourth, whereas pioneers tend to get stuck in their early offerings, settlers can observe market changes and shifting consumer tastes and adjust accordingly. In a study of the U.S. automobile industry over nearly a century, pioneers had lower survival rates because they struggled to establish legitimacy, developed routines that didn’t fit the market, and became obsolete as consumer needs clarified. Settlers also have the luxury of waiting for the market to be ready. When Warby Parker launched, e-commerce companies had been thriving for more than a decade, though other companies had tried selling glasses online with little success. “There’s no way it would have worked before,” Neil Blumenthal tells me. “We had to wait for Amazon, Zappos, and Blue Nile to get people comfortable buying products they typically wouldn’t order online.

The educational goal of self-esteem seems to habituate young people to work that lacks objective standards and revolves instead around group dynamics. When self-esteem is artificially generated, it becomes more easily manipulable, a product of social technique rather than a secure possession of one’s own based on accomplishments. Psychologists find a positive correlation between repeated praise and “shorter task persistence, more eye-checking with the teacher, and inflected speech such that answers have the intonation of questions.” 36 The more children are praised, the more they have a stake in maintaining the resulting image they have of themselves; children who are praised for being smart choose the easier alternative when given a new task. 37 They become risk-averse and dependent on others. The credential loving of college students is a natural response to such an education, and prepares them well for the absence of objective standards in the job markets they will enter; the validity of your self-assessment is known to you by the fact it has been dispensed by gatekeeping institutions. Prestigious fellowships, internships, and degrees become the standard of self-esteem. This is hardly an education for independence, intellectual adventurousness, or strong character. “If you don’t vent the drain pipe like this, sewage gases will seep up through the water in the toilet, and the house will stink of shit.” In the trades, a master offers his apprentice good reasons for acting in one way rather than another, the better to realize ends the goodness of which is readily apparent. The master has no need for a psychology of persuasion that will make the apprentice compliant to whatever purposes the master might dream up; those purposes are given and determinate. He does the same work as the apprentice, only better. He is able to explain what he does to the apprentice, because there are rational principles that govern it. Or he may explain little, and the learning proceeds by example and imitation. For the apprentice there is a progressive revelation of the reasonableness of the master’s actions. He may not know why things have to be done a certain way at first, and have to take it on faith, but the rationale becomes apparent as he gains experience. Teamwork doesn’t have this progressive character. It depends on group dynamics, which are inherently unstable and subject to manipulation. On a crew,

In families in which parents are overbearing, rigid, and strict, children grow up with fear and anxiety. The threat of guilt, punishment, the withdrawal of love and approval, and, in some cases, abandonment, force children to suppress their own needs to try things out and to make their own mistakes. Instead, they are left with constant doubts about themselves, insecurities, and unwillingness to trust their own feelings. They feel they have no choice and as we have shown, for many, they incorporate the standards and values of their parents and become little parental copies. They follow the prescribed behavior suppressing their individuality and their own creative potentials. After all, criticism is the enemy of creativity. It is a long, hard road away from such repressive and repetitive behavior. The problem is that many of us obtain more gains out of main- taining the status quo than out of changing. We know, we feel, we want to change. We don’t like the way things are, but the prospect of upsetting the stable and the familiar is too frightening. We ob- tain “secondary gains” to our pain and we cannot risk giving them up. I am reminded of a conference I attended on hypnosis. An el- derly couple was presented. The woman walked with a walker and her husband of many years held her arm as she walked. There was nothing physically wrong with her legs or her body to explain her in- ability to walk. The teacher, an experienced expert in psychiatry and hypnosis, attempted to hypnotize her. She entered a trance state and he offered his suggestions that she would be able to walk. But to no avail. When she emerged from the trance, she still could not, would not, walk. The explanation was that there were too many gains to be had by having her husband cater to her, take care of her, do her bidding. Many people use infirmities to perpetuate relationships even at the expense of freedom and autonomy. Satisfactions are derived by being limited and crippled physically or psychologically. This is often one of the greatest deterrents to progress in psychotherapy. It is unconscious, but more gratification is derived by perpetuating this state of affairs than by giving them up. Beatrice, for all of her unhappiness, was fearful of relinquishing her place in the family. She felt needed, and she felt threatened by the thought of achieving anything 30 The Self-Sabotage Cycle that would have contributed to a greater sense of independence and self. The risks were too great, the loss of the known and familiar was too frightening. Residing in all of us is a child who wants to experiment with the new and the different, a child who has a healthy curiosity about the world around him, who wants to learn and to create. In all of us are needs for security, certainty, and stability. Ideally, there develops a balance between the two types of needs. The base of security is present and serves as a foundation which allows the exploration of new ideas and new learning and experimenting. But all too often, the security and dependency needs outweigh the freedom to explore and we stifle, even snuff out, the creative urges, the fantasy, the child in us. We seek the sources that fill our dependency and security needs at the expense of the curious, imaginative child. There are those who take too many risks, who take too many chances and lose, to the detriment of all concerned. But there are others who are risk-averse and do little with their talents and abilities for fear of having to change their view of themselves as being the child, the dependent one, the protected one. Autonomy, independence, success are scary because they mean we can no longer justify our needs to be protected. Success to these people does not breed success. Suc- cess breeds more work, more dependence, more reason to give up the rationales for moving on, away from, and exploring the new and the different.

IT may seem counterintuitive to use uncertainty to quell volatility. But a small amount of uncertainty surrounding short-term interest rates may act much like a vaccine immunizing the stock market against bubbles. More generally, if we view humans as embodied brains instead of disembodied minds, we can see that the risk-taking pathologies found in traders also lead chief executives, trial lawyers, oil executives and others to swing from excessive and ill-conceived risks to petrified risk aversion. It will also teach us to manage these risk takers, much as sport physiologists manage athletes, to stabilize their risk taking and to lower stress.

Ostensibly, the most important governance reform was supposed to be the Right to Information (RTI) Act that aimed to impose greater accountability on the government. It was an NAC initiative. Several senior and retired civil servants cautioned Dr Singh against the RTI, worrying that rather than expose corruption and sloth in government, it would sap initiative and encourage officers to pass the buck. The jury is still out on whether or not RTI was a wise move and what its impact on governance has been. Has it made the government more transparent and accountable or has it made civil servants risk averse and unwilling to take difficult decisions? In UPA-1, when there was considerable euphoria over the RTI Act, few would have imagined that analysts would hold the RTI Act responsible for at least some of the so-called ‘policy paralysis’ that UPA-2 came to be charged with.

Research suggests that when people stick to a lower-sodium diet for a period of time, they actually develop a preference for less salty foods. Meanwhile, reports from the Iowa Women’s Health Study, which has been ongoing since the mid-1980s, showed that women who made the transition to a plant-based, lower-fat diet actually acquired, over a span of months, aversions to many of the processed and fast foods they liked at the start of the study. When changes like these occur, you know you’ve begun to rehabilitate your taste buds.

Bond market investors are a downbeat lot. They live in an asymmetric world because bonds can go down much more than they can go up. And investors in Treasury securities are the most downbeat and risk averse of all since they prize safety above all else.

Worst of all is when one encounters zombie churches. Because every church is built and sustained by volunteers, almost every church was at some point a thriving institution that contributed to real flourishing. But over time the imperatives of self-preservation can create a risk-averse culture that prevents continued learning and growth. Zombie churches exist to keep the lights on rather than to be the light in dark places; they turn inward rather than outward; they serve insiders and ignore outsiders.

Residing in all of us is a child who wants to experiment with the new and the different, a child who has a healthy curiosity about the world around him, who wants to learn and to create. In all of us are needs for security, certainty, and stability. Ideally, there develops a balance between the two types of needs. The base of security is present and serves as a foundation which allows the exploration of new ideas and new learning and experimenting. But all too often, the security and dependency needs outweigh the freedom to explore and we stifle, even snuff out, the creative urges, the fantasy, the child in us. We seek the sources that fill our dependency and security needs at the expense of the curious, imaginative child. There are those who take too many risks, who take too many chances and lose, to the detriment of all concerned. But there are others who are risk-averse and do little with their talents and abilities for fear of having to change their view of themselves as being the child, the dependent one, the protected one. Autonomy, independence, success are scary because they mean we can no longer justify our needs to be protected. Success to these people does not breed success. Suc- cess breeds more work, more dependence, more reason to give up the rationales for moving on, away from, and exploring the new and the different.

For example, there’s an uncharacteristic explosion of creativity among accountants. Yes, accountants: Groups like the Thriveal C.P.A. Network and the VeraSage Institute are leading that profession from its roots in near-total risk aversion to something approaching the opposite. Computing may have commoditized much of the industry’s everyday work, but some enterprising accountants are learning how to use some of their biggest assets — the trust of their clients and access to financial data — to provide deep insights into a company’s business. They’re identifying which activities are most profitable, which ones are wasteful and when the former become the latter. Accounting once was entirely backward-looking and, because no one would pay for an audit for fun, dependent on government regulation. It was a cost. Now real-time networked software can make it forward-looking and a source of profit. It’s worth remembering, though, that this process never ends: As soon as accountants discover a new sort of service to provide their customers, some software innovator will be seeking ways to automate it, which means those accountants will work to constantly come up with even newer ideas. The failure loop will

Conventional economic thinking assumes the poor will want to earn their way out of poverty. But as studies from countries as different as Ethiopia and France show, poverty makes people feel powerless and blunts their aspirations, so they may not even try to improve their lot. When they do, they face obstacles everywhere. They have no margin for error, making them risk averse. If they do not know where their next meal is coming from, saving and investing for the future is hard.

Victims are also less likely to take initiative because they feel outcomes are not in their hands anyway. An organization filled with victims will generally have low morale, have more risk-averse behavior, and find it difficult to implement change.

For the West, ending this confrontation may prove to be even more agonizing than ending the Cold War, because: the West is refusing to recognize that this is not a regional crisis, but a clash of opposing systems; the West has lost the ability to contain a civilizational adversary; the Kremlin has created self-protection mechanisms within Western societies; the liberal democracies don’t see any need to fight for norms in their foreign policies; they believe the Russian ruling elite is less risk-averse than the aged and decrepit Soviet leadership, but they’re still not sure how risk-averse; the system of global governance, which was based on the outcome of World War II, no longer fits today’s world; Russia’s aggression against Ukraine has blossomed into a crisis of Ukrainian statehood;

The very nature of mature companies is to be risk-averse and to attack big change like a body attacks an infection.

The way to get easy money is to have the most noble character trait of all: being risk averse.

Improvisational techniques, therefore, can free us up from the risk aversion and emphasis on rigid procedures that predominate so many workplaces. One company that has made extensive use of these core techniques in its daily operations is Pixar. Throughout the Pixar creative process, they rely heavily on what they call plussing; it is likely the most-used concept around the company. The point of plussing is to build upon and improve ideas without using judgmental language. Creating an atmosphere where ideas are constantly being plussed, while maintaining a sense of humor and playfulness, is a central element of Pixar’s magic. The practice of plussing draws upon those core principles from improvisation: accepting every offer and making your partner look good. Rather than criticize an idea in its entirety (even if they don’t think it’s good), people accept the starting point before suggesting improvements.

1. Churches seem restrictive and overprotective. Self-expression has become one of the foundations of our postmodern culture. There is less concern about truth than about freedom to express feelings, ideas, and experiences. The demand for expressive liberty has certainly threaded its way into the realm of spirituality, as well—which poses a problem for many churches, since many young adults say their experience of church feels stifling, fear-based, and risk-averse.

They are not confined to specific tasks. They are not limited in their access to the company’s information and computing power. They are not averse to taking risks, nor are they punished or held back in any way when those risky initiatives fail. They are not hemmed in by role definitions or organizational structures; in fact, they are encouraged to exercise their own ideas. They don’t keep quiet when they disagree with something. They get bored easily and shift jobs a lot. They are multidimensional, usually combining technical depth with business savvy and creative flair. In other words, they are not knowledge workers, at least not in the traditional sense. They are a new kind of animal, a type we call a “smart creative,” and they are the key to achieving success in the Internet Century.

people tend to avoid taking risks—they are “risk averse”—when they are deciding among potential gains, potential positive outcomes.

There is something for every investor: Whether you are a risk taker or risk averse, whether you want to invest in India or abroad, whether you want to invest in equity, debt or a combination of funds, whether you want to invest in some theme (e.g. rural, export-oriented, P/E ratio), industry (e.g. Manufacturing) or sector (e.g. Power), you will be able to do it through mutual funds. In short, it is a great investment vehicle to achieve your financial goals.

Cognitive Bias, that is, unconscious—and irrational—brain processes that literally distort the way we see the world. Kahneman and Tversky discovered more than 150 of them. There’s the Framing Effect, which demonstrates that people respond differently to the same choice depending on how it is framed (people place greater value on moving from 90 percent to 100 percent—high probability to certainty—than from 45 percent to 55 percent, even though they’re both ten percentage points). Prospect Theory explains why we take unwarranted risks in the face of uncertain losses. And the most famous is Loss Aversion, which shows how people are statistically more likely to act to avert a loss than to achieve an equal gain. Kahneman

in business, being risk averse can result in stagnation.

If we spend our lives so afraid of suffering, so averse to sacrifice, that we avoid even the risk of persecution or crucifixion, then we might never discover the true wonder, joy and power of a resurrection faith. Ironically, avoiding suffering could be the very thing that prevents us from partnering deeply with the Risen Jesus.