Real-Life Risk Taking with Christine Hofbeck
Disclaimer: the opinions expressed by the author of this article don’t necessarily represent the opinions of NAWA as an organization.
As actuaries, so much of our time is spent thinking about and quantifying risk. How can that influence our behavior when it comes to real-life risk taking? At the 2023 NAWA Annual Meeting, Christine Hofbeck spoke to attendees about this topic, sharing examples from her life and guidelines for thinking about risks and possible outcomes.
Risk is anything we do that has an uncertain outcome and an impact on us financially, emotionally, reputationally, or physically. At work, we generally think of risk as downside risk or something negative that we need to manage and mitigate, but applying this view to real life can limit us from achieving our dreams. What if you challenged yourself to consider risk both in the form of taking action and not taking action? What might you accomplish if you redefined risk to include things with potentially positive unknown outcomes? Instead of risk, we might label these as dreams, decisions, opportunities, or possibilities.
We tend to think of people as static points on the risk averse <-> risk seeking spectrum, with actuaries having a reputation for being risk averse. However, as individuals we might find ourselves at different points on this spectrum depending on the situation. Challenge yourself to reframe your mindset here, too: do you have a different perspective if you think of it as dream averse <-> dream seeking?
Christine shared a quadrant system for categorizing risks.
Both quadrants 2 and 4 could lead to regret. When you’re evaluating a risk, it can be helpful to determine which regret is bigger- the regret of doing something and failing, or the regret of not doing something you might have succeeded at but never tried? Even if you take a risk and face challenges or ultimately fail, simply by taking the risk you give yourself the opportunity to move from quadrant 4 to quadrant 1; that is, by taking the chance, you allow yourself the opportunity to succeed.
Sometimes risks are put upon us and we are forced to make a decision. In these situations, we may have to figure out the best path forward and how to minimize the risk of regret. Here are a few ideas for how to mitigate risk:
Lean on a trusted ally (ideally one that has a similar risk tolerance to you)
Don’t burn bridges (for example, if you are leaving a job, do it in a thoughtful way)
Build a network (for example, NAWA!)
Write it down
Plan
Alternatively, if you reclassify risks as dreams, you can use these tools to maximize possibility:
Take action
Tell a friend (like working out, posting it makes you more accountable!)
Research
Make time
Believe
At the end of the day, risks are uniquely personal, and accumulated happiness or your version of it should drive your decisions. Accumulated happiness might look different for everyone and may even be different for you at different points in your life. As you’re thinking about risk, think about the dreams you have and which of those might bring you the most accumulated happiness, and let this be your guide to real-life risk taking.
Bio:
Christine Hofbeck, FSA, MAAA is the Vice President of Actuarial Development at Fortitude Re. In this role, she leads the intern and actuarial development (exams) programs, rotations, and continuing education initiatives. Her non-fiction business book "Winning Conditions: How To Achieve by Managing the Details That Matter" (Simon & Schuster) became a bestseller and is available on four continents in two languages. She holds degrees from the University of Pennsylvania and MIT, and formerly served on the Society of Actuaries Board of Directors. In 2017 she was the runner-up on CBS's hit reality television show Survivor.