Let's consider this 3 part mini-series as a step by step guide to bridge aspirations and actions with a plan that is in tune with our nature, in particular our risk attitude. Let's increase our self awareness and rethink our relationship to risk (I), embrace uncertainty as it is part of the recipe towards approaching our full potential ✨ (II) and design and navigate a pathway that allows us to incorporate our values (III); for less friction and more flow, less hypocrisy and more integrity in this world.
How much risk does it take? How much risk can we take? Are we scared or excited when daring?
PC: unknown
Ready for take off?
We all seem to agree that growth happens beyond the comfort zone, where things are less certain, change is more constant, we start with 'less to no clue' and we fail more likely before we succeed or progress.
Who in his natural common sense of mind would put him/ herself intentionally into this zone? And why?
Fundamentals first
If you are new to concepts like 'comfort zone', 'flow' & 'risk appetite', we have invited chatgpt (*) to quickly sum up the core gists and back it with articles for your further research.
Comfort Zone
A comfort zone refers to a psychological state where an individual feels safe, at ease, and in control of their environment, experiences, and actions. In this state, the person encounters minimal anxiety and stress, maintaining a steady, routine-based existence.
Comfort, Stretch, and Panic Model
The Comfort, Stretch, and Panic Model is a framework used to illustrate how individuals experience different levels of challenge and engagement, which impacts their ability to learn and grow. This model, often referenced in personal development and educational contexts, categorizes experiences into three distinct zones:
Comfort Zone:
This is where individuals feel safe, secure, and at ease. Activities in this zone are familiar, routine, and do not create stress or anxiety. While it fosters stability, staying exclusively in the comfort zone can lead to stagnation and limited personal growth.
Stretch Zone (Learning Zone):
In this zone, individuals experience manageable challenges that push their limits without overwhelming them. It is characterised by a balance between challenge and skill, where individuals are outside their comfort zone but not in a state of panic. This zone is ideal for learning, growth, and the development of new skills.
Panic Zone:
This is where challenges exceed an individual's current skills or coping abilities, leading to feelings of anxiety, fear, and stress. In this state, learning is often hindered because the individual is focused on survival rather than growth. Prolonged exposure to the panic zone can lead to burnout and decreased motivation.
Here are three scholarly articles that define and support the concept of flow:
Brown, B. (2012). Daring Greatly: How the Courage to Be Vulnerable Transforms the Way We Live, Love, Parent, and Lead. New York: Gotham Books.
Discusses the importance of stepping outside the comfort zone to embrace vulnerability and achieve growth.
Senninger, T. (2000). The Learning Zone Model: A Framework for Expanding Your Comfort Zone. Retrieved from https://learningzonemodel.com.
Introduces a practical model for understanding how people learn by navigating through comfort, stretch, and panic zones.
Yerkes, R. M., & Dodson, J. D. (1908). The Relation of Strength of Stimulus to Rapidity of Habit-Formation. Journal of Comparative Neurology and Psychology, 18(5), 459-482.
Describes the Yerkes-Dodson Law, which supports the idea that moderate levels of challenge improve performance, while excessive challenge can hinder it.
Flow
Flow is a psychological state in which an individual is fully immersed and engaged in an activity, experiencing deep focus, enjoyment, and intrinsic motivation. This state is characterized by a balance between the challenge of the task and the individual's skills, leading to a sense of timelessness and complete absorption. Flow often results in optimal performance and personal satisfaction.
Here are three scholarly articles that define and support the concept of flow:
Csikszentmihalyi, M. (1990). Flow: The Psychology of Optimal Experience. New York: Harper & Row. This seminal work introduces and elaborates on the concept of flow, describing the conditions under which flow occurs and its impact on happiness and performance.
Nakamura, J., & Csikszentmihalyi, M. (2002). The Concept of Flow. In C. R. Snyder & S. J. Lopez (Eds.), Handbook of Positive Psychology (pp. 89-105). Oxford: Oxford University Press. This chapter provides a detailed analysis of flow, including its psychological components and how it fosters well-being and personal growth.
Moneta, G. B., & Csikszentmihalyi, M. (1996). The Effect of Perceived Challenges and Skills on the Quality of Subjective Experience. Journal of Personality, 64(2), 275-310. This empirical study investigates the conditions that give rise to flow and the role of balancing challenges with skills in achieving this optimal state.
Risk Appetite
Risk Appetite refers to the level of risk an individual, organisation, or entity is willing to accept in pursuit of goals and objectives. It reflects the balance between potential benefits and potential losses and is influenced by factors such as experience, resources, and the specific context. In decision-making processes, understanding one’s risk appetite helps determine the appropriate course of action, whether conservative, daring, or full risk.
Low Risk Appetite:
Preference for secure, low-uncertainty decisions, often associated with avoiding potential loss or disruption.
Moderate Risk Appetite:
Willingness to take measured risks where the benefits outweigh potential downsides, with reasonable mitigation plans in place.
High Risk Appetite:
Acceptance of significant risks in pursuit of high rewards, often involving bold decisions and the potential for substantial gains or losses.
Here are three scholarly articles that define and support the concept of flow:
Hubbard, D. W. (2009). The Failure of Risk Management: Why It's Broken and How to Fix It. Hoboken, NJ: John Wiley & Sons.
Discusses risk appetite within the context of decision-making and the flaws in traditional risk assessment models.
Hillson, D., & Murray-Webster, R. (2007). Understanding and Managing Risk Attitude. Aldershot: Gower Publishing.
Explores how risk attitudes and appetites influence decision-making and project management.
International Organization for Standardization (ISO) (2018). ISO 31000: Risk Management – Guidelines. Geneva: ISO.
Provides a framework for establishing risk appetite and integrating it into organizational risk management strategies.
In a nutshell
Our key takeaways and foundation to build upon for what's next:
Leaving the comfort zone is a mind challenge.
The comfort zone consists of routines devoid of risk.
Outside the comfort zone we are faced with increased uncertainty.
Intentionally leaving the comfort zone goes hand in hand with developing a growth mindset.
Resilient systems bounce back to the same level after 'shock'. Anti-fragile systems learn to grow from them.
There are numerous advantages of stepping outside, including self-actualisation, development of a growth mindset, resilience, anti-fragility and greater self-efficacy.
Experiencing flow requires an appropriate challenge, matching skill levels. If skills>challenge, we experience boredom. If skills<challenge, we experience anxiety. We navigate between the two to explore an optimal experience.
Risk profile, risk capacity, risk tolerance and risk attitude are all considerations affecting risk appetite.
No Risk, no Growth, no Flow
Growth and progress imply learning. Ultimately, we are all somehow on a sense making and learning journey; Everyone at their own pace and rhythm. Learning happens outside of the comfort zone, where we are faced with an increased amount of uncertainty and challenge and as such, an increased amount of perceived risk (risk= 'the effect of uncertainty on objectives').
Accordingly, unless life forces us to learn through it's sometimes unexpected and 'coincidental' events, stepping out of the comfort zone intentionally means being willing to take risks. But what if we are naturally not comfortable with taking risks? Can we learn to increase our risk appetite on demand? And become comfortable with risk?
The more we believe in something, the more we are willing to risk.
Values & Risks
We like to promote the idea that we can, if we really want to. That means, that our desire to do so needs to be bigger than the desire to stay the same.
Usually, this desire is triggered by a sense of unease with the current status quo in combination with an increased insight into what is really important to us, what we really care about and how we like to see ourselves in visions of the future.
So, let's say the momentum is set and we understand that we have to start trying and prepare for potential error. A question remains: How far can we - or do we have to - go?
Homework
Before we invite you to move forward to next part and explore answers to these questions, we would like to invite you to think about your current values & visions framework. The following reads can give some ideas on what to consider: 'The value of values' + 'Values Driven Journey'
Of course we are here to facilitate in case you might need some support.
Best wishes✨
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