Values & Risk Part I/3 | Reframing our Relationship to Risk
- Sparks
- 3 days ago
- 6 min read
Growth, uncertainty, and risk are inseparable, yet navigating them intentionally is rare. This 3 part series explores how values, goals, and risk attitudes intersect to shape personal and organisational growth.
In this first part, we explore a few characteristics of learning, growth and flow theory and connect the related dots by bringing risk attitude and appetite into the picture. We conclude this chapter by emphasising the importance of values-awareness and their relationship to risk attitudes.
How much risk does it take to grow? How much risk are we willing to - or can we - take? Are we scared or excited when daring?
PC: DESIGNED BY THINK DIFFERENT
Leaving the comfort zone...
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.
So why would we put ourselves intentionally into this zone?
Learning fundamentals first
If you are new to concepts like 'comfort zone', 'flow' & 'risk appetite', we have invited chatgpt to help us (*) with a quick summary of the core gists:
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 in motion.
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.
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.
Some Risk fundamentals second
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.
Connecting the dots
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.
There are numerous advantages of stepping outside, including self-actualisation, development of a growth mindset, resilience, anti-fragility and greater self-efficacy.
Resilient systems bounce back to the same level after 'shock'. Anti-fragile systems learn to grow from them.
Experiencing flow requires an appropriate challenge, matching skill levels. If skills outweigh the challenge, we experience boredom. If skills are insufficient to match the 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. 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? Can we become comfortable with risk?
If we really want to...
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.
The more we believe in something, the more we are willing to risk.
What if we don't know what is really important to us - yet? And when do we actually believe?
Let's dive a little deeper
Before we invite you to move forward to the next part and explore answers to these questions, we would like to invite you to think about your current values code & set of visions.
Of course we are here to facilitate in case you might need some support.
Best wishes✨
Helene with SPARKS
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About our Values & Risk Series
Is your Risk Attitude fit for Purpose?
***
Navigating successfully between growth and protection requires a good understanding about what is dear to us - a.k.a. what we value - and how comfortable we are with taking risks (as a collective) - a.k.a. dealing with uncertainty.
(Organizational) Burnout/ Anxiety/ Fatigue are partly a consequence of self - UN - awareness. Boundaries and energy management are becoming crucial concepts when learning how to shield oneself in a world of ever increasing and changing expectations and uncertainty.
Our Values & Risk Series is designed to explore the opportunities of (collective) risk culture, improve goal setting and nurture initiatives in line with one's risk profile and essence.
Additional Readings
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.
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.
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.
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