ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Risk and Return in Life - A Guide to Managing Risks in Everyday Life

Updated on July 16, 2013

Introduction...

Many things in life are so simple that we tend to overlook them very easily. One such concept is the risk and return in life. Before we get to what risk and return is, let us get an idea of what the two terms mean separately.

Risk

Risk, formally, means the tendency to receive a negative result or outcome from an activity. In more simple words, risk is could mean 'what could go wrong if we decide on one activity rather than the other'. No need of formal definitions, I think we all have a pretty good sense of what a risk is. The key thing is that a risk essentially has to produce a negative outcome.

Return

Return is some kind of benefit we receive for undertaking an activity. The return could be a monetary or a non-monetary compensation. The return could be instant or long term.

Always prioritize your family
Always prioritize your family

Risk and Return in Life...

Probably you have heard the term "Risk and return" more frequently in the business world than in everyday life. Well, it is true. But through this hub, I am trying to integrate the same concepts to our everyday life to shed some light into better decision making in our lives.

Risk and Return in a business context means that before making a business decision (specially for investments) the Board o Directors should assess the risks they are about to undertake and evaluate the probably return from the investment. If the returns are higher than the risk they undertake, the decision gets a green light and if the returns are lesser than the risks they undertake, it's a red light. But there are many more factors to be considered as well.

Taking the same concept into our lives, we can see how risk and return could help make better decisions. In the business context, the risks and returns were essentially measured in monetary terms. But in the social context, the risks and returns could be evaluated on a value scale.

Let us evaluate some scenarios. Think about school life. Our parents chose a school for us and we learnt there. Our parents made a decision to provide us education and decided to choose that school. There may be different problems with each school, starting with bullies, terrible teachers, terrible food etc etc. Those are the risks of the decision they made. Existence of those risks does not guarantee that we will face all of the risks. There is rather a 'chance' or a probability of facing the risks. If we are careful enough we can avoid bullies. Taking home made lunch, we can avoid the terrible food served and avoid the risk of catching some disease. These are attempts to minimize the risk. Nothing will guarantee you that anything you attempt will 'eliminate' the risk. On the other hand if we manage these risks to some extent and cope up with the years of schooling we can get the benefit of the decision we made way back. The benefits would be knowledge, an employment opportunity, a successful life etc. Now that we have an understanding of what the risks and returns of the decision are, we can evaluate the two on a scale. Now, the example I have taken is education which basically the most important thing in anybody's life and analysis of risks and returns would be pretty null and void, but for the sake of analysis it would be as follows. For analysis the risks and returns of a decision could be put on either sides of a mental scale. In education, all the risks mentioned above and more would not account for a weight of a feather when measured against the benefits of education. Let us say if all the risks weigh a feather, the returns would weigh a ton. That is how much education is important to us. Mark Zuckerberg may be a Harvard dropout and the youngest billionaire in the world, but he did go through his schooling years.

The same principles apply to when you analyse any decision you make in life. Always give a high weightage to matters when it comes to family, society and people. Because we cannot live without the help of others. People are the most valuable asset you can earn.

Love is a risk... worth giving a chance.
Love is a risk... worth giving a chance.

Was this hub helpful?

See results

Some inspiration...

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)