If you spend a little time researching the strategies and ideas of many of the world’s most successful investors, you will see a pattern emerge. That pattern isn’t luck, or a nose for great opportunity. Instead, that pattern is a well-developed system of managing loss or risk. In other words, some of the world’s greatest investors got to where they are by making sure that when they do fail, they don’t take too big of a hit.
Employing this strategy in your own life is pretty simple. We shouldn’t be afraid to take risks, but when we do take risks we should do what we can to remove the sting of failure’s consequences. By doing so, we can save our resources to make more attempts, and we can worry less and focus more on the task at hand. Here are a couple of ideas to mitigate the risk as you reclaim failure:
1. Plan ahead. A good plan looks at what can go right, what can go wrong, and prepares us to deal with both.
2. Try to study some similar situations where the person failed at the thing you are trying to do. See how they failed, and also what they did to survive the failure.
3. Think “insurance”. You might not be able to buy insurance for everything you want to do in life, but many times there are ways to insure ourselves in the case of loss. The principle here is to ask, “What can I pay a small amount up front to protect me from a big loss later?”
4. If you can’t mitigate the risk, then either find a way to be ok with the loss, or find another approach. Sometimes it’s more important to live to fight another day.