Have you considered your reward profile?

I’ve written previously about the importance of talking about reward alongside talk of risk. Risk (in practical conversation) is a discussion of negatives. But we can only consider negatives if we put them in the context of intended positives. And we should only talk about possible positives when we’re aware of the possible negatives. In short, risk and reward must go together.

Meanwhile, the other day I was talking to someone about the kind of people who join startups rather than more established companies. A startup’s future is much less certain than that of a big corporation. When describing the differences between such people I used the phrase “risk profile”, and immediately I remembered my own advice. So, let’s briefly consider someone’s reward profile…

The very name “risk profile” carries an emphasis on negativity—how much will you allow things to go wrong? Switching it around to a reward profile changes the conversation. We stop talking about the bad things we don’t want to happen and start talking about the good things we do want to happen.

There is no single format of what a risk profile looks like, but if a specific risk profile document only talks about the negative, then it might be useful to create a separate reward profile and compare the two. We can see how compatible they are, and have a sensible conversation that considers risk and reward together.

For example, if the risk profile looks like, say, the safety risk profile over here (comparison of bad events against probability) then a corresponding reward profile could be a comparison of positive outcomes against probability.

On the other hand, some risk profile documents do talk about reward, for example the probability of financial gain and loss, so we could fairly call these “risk and reward profiles”. This is the kind of thing I’ve advocated with probability curves to discuss uncertainty.

Talking only about risk skews the conversation. Overall the aim is to consider situations in the round—not just risk, not just reward, but both together.

Photo by Jonathan Taglione

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s