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Even the Odds

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Even the Odds

Sensible Risk-Taking in Business, Investing, and Life

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Minimize your risk while maximizing your life’s returns.

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Recommendation

“A ship is safe in harbor, but that’s not what ships are for.” This observation by 19th-century American theologian William G.T. Shedd “encapsulates life’s innumerable inherent risks,” says risk-management expert Karen Firestone. However, if you’re astute, she advises, you’ll do everything possible to manage your personal and professional risk. As CEO of a wealth management advisory firm, her job is to maximize her clients’ financial returns while minimizing their risks. Her clients trust her to handle more than $1 billion of their assets, so her knowledge of dealing with risk is hard earned in the real world. Her advice will help anyone minimize risk, even when it’s time to take your ship out for a sail. While never giving investment advice, getAbstract recommends Firestone’s guidance to investors, stock analysts, MBAs, business professors and fund managers.

Summary

Risk Management Is Life Management

Asset manager Karen Firestone is a risk-management expert. Controlling money well depends on assessing risk, and she has handled billions of dollars for her clients. But risk goes beyond investing, and it permeates every area of life. Driving a car, walking down the street, eating fast food or smoking a cigarette all have risks. In fact, risk is part of getting married, choosing an occupation, starting a new business or deciding where to live. Few skills matter as much as judicious risk assessment. Bet wrong, and you can lose your money, your business, your reputation, your health or even your life. Learning how to evaluate risk and choose your risk-management options is a necessary life-management skill.

Adhere to four basic risk-taking principles:

1. “Right Size Your Risk”

Right-sizing your risk means determining its scope, which can be “monetary, emotional” or “measured in time, effort or energy.” To illustrate, “if you tend to get sleepy” after 30 minutes on the road, consider the ramifications of choosing a job that requires an hour’s commute each way. Obviously, this choice involves a heavy risk.

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About the Author

Karen Firestone is president, CEO and co-founder of Aureus Asset Management.

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