A recent blast of media stories about such daring activities as extreme sports, day trading and starting highly capitalized high-tech businesses indicates that Americans embrace risk. However, that conclusion is an overstatement; it ignores the fact that today's risky behaviors are buttressed by the sense of prosperity and security that have resulted from the greatest bull market in history.

Kathleen Gurney, Ph.D., a psychologist and the CEO of Financial Psychology Corporation, North Miami, Florida, says, "In the United States, taking risks is a socially desirable trait. We want to believe we can take more and more risk, because risk is revered. But when push comes to shove and you are at risk of losing money, or you have just lost money, you find our what kind of a risk taker you really are. People are much lower risk takers than they would like to believe."

Look at your past experiences to assess your attitude toward taking chances. Do you risk by choice or only when you are forced to? Do you look at potentially hazardous activities from the perspective of what you could gain or what you could lose? When a past risk didn't pay off, did you become more hesitant to take other chances? Gurney says, "It's difficult to evaluate our own propensity for and comfort level with risk because it is a multidimensional trait. Risk is comprised of how emotional vs. rational we are when making a decision, how confident vs. anxious, how impulsive vs. reflective.


STEPPING OUT ONTO THE TIGHTROPE
Before you hazard too much - or too little - ensure that your risky decisions are reasonable and objective.


DEAL WITH ANXIETY
According to Kathleen Gurney, Ph.D., "When you look at people who can take risk - meaning appropriate risk - and those who cannot, a lot of it comes down to how good they are at tolerating their own anxiety. Anxiety is not bad unless you don't deal with it. It is meant to keep us out of danger, as long as it doesn't cripple us. Anxiety could motivate you to walk away from something that is an opportunity. So figure out what is making you anxious and how you can become more comfortable with whatever decision you have to make."


RELY ON YOURSELF
It's tempting to share the risk of negative fallout by asking a lot of people to participate in decision-making. This approach may be appropriate, even necessary, for major financial decisions. However, decisions of a lesser magnitude can get bogged down by too many personalities and opinions. Gurney says, "It may feel sage to get consensus, to get approval. But it can be dangerous because it keeps you from acting on something you really thinks you should do. Trust you own strategy if you have done your homework, if you have relied on what had been successful for you. Don't try to validate every decision with consensus."


LOSS VS GAIN
Most people like to champion the underdog, the person who defies the odds and comes out victorious. They believe that success comes to those who not only work hard, but also take some chances. Why, then, do most people take so few risks?

"Fear and loss are much greater motivators than gains or profits," says Financial Psychology's Gurney. She continues, "People find losing money so distasteful that the drive to avoid loss really sabotages future gains or opportunities. The elation that comes from a gain is short-term compared to the shame, the depression, the regret that harbors within us over a loss. The feeling over loss are so much stronger."

A failure can demolish a risk taker's self-confidence. Gurney suggests, "You can learn from your mistakes if you are willing to do a reasonable analysis of the failure. Could you have tried harder? Should you have done more research? Did something happen that you never could have controlled? Most often, the answer is 'yes'" A solid analysis of failures gives you a foundation on which to base evaluations on future risks. Gurney says, "If you think that failure is due to your lack of skill and ability, then you have no optimism that you can succeed in the future. Therefore, you will take less risk or no risk at all."