Tim Ferriss: How do you take risks and manage risks? Well, it starts with defining risk. So people start to manage risk and think of risk and plan for risk without ever defining it in the first place. This is where we get ourselves into a lot of trouble. And many people view me as a risk taker. How do you get comfortable taking so many risks? I don't view myself as a risk taker at all, I actually view myself as an expert or a would-be expert at the very least in risk mitigation. I think of myself as very, very conservative and I think of risk as the probability or the likelihood of an irreversible negative outcome, the irreversible is super important in that sense. And the way that I work through different decisions or potential risks is by following an exercise called fear setting. And I do this at least once a month. I do this certainly multiple times a quarter. And it is akin to goal setting. A lot of people focus on goal setting. Well, if you're riding around with the emergency brake on, i.e. small or big fears, and as Tony Robbins, who I interviewed for Tools of Titans might say, "Stressed is the achiever word for fear." So if you're feeling stressed same, same. It is fear.
So here's how you work through it so you're more effective and less reactive, emotionally reactive in your decision making and just responding honestly to external circumstances. Fear setting. What does it look like? It's very simple. What I do is free hand this so I use a piece of paper. I'll take a piece of paper and I'll turn it vertical so we have 8.5 x 11. I'll put two lines equally distanced like so so you have three columns. Now, the decision that I am considering making I'll put at the top, the risk. And then in the first column I'll write down all of the worst things that could possibly happen. And the key element here is specificity. Super specific. So what are the worst things that could happen if you made this decision? If you, and this is broad but it could be launch the new product; dedicated a team to a different project; fired half of your staff, whatever it might be. It could be quitting a job; taking a new job; breaking up with someone; proposing to someone, whatever it might be. Write down all of the worst things that could happen with the greatest amount of detail possible. They need to be specific so think of them as sort of the anti-goals. To set good goals they need to be what? Smart. Specific, measurable, achievable, blah, blah, blah I don't know what R is; I can never remember R, T, timeline. Reasonable, I don't know who knows. Rad, let's go with rad. But anyways you don't want this to be rad, but those same criteria you would use for goals you're using for these fears. They need to be specific. All the worst things could happen.
All right. Second column is what could I do to minimize the likelihood of each of those things from happening? What could I do to minimize likelihood of all those things from happening each one in turn? Next column is what could I do to get back to where I am now if these things happen? Again, one by one you go down the list. What could I do to get back to where I am now? And if you're considering say quitting your job and starting your own company, well certainly you could start by moonlighting so that would be one in the column. Maybe you could take a bartending job or a waitering job if everything went to hell in a hand basket to get back on track. And they're are the same type of coping mechanisms, they're the same type of financing options, they're the same type of short-term say remote contracting virtual team options, whatever it might to be as a CEO, as a VP of marketing, as a fill in the blank, whatever the title might be however you think of yourself also you can do this. So fear setting at the top of the page; what you thinking about doing, the risk, the thing that might be risky or that is scaring you and then all the worst things that could happen bullets of by bullet as specific as possible in the middle; what you could do in each case for each bullet to minimize the likelihood of each happening; and then last what you could do to get back to where you are now if each of those happen.
And last but not least, I'll give you one more just as extra credit is something that I would call fear rehearsal. And it's no big secret for people who have read a lot of my stuff I'm very interested in stoic philosophy. I think that stoicism is a fantastic operating system for thriving with high performance in high stress environments. And it trains you to be less reactive. So fear rehearsal is something that Seneca used to do, it's something Cato [ph] used to do, a lot of the great stoics used to do it, Marcus Aurelius and that was practicing your worst-case scenario. So if there's any financial aspect involved, which very often there is, then you could do say what maybe Kevin Kelly does, the founding editor of Wired magazine. You could sleep on your floor in a sleeping bag for a couple of days and eat only oatmeal or something like that and realize actually this isn't that bad. I could totally survive doing this or rice and beans or whatever it is. You could do what I do, which is somewhat similar, which is going for say a week eating the scantest affair as Seneca would say, setting aside a few days each month, so maybe I'm eating rice and beans, maybe eating only one meal a day and fasting. I do routine fasting also, which is something I've talked a lot about with someone named Dominic D'Agostino, wearing the same clothing for a week straight or maybe just Hanes T-shirts and one pair of cheap jeans with flip-flops. Fine.
So you're rehearsing the worst-case scenario so it loses its power over you, it loses its grip over you. You're effectively inoculating yourself against fear later, which will cause you to make bad decisions. So I would say fear setting and fear rehearsal are the big two buckets of techniques that I would use for addressing risk, which starts with defining it. The likelihood of an irreversible negative outcome. Define thy terms. A nebulous term that you use a lot is a dangerous thing.