Risk is a surprisingly interesting subject, both in the context of economics, and life more broadly. There are so many industries built on risk -- insurance, finance, etc -- but we never talk about how to make it easier for people to take risks.

A thread:

1/ One of the biggest investments you can make in yourself is to make it easy for you to take risks. Most people underestimate the reward that can come from taking risks, and so fail to be bold and take a chance when they could stand to gain significantly.

2/ Taking risks is a necessary part of becoming successful. Doing the average thing will yield an average outcome; guarantees mean there is no risk. It's impossible to be right all of the time, so life is really all about managing our risks.

3/ So, if risk management is so important, how do we make it easier for us to take risks? The first thing to do is to understand your risk parameters. Ask yourself: what kind of risk can I tolerate? How much can I lose and still feel good about.

4/ There are four key types of risk to think about in life: reputation, career, opportunity, and financial. When you are making a decision and considering a risk, you need to take into account all of these factors, and whether the risk fits into your parameters.

5/ Reputation risk is when someone may see you differently for doing something. Great example is crypto. Some people see crypto researchers and developers as crazy -- "crypto is meaningless and a waste of time". But if crypto is the next big thing, ppl will see them as geniuses.

6/ It's important to note that reputation risk is temporary. If you take a risk on crypto and the whole industry fails, people may see you differently for a little while. But people will forget and move on. Heard of "Ning"? Marc Andreessen's startup? What about "a16z"?

6/ Career risk is all about how a decision will affect your job prospects. The best way to think about career risk is in terms of regret minimization (Jeff Bezos). Will I regret taking this new job? Conversely, will I regret not taking this new job?

7/ In career risks, your goal should be to minimize your regret in the future. Think ahead and consider how you will feel if you don't make changes to your career. Sure, pursuing a career in crypto could be a major risk. But what upside could be gained?

8/ Opportunity risk is never talked about enough. This type of risk is invisible and almost impossible to quantify. Let's say I get offered a job as a VC. "What do I get by taking that job?" is a reasonable question to ask. But what about what you could lose?

9/ If you pursue that job as a VC and a week later you get offered an even better job, you will likely not be able to take it (a VC firm just took a chance on you!). By pursuing one opportunity, you then cannot pursue another one.

10/ Good risks have significant upside to be realized if they pay off. If I pursue a career in ISAs and they turn out to be the next big thing, I will likely be seen as an industry expert. If I invest all my money into a new business and it becomes the next Facebook, I'll be rich

11/ You need to make it easy for you to take risks. There are two ways to do this. The first is that you should try to make your choices easily reversible. If I pursue a job at a new crypto startup, perhaps having a back-up plan in place would be prudent.

12/ Secondly, your downside should be capped in some respects. Ofc, capped downside means limited upside. But you need some protection. For example, if you pursue a new financial market crypto startup that fails and harms people's savings, you can't recover from that.

13/ Bonus: you should also calculate the odds of failure and weigh how you can recover -- good risks are easy to overcome if they go south.

Indeed, quantifying reputation risk can be difficult. But not doing so makes us more likely to make irrational decisions.

14/ It's also important to take into account luck. Understand that some things that happen are not a product of your skill, but rather luck. If you understand luck from the get-go, you are more likely to make better decisions -- luck can boost our ego too much.

15/ Risk is easier to manage when you have less to lose. Bezos can't take as many risks because he has billions to lose. But a 17 yo kid in Brooklyn with nothing can take massive risks in pursuit of their ambition -- they have a lot less to lose. Thus, take risks when you can.