Risk is the probability of a bad thing happening.

Go skydiving, for example, and the risk is your 0.001% chance of death.

But jump back to real life, and we only think about financial risk.

Seems sensible: if you didn’t make enough money to feed your family in 1921, you would literally die or hit extreme poverty. Worrying exclusively about financial risk was smart.

But we’re not in 1921 anymore.

Things have moved on: social security, free healthcare, etc. We’re no longer in a desperate struggle to survive: money is quickly losing its meaning and young adults want more out of life.

So the way we think about risk needs updating.

Here’s how I calculate risk for 21st-century decision-making 👇

Happiness Risk

Really, all we care about is our happiness.

So the only type of risk you should care about is the probability of not being happy.

My happiness is a function of:

1. My health

2. My social & romantic life

3. How much I’m learning

4. How much cool sh*t I get to make

5. My finances

6. And the meaningful impact I have on the world

Notice that finances still pop up. I’m not going broke anytime soon…but any risky decisions I have to make will consider all 6 factors — not just the £££.

So flashback to my final-year at university.

Do I:

A) Take the high-paying investment banking job? Or

B) Double down on the penniless startup I’d co-founded?

The average grad will freak at even the thought of B.

“What a huge, scary risk. My cashew-size testicles are far too small for that.”

But what if you look beyond the financial risk…

Reviewing the comparison table above, it actually looks like investment banking is the riskier option.

As soon you start to evaluate happiness risk (instead of just financial), many risky decisions aren’t risky at all…

And many “stable, safe” choices are actually extremely dangerous. The average analyst at Goldman Snacks has a health score of just 2.3/10…

Risk Mitigation

So already we’ve seen how “risky” bets often aren’t so risky…

But the world isn’t binary.

It’s never Option A or Option B.

There’s always an Option C you can create to find an equilibrium between two extremes.

Revisiting our Investment Banker vs Startup example:

What if you could take measures to mitigate the high financial risk of running a startup?

For example, when I was running my first startup, I spent every Sunday blasting out 12 hours of private tuition.

This paid all my bills, and by cutting out bullsh*t expenses (*cough* London cocktails *cough*), I actually ended up saving over £10k before we fundraised and I got a full-time salary…

So by tutoring on the side, I successfully mitigated the main risk factor of rolling the startup dice.

What’s stopping you from rolling your dice?

Whatever it is, financial, health or social risk…there will be ways to mitigate the risk.

For example, one of the founders I coach was scared about sharing his new company with friends for fear it might not work out and he’ll look silly.

So instead of launching with a delusionally bold “I’m gonna change the world #elon”, he posted:

Decided I’m gonna try something new. Let’s see what happens — would love for you guys to check out new website :) [etc.]

Risk factor mitigated.

Invisible Risks

You can ignore risk, but you can’t make it go away.

But that’s what so many of us are currently doing…

AI is set to kill off 400 million jobs by 2030, and 20% of finance jobs will be replaced by hyper-rational Godbots.

So whereas a cushy 9–5 was a safe bet for the risk-averse back in the 60s, it’s now quickly turning into one of the riskiest, least stable career paths you roll down.

If your work involves lots of repetitive labour, it probably won’t be here for very long…

If you’re not building marketable skills in less-automatable fields — like data science, design, sales — you’re taking a crazy risk with your career.

But even if you’re not phased by AI, you can now get fired for asking my ethnicity or mixing up my gender pronouns (he/him).

If you don’t have a marketable skill — i.e. a skill you can pitch other people and get reliably paid for — you’re forever at the mercy of your current boss.

Summary

Financial risk is just one part of the thing you should really care about: happiness risk — the probability of being unhappy.

Next time you face a risky decision, zoom out from just the money and think about what actually makes you happy? And then: what’s the risk you won’t get those things? That’s the risk you should base your decision on.

And remember, you can always mitigate risk by working part-time, testing an idea before doubling down, spending a month in NY before moving permanently.

And finally, don’t ignore those invisible risks. Your job can disappear in a finger click, make sure you’re building marketable skills for when things go wrong.

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