What do you stand to gain? What do you stand to lose?
Find a coin. Any coin will do. Now flip it. You have a 50-50 chance of either calling heads or tails. Not bad odds. How much would you be willing to bet on a coin toss though? $1? $10? $100?
Seriously, think about how much you would actually be willing to bet on a single coin toss. How much would you be willing to risk vs. the potential reward. Most people would be willing to stomach losing 1-10 dollars. Fewer would be willing to risk any more than that. Congratulations. You did a simple risk tolerance analysis. We do this all the time for nearly every decision we make as people. Rarely though are we 100% sure of the odds of any risky activity and, studies have shown, people are pretty bad at evaluating risk.
If we knew the risk and odds of every choice we ever made, people would be able to make fully rational decisions and us life coaches might be out of a job. But that's not the case, clients need help navigating the risk in their lives while also seeing the potential rewards that awaits them.
Which is why this week on CLCI Live, Brooke Adair Walters (MCPC), Jerome LeDuff Jr (MCLC), Anthony Lopez (MCPC), Lisa Finck (ACC), and Jen Long (MCPC), talk about how coaches can help their clients take the fear out of risk and go forward confidently into the unknown!
Risk/Reward Tolerance Matrix
For this live, our awesome CSO, Brooke Adair Walters, created an awesome tool for coaches to use in their sessions to provide clarity through comparison and possible outcomes. It also can shine a light on possible blocks, potential wins, and reveal unexpected outcomes.
So what uses does a client have for this type of analysis? They can decide:
Between several goals, options, or outcomes.
What option is the most valuable at the moment.
Where to invest their resources & time.
How to calibrate the table for your client’s risk tolerance
The purpose of calibrating the table for your client is to allow them to better define what makes their decisions either easy or difficult
Take the time to listen to your client’s language, and also mirror their responses in this space. It is valuable to you the coach and your client to explore and define what means a great reward and a great risk for your client.
It is also important to explore these spaces free of the boundaries of what it is they are actually working on. That way they can set the boundaries of their risk/reward ratio before the pressures of real life are applied.
Before you begin ask your client…
Where on this table would be a “Must Do It”/“No Brainer” decision, and where would be a “No Way”/”Run Away Screaming” decision for them? Even ask your client to name each quadrant or area of the table in a way that explains for them when to say “Yes, absolutely” or “No, absolutely not”. Feel free to explore how your client defines these spaces in their own language.
Take some time to explore the in between areas. Ask about the quadrants or spaces that are not clear yes & nos. What makes them in between areas? What would your client do with decisions that land in these middle grounds?
Note: Remain curious and also allow your client to explore. Mirroring and scaling will be powerful tools in the use of this matrix.
Powerful Matrix Questions for Coaches
Questions To Ask Around “Not Likely”
What makes it not likely?
Is it possible that the likelihood could change? (May reveal blocks)
On a scale from 1-10 how unlikely is this?
On a scale of 1-10 how certain are you of the likelihood?
Questions To Ask Around “A Sure Thing”
Are there any obstacles that may make this “not a sure thing”?
Is it possible that the likelihood could change? (helps with preparedness)
On a scale from 1-10 how sure of a thing is this?
Questions To Ask Around “Life Changing Win”
How do you define a “Life Changing Win?
What does a “Life Changing Win” feel/look/sound like to you?
On a scale from 1-10 how life changing would this be?
How specifically would this change your everyday life? (Brings the win into the real world - moves from heart to head)
What makes this reward so meaningful? (Ties their emotions to the win- moves from head to heart)
Questions To Ask Around “A Loss”
What makes this a loss for you?
Are there any ways this “loss” may also be a “win?” (Reveals Blocks & Opens Doors)
On a scale from 1-10 how much of a loss would this be?
Questions To Ask Around Risk
Is there anything that is worth a risk?
What makes something worth a risk?
When does a choice become “too risky?”
On a scale from 1-10 how risky are you?
What role does risk play in your life?
Want the high-quality PDF of the Risk/Reward Tolerance Matrix?
Lisa Finck, Brooke Adair Walters, Jerome LeDuff Jr, Anthony Lopez, and Jen Long!
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