Step 2: Required risk consumption
This is where personal goals come in relative to risk. The idea of required risk consumption is based in the law that anything with potential benefit has risk. Further, there’s often a correlation where the higher the benefit, the higher the risk. So if you want huge benefits, then the required risk consumption is likely to be much higher than if you only wanted small benefits.
This is, on an oversimplified level, the difference between getting what you want and not getting what you want. If you want something badly enough, then you accept the required risk consumption and use the remaining steps to navigate and mitigate risk where you can. If your business risk tolerance is hard-wired but doesn’t cover the required risk consumption of your goals, you must change your goals.
For some, this is a freeing notion. When you alter your choices to match other priorities, in this case your risk tolerance and capacity, you can gain a sense of peace.
For others, this is a signal to change their risk tolerance or find ways to increase their risk capacity.
Combining the first two steps – risk tolerance, capacity, and required consumption – gives you a picture of your goals from a risk perspective.