One of my least favourite utility questions is: what is your attitude to risk?

I've heard it asked on numerous occasions and have never encountered a satisfactory answer. Time and again one hears variations on the theme of being 'risk averse'.

People love being 'risk averse'. They love it like loving 'world peace'. And I'm not sure if they really understand what either really entails.

No doubt all the management handbooks suggest that is the thing to say. But what does it mean?

Well, let's do a little thought experiment...

We'll start by exchanging 'risk' with 'safety'. And as we are talking finance, let's replace 'financial' with 'fun'.

Let's take a risky proposition with a potentially high financial return. We'll call that option A.

Then we have the low risk, lower financial return option. We'll call that B.

Conceptually it is difficult to relate to risks that aren't immediate. It's in our genes. Climate change = erm... However: wooly mammoth = risky. (Nuts and berries = less so.)

But fun and safety we can understand. If option A was loads of fun but not very safe we'd have a fair idea what we were letting ourselves in for. Same with option B: safe but a bit boring. When it comes to our own safety we are better (but not perfect....see picture above) at assessing risk: it's simply more immediate.

So let's try this instead: what's your attitude to fun? By giving an answer based on the safety of the proposition you are better placed to respond. Sky diving = risky. Chess = less so.

So if risk and finance are interchangeable with fun and safety what does being risk averse make you? 

Boring.

Safe, but boring.

But if we remember the context of the question; that the question is posed whilst you are employed and paid to protect your employer's interest, then it is entirely appropriate to consider safe as the right thing to be. And consequently I shouldn't be surprised by the answer.

Safe, boring and in continued employment: the risk averse way to end a day.