06/19/2012 04:45 pm ET Updated Aug 19, 2012

Embracing Risk in Career Decisions

Risk management is critical for business decisions -- but may not be healthy for making decisions about your career. In fact, if you want your career to take off, you may need to do the opposite of what risk managers try to do: Instead of focusing on how to reduce risks, you may need to embrace and enhance them.

In organizations, the basic purpose of risk management is to rationally identify and analyze threats that might compromise success, and then recommend steps to mitigate them. Since many risks are invisible until after-the-fact, the risk management function uses its tools and analytical abilities to uncover them early to reduce their impact. Because human judgment is involved, this doesn't always work -- as in the case of JPMorgan Chase's trading losses -- but in many cases the process is effective.

On the surface, career decisions should follow the same process. There are multiple sources of risk in making a decision to change jobs or enter a new field: economic considerations, future potential, family, relationships with co-workers, the need to learn new skills, stability of the employer, and many more. Obviously all of these issues are part of the decision process, and it would be logical to think that reducing the associated risks would be a good thing.

However, for many careers, minimizing these risks is much less important than considering two other major parts of the decision:

1. Happiness criteria: At the end of the day, your career success is determined not just by tangible indicators (compensation, title, reputation) but also by the underlying enjoyment you derive from your work. Though highly subjective, this "happiness" factor often overwhelms all other career issues; to the extent that a person can have an apparently stellar career but still be miserable, or vice versa.

2. The attitude factor: Also driving your career is your ability to learn and adapt over time -- to deal with new situations, different personalities, and ongoing surprises -- and make the most of them. Although people can paint logical pictures of their career paths in retrospect, in reality most careers are unpredictable -- influenced by particular people, seminal moments, or unique opportunities. Having the attitude to grasp these surprises and leverage them is critical.

Because career success depends so heavily on happiness and attitude, you need to treat these factors differently, and not just as two more parts of an overall risk-mitigation model. This means that career decisions need to start not with risks, but creating a prioritized list of "happiness criteria," or aspects that will critically determine your long-term satisfaction. The second step is to think through which of these criteria are non-negotiable and -- if compromised -- would force you to make a trade-off that could increase your risk in some other area.

Here's a quick example: After several years of leading the flagship product of a fast-growing technology firm, Rachel* was asked to lead the company's largest division. Although this was clearly a pathway to the C-suite, she turned it down because it would have meant relocating away from her extended family and spending too much time away from her children, which were non-negotiable "happiness" criteria. As a result, Rachel took a staff job with less responsibility and status, but that passed the happiness test.

But starting with happiness doesn't mean that your career needs to be compromised. That's where "attitude" comes in. As long as you are focused on what is important to your long-term satisfaction, then the challenge is to grab other opportunities that might otherwise seem risky or even crazy. Rachel, for example, used the staff job to reinvent herself as a leader for innovation, and eventually helped the company build a replicable process for starting new businesses. Her success in this area opened up other opportunities that never would have emerged otherwise.

The key point here is that career success is not about reducing risks. Rather it's about maximizing your happiness in a way that also allows you to find surprises and push yourself into new territory. To do that you may need to maximize your risks rather than manage them.

How do you manage the risks in your career?

*name disguised

Cross-posted from Harvard Business Online.