How to Turn Risk into Opportunity | Jay Abraham

On this episode of Strategic Edge, business strategist Jay Abraham explains how entrepreneurs can reframe risk to unlock growth and gain a competitive advantage. Abraham challenges the common perception of risk as something to avoid, instead positioning it as a strategic tool that can be managed, minimized, and leveraged across sales, marketing, partnerships, and leadership decisions.

He outlines how risk reversal strategies can increase customer confidence and conversion rates, while also emphasizing the hidden danger of inaction. Abraham highlights the importance of continuous testing, experimentation, and strategic partnerships to reduce downside while accelerating growth. He also explores how emerging technologies like AI create new opportunities—but only for those prepared to apply them effectively. By understanding and structuring risk more intelligently, businesses can improve performance, drive innovation, and achieve more consistent, scalable results.

Key discussion points:

•  Reframing risk as a growth driver rather than a barrier 
•  Using risk reversal to increase trust and improve conversion 
•  The hidden cost of inaction and missed opportunities 
•  Leveraging partnerships to reduce risk and accelerate growth 
•  The role of testing and experimentation in long-term success 
•  Identifying opportunities in emerging technologies and shifting markets

Transcript

What Risk Really Means

Jim Fitzpatrick 0:32

Jay Abraham, thank you so much for joining me once again on Strategic Edge with Jay Abraham, exclusively right here at ASBN.com. So good to have you.

Jay Abraham 0:40

It's my pleasure as always.

Jim Fitzpatrick 0:43

Sure. So, Jay, throughout your career, you've helped businesses identify opportunities, you know, that others completely miss, which is what I love about talking to you because you always bring the goods when we talk about this particular topic. When we talk about risk in business, many people immediately think of danger or loss, right? From your perspective, what does risk in and of itself really mean? And why do so many entrepreneurs misunderstand it?

Jay Abraham 1:11

Yeah, I think that it has a very sweeping global implication. But if I were to try to really summarize it in the low common denominator, it is the it is the factor that keeps people from taking uh positive action. And it and it has many different implications. It has implications in selling, marketing, advertising, it has implications in recruiting, it has implications in um in career growth and performance. It has implications in leading, managing, it has implications in parenting. So I can go anywhere you want, Jim. Just take me on an adventure and I'll try to be responsive.

Reframing Risk As Advantage

Jim Fitzpatrick 1:57

Let's talk about reframing risk. Many entrepreneurs think of risk as something to avoid. You've often suggested that risk is misunderstood. How should business leaders reframe their thinking about risk so it becomes a strategic advantage rather than a threat?

Jay Abraham 2:15

So there is a concept called risk reversal, and it's predicated on an understanding that decision making is rife with risk uh reflection. So if I want to sell you something, there are many verbalized risks and many implicit risks in a transaction. If I wanted to sell you something, let's say I wanted to sell you uh a SaaS system. Well, the first thing is, is your system going to perform as you say it will? That's the first risk. The second, is it going to perform better than an equivalent I can basically opt in or opt to buy instead? Third, is it going to perform uh you know better for the dollars than the alternative? Not just, you know, everything has to be weighted. So if mine is only uh $100 a month and yours is a thousand, is it going to be 10 times better? So next is next is the risk of what happens, not just on the money I'm spending, but what happens if you blow up and I lose my data or I lose my inventory or lose my cash management or I lose my uh my clientele list. So that's it. Next is, is this the best investment of my money? Because most people spending money, unless they're billionaires, have a finite amount. And so subliminally, they're thinking, is this the best place to put that money? Am I risking something that might be a better yield? Maybe I should defer this category, or maybe there's an alternative. And this happens across, you know, B2C, B2B, et cetera. So first thing is you need to know all the elements of risk that are uh that are um uh constraining people from saying yes. And that's just in selling. Yeah in in managing, people are afraid if they do something and it goes wrong, they're gonna get fired. They're gonna, they're gonna get their promotional capabilities, they're gonna get uh diminished. They're afraid that uh, you know, that if they blow a lot of money for their department, uh they're gonna basically get uh reprimanded. So you've got to figure all the different risks as far as if you're trying to hire talent and it's a desirable talent, people are afraid, am I gonna go to work for you? Is it really going to have the upside you promise? If I'm gonna get options, are they really gonna be worth anything? Do you have enough funding and enough commitment from your? I mean, it goes on and on and on. And most people don't think about any of that.

Jim Fitzpatrick 5:01

Yeah, for sure. There's no question about it. And I know as an entrepreneur myself, you know, risk always is right there in front of me, right? And before I make any decision at all, my and maybe it's some of my negativity, my mind goes right to what's the risk involved here, right?

Jay Abraham 5:17

Yeah. And and even doing things that, I mean, you and I have some projects we're working on. You have to you have to wait, the opportunity cost is risk too. If you allocate, even if it doesn't cost much, but it requires you to reallocate resources that could be better invested, diverted, channeled into something with more clear cut yield, you've got to evaluate that risk.

Jim Fitzpatrick 5:42

Yeah, that's right. That's right. Um, you've spoken about the idea that the biggest risk sometimes isn't what you do, it's what you fail to do. And I know I fall into that as well. How should leaders evaluate the risk of inaction or missed opportunity?

Jay Abraham 5:59

Uh well, I mean, so you grow or die, you multiply or uh or diminish, you expand or you contract. That's just a truism. Isn't it? You can stay constant. So if you're not going to stay constant, if you're not constantly experimenting with alternatives that are going to keep the growth going up, then by default, you're allowing it to go backwards, aren't you? So you have a moral obligation, you have a custodial responsibility as the owner or CEO of a business to constantly be growing it qualitatively. But the problem people have is they think that these are dangerous decisions. When I come from the world, that you can pre-validate almost any assumption without spending a lot of time, money, or risk. But most people don't know that. Everyone just makes a de facto decision on something and they move, they they they bet the farm when that's not necessary. But you have to be willing in a continuous, never-ending uh commitment to constantly be testing, this takes a different kind of risk, testing new approaches, new new markets, new strategies, new selling approaches, new products, new new propositions. Because if you don't, and I think that Peter Drucker said that, if you're not committed to constantly making what you do, how you do it, uh the way you do it, uh, and how it does obsolete, you can bet rest assured your competitor is committed to do it for and to you.

Jim Fitzpatrick 7:31

Yeah, yeah. Very, very good point. He's he's right about that.

Jay Abraham 7:35

Yeah, and I can go through a little bit of very simplistic risk reversal methodology that's pretty fun.

Risk Reversal Examples That Work

Jay Abraham 7:41

Sure. So let's talk about uh two very well-known uh uh companies today that use risk reversal to to catapult, Domino's and FedEx.

Jim Fitzpatrick 7:52

Okay.

Jay Abraham 7:53

When Domino's first started, and they changed it because they had a lot of accidents, they they they came to stature because their message was hot, fresh, delicious pizza to your door in 30 minutes or less, or it's free. Right. That's risk reversal. FedEx, they said when it absolutely positively has to be there by 10 a.m., FedEx, or it costs you nothing.

Jim Fitzpatrick 8:22

That's right.

Jay Abraham 8:22

That's risk reversal.

Jim Fitzpatrick 8:24

Yeah.

Jay Abraham 8:25

There are many forms of risk reversal. But the first thing is can you basically as a company identify the risk people have or the or the portfolio risks that you know, the the the the collection of risks, and can you find a clear-cut way to either minimize it, eliminate it, or turn it into a positive? So there's lots of risk ways. There's basic risk reversal. So if I said to you, uh, let's take a product that's really easy to to uh to demonstrate, if I took a supplement and I said uh 30-day money back guarantee, that's basic risk reversal.

Jim Fitzpatrick 9:05

Yeah.

Jay Abraham 9:06

If I uh there's many kinds. If I said uh uh if you don't if you don't have meaningful reserve results in 30 days or less your money back, that's a little stronger. If I say uh if you are unhappy, not only will I give you your money back, but I'll give you 10 extra dollars for your grief. That's better than risk reverse. If I say, Jim, if you trust me to basically put my supplement to the 45-day test, and you can't honestly say on or before the end of that 45th day, that number one, you've got infinitely more energy, you're sleeping uh with with such uh such refreshingness and such depth that you very rarely get up and you wake up fully renewed, if you can't tell me that your focus has multiplied, that people are commenting about how uh how uh youthful and and radiant you look, if you can't tell me that your balance as far as not how you walk, but how you look at life and stress is reduced, and that you don't have more uh joy at home. And even if your sex life is improved, if you can't tell me that those achievements aren't starting to happen on or before the 45th day, I don't even deserve to keep your money, and I will instantly give it back with my apologies, and I'll buy you a competitive product that can deliver some of those promises.

Jim Fitzpatrick 10:43

How do I say no to that? In fact, I want that, I want that product if you if you've got it.

Jay Abraham 10:47

So to give you an example, we basically, there's many, again, there's like eight forms of risk reversal, and most people don't use any, but we've done tests and we've seen that risk reversal added properly to a selling proposition, whether it's the ad, whether it's the sales approach, uh it can double response. It can double response. Just same market, same salesperson, same ad, same, same, you know, same prospect, double response. Yeah. And most people don't even try to use it. There's another form. If you a lot of people, I've helped a lot of experts, Jim. They have expertise that produces measurable outcomes, but they really never go there. I will interview them and say, okay, what's worst case the most measurable outcome? Your expertise will produce when applied properly to, you know, whatever, business, a body. I mean, it doesn't matter. Right. And I never thought about it. I said, let's look at worst case, not best. And so we'll find out that if you do the regimen, you can't help but lose 22 pounds. If you do the regimen, you can't help but reduce your expenses in your business by 14%. If you do the regiment, you can't help but but get uh you know 13 to 30 percent more closes. If you do the regiment, you're not you're gonna get another 50% larger sale. So we would say your risk reversal is this. Yeah. If you follow the methodology, I will guarantee you will get at least a blank percent of whatever in a blank amount of time. And if you fail to do so, I will give you a pro rata refund up to 100%. I love it.

Guarantees That Double Response

Jay Abraham 12:28

Uh so I was in the seminar business for uh about five years, and we did a quarter billion dollars. And I'll tell you how we did it. We had the first seminar we ever did back 30 years ago was $15,000 and $20,000 a person. That's a lot, isn't it? Yeah, that's a lot. That was then. I mean, today it'd be probably six.

Jim Fitzpatrick 12:48

That's a lot.

Jay Abraham 12:49

Yeah, and let me tell you how we sold them out, and we did. We sold them out because I would I I would all in modesty, I understand risk reversal very well. So the first thing that we would do, we would we would run 16 and 20 page ads that gave people actual uh example strategies that they could actually apply right there and then. We taught them testing, we taught them uh, we taught them preeminence, we taught them the three-way to grow business model, we taught them the power parthenon right there. So it would validate.

Jim Fitzpatrick 13:22

Yeah.

Jay Abraham 13:22

Then we told them that if they signed up, I would, this is before everybody started hustling all this uh this vacuous stuff that they claimed had value. We would buy them a $2,000 training program, which was still very valuable 30 years ago and it was real, yeah. That would have before we ever they ever came to the program, and if they applied much of it, we would be buying the program for them. We then told them that we, this is before uh you could do everything online. We told them that we would not even deposit their check or process their credit card until two o'clock on the third day of a five-day event. And if they hadn't already gotten infinitely more than the investment they've made, all they had to do was walk to the back discreetly and we give them back the check or the credit card, and then we let them pay the majority after they went home so that theoretically, if they're applying it, they're paying for it out of a fraction of the of the and that killed.

Jim Fitzpatrick 14:23

Yeah, risk reverse right there. I mean, that that's you took out you took out any any risk that that individual had. And and you like you said, it killed it.

Jay Abraham 14:35

I think I told you about my son who got almost every job he ever applied for in the uh pharmaceutical

Selling High Ticket With Less Risk

Jay Abraham 14:42

market. And he did it because everyone else basically wanted to know the benefits. He wanted to know all about the the market, the clients, the past person doing it. And he he offered to invest a week of his time riding along, meeting the clients, the the and and making sure he would be compatible. I had him create a book called, you know, how to get, I can't remember what we called it, how to get um, how to get doctors to eagerly await your uh your visit and make time for you whenever you show up or make quality time. And he had that book as his calling card with his resume.

Jim Fitzpatrick 15:19

That's a great idea.

Jay Abraham 15:20

And and he offered that if he, you know, if he didn't really believe he could he could add more value, he wouldn't even ask for the job. If they gave it to him, he would not consider his employment uh uh uh binding and um and committed until he'd been there at least 30 days and they could really and so he would go, I gave him a whole litany of things at every job. Because everyone else, what's in it for me?

Jim Fitzpatrick 15:46

Yeah, that's right. That's right.

A Simple Model For Smart Risks

Jim Fitzpatrick 15:48

Now there's a big difference between uh, you know, between strategic risk taking and reckless decision making. And sometimes I I walk that line, you know, every day. But what framework or mental model can leaders use to determine whether a risk is actually worth taking?

Jay Abraham 16:06

Well, I mean, the first thing is you have to ask yourself incrementally or exponentially, what's the impact going to be plus or minus? What is the what are the resources that have to be basically deployed? Sure. Can it be validated or invalidated easily and safely first, right? If it works, what's it going to mean ongoing? If it doesn't work, if I can control the risk, it's just a a an inconvenience. If I can't control the risk, I probably have to be very uh, you know, very but my evaluating concept is always don't try to do anything that's going to tremendously change the whole performance of the business or the whole dynamic until you first validate or invalidate assumptions. And most people don't. Also, most people think that they have they they should make decisions based on conjecture, what they like, what they're what their investors, their their board, their family likes, their spouse. Whereas the only vote that counts is by testing and asking the audience to respond differently with their calls, their checks, their whatever, their their visitations. So I think a lot of people don't understand how much you can you can validate or invalidate safely. And when you can when you can do that, you should be testing assumptions all the time. You should have two, three, four tests going on every uh every month in different areas, because most companies, particularly under probably hundreds of millions, they they aren't at they they don't optimize, they don't maximize, they don't multiply, they don't innovate on any of the procedures, any of the of the performance indices, the the leverage points that exist internally, and it costs almost nothing to do that. You can basically, I just did, I sent it to you, uh, a 14-minute uh distillation of how you can basically exponentially blow up your bottom line with almost no investment or risk just by challenging yourself to gain a heck of a lot more performance, more amplified yield, if you will, out of what you're already doing.

Jim Fitzpatrick 18:16

Yep. Yep. Which is incredible.

Leading Through Volatile Markets

Jim Fitzpatrick 18:18

When markets become volatile, become more volatile or uncertain, as we see right now. I mean, there's a lot of uncertainty out there. Um how should leaders adjust their approach to risk without becoming paralyzed by by fear?

Jay Abraham 18:34

Well, there's there's hedged risk and there's naked risk. Okay. So hedge risk, which I always favorite, is figure out who already has access to your market, and the risk is basically going to them and sharing revenue and basically hedging your bet by getting them to help source a lot more people for you. Uh, one of the things that I've always observed, because I've I've counseled lots of people in bottle times and recessionary times, in you know, all kinds of challenging, chaotic times, is that even in those times, the business doesn't die. You know, it it it uh it uh can it it reduces, but you have to resolve that you're gonna get when it reduces. Here's what normally happens competition starts cut cutting expenses. When they cut expenses, one of the biggest expenses they cut are two things service to their clients and high cost uh personnel. When they cut services, if you add services, you're gonna stand out on the existing ones because they're gonna be they're gonna be disenchanted with their current providers. Secondly, you're gonna get the lion's share of whatever business still exists that comes in. When they terminate high price personnel, those are the ones that normally have the tight direct relationships with the prime buyers, the prime vendors, the prime influencers, and you can hire them and basically bring with them almost the totality of the company for almost nothing. So there's a lot of ways to think differently.

Jim Fitzpatrick 20:11

Yeah, yeah. And you I know we've spoken a lot about uh establishing partnerships in other areas that uh, to your point don't really cost you anything. You can only benefit from them, right?

Jay Abraham 20:22

Yeah, I I know we did a uh a show on this, but right now uh there's two really fascinating dynamics.

Partnerships As The Safest Hedge

Jay Abraham 20:29

Uh 2,000 of the top corporations get 20% of their revenue, but 40% of their profit from partnerships. Wow. Microsoft gets $32 billion in one division. Wow. Zoom gets 40% in Asia, Shopify, a huge percentage. There's two or three multi-billion dollar acquisitions that were made just for their partnering distribution. Oh my gosh. Wow. Yeah. So most people don't realize it's the safest because most partnerships have almost no downside, only upside.

Jim Fitzpatrick 21:03

Yeah.

Jay Abraham 21:03

Because you it it shortens the when somebody entrusts you to their audience that they've already worked very hard to build trust, credibility, access to, it shortens the sales cycle. It gets a lot higher average sales and profit, it gets a lot more residual, a lot more referrals. Everything about it is a really great hedge in a chaotic time.

Jim Fitzpatrick 21:28

Yeah, no question.

Starting A Business Now With Advantage

Jim Fitzpatrick 21:29

Um, in our final minutes, um, the old adage, the greatest risk is not taking one. The reason I bring that up is there's a lot of people that are on the sidelines right now, and uh they want to go into business for themselves. Maybe they've retired. About a hundred uh uh 10,000 baby boomers a day are retiring currently, right now, in the United States. It's a lot of people out there, but they still feel they have got a lot of runway left. But they've not taken the jump or the leap into being self employed or building their own business. Maybe because of the uncertainty that we see out there in the world right now. What is your take on that? What uh you know, the the whole the as I said, the whole adage of the greatest risk is not taking one. Um is now a good time for for people to start a business?

Jay Abraham 22:14

Uh yes and no. It depends on the business. I mean, uh, I have a couple of friends who have uh they don't have huge businesses, their businesses are five to ten million, but both of them have managed to eliminate 80% of their overhead and get uh about a hundred percent more productivity by using Agenics and AI and all these things. And uh they're making a lot more profit from the revenue they they are doing, and they are getting higher yield because they're using all this uh this intelligence to evaluate offers, propositions, approaches, and it's pretty powerful. I think if you're gonna go into something with so everything is about advantage, you've got to have an advantage, and advantage is a very interesting concept, Jim. Well, an advantage can be basically I'll give you two stories. I think I told one of them, but it's good. Advantage can be, you know, being right next to a huge audience. We have a friend that uh was opening a pizza, a pizza parlor in this uh industrial area where SpaceX has got 10 or 15,000 people and there's no pizza parlor. Well, I mean, that's an advantage. Sure. Uh, you know, an advantage can be basically that uh we we use services that still bring them to us. That's I mean, you need to, if you're gonna go into a field if you're not technological, it's gotta be a field that is minimally impacted. Where technology helps you, it never jeopardizes you.

Jim Fitzpatrick 23:56

Yeah.

Jay Abraham 23:56

It makes you more efficient, but it doesn't eliminate. So in other words, we this is you know, this is boring. We have a pool person, we have a landscape person, we have, you know, all these people, AI can help them in their building, AI can help them maybe understand how to treat the yard to get better results, or treat the pool to get, you know, to save them from having to add as much chemicals, but it's not gonna, it's not gonna come out and do it for them.

Jim Fitzpatrick 24:23

Right.

Jay Abraham 24:24

So you have to decide if you're gonna go into a field that is technology mission critical, and you don't possess or you can't hire great technology, you're gonna be disadvantaged.

Jim Fitzpatrick 24:37

Yeah, that's right.

Jay Abraham 24:38

But what I would ask is who's got as much or more to lose than you and figure out how in almost every business, your business can be the solution to somebody else's bigger business problem. Now, that's a different discussion, but I can go into that in another session if you like.

Jim Fitzpatrick 24:56

Yeah, please do. We look forward to it.

Final Takeaways And Closing

Jim Fitzpatrick 24:58

Strategic Edge with Jay Abraham. Thank you so much for once again joining us here at ASBN for the Strategic Edge. I know our viewers get so much out of your visits with us and these sessions, so thanks so much. Look forward to next time.

Jay Abraham 25:11

My pleasure.

Speaker 25:15

Thanks for watching Strategic Edge with Jay Abraham, exclusively on ASBN.