He smashed 'Jeopardy!' records on the way to winning $2.5 million. Here's how champion James Holzhauer sets himself apart with his approach to risk.

Jeopardy Productions, Inc./APJames Holzhauer.Jeopardy James Holzhauer won $2.5 million an iconic game show where contestants usually play it safe. He told Business Insider why he made huge wagers at every opportunity.Holzhauer, a professional sports gambler, thought about risk in a unique way and broke records with the biggest wins in Jeopardy! history.While failure might have been embarrassing, Holzhauer argues that his method was safer than it looks because it let him lock up games in the early going.Click here for more BI Prime stories.Taking risks with money is challenging for a lot of people. Betting $10,000 on television would probably be out of the question.But not for James Holzhauer. He won $2.5 million on Jeopardy! with a big-bettor style that no one else had attempted on the iconic 35-year-old game show. The professional sports gambler often made multiple eye-popping wagers in a single episode and finished with the 12 most lucrative games in the show's history.And to him, that was playing it safe.I watch a ton of football, and I constantly notice that teams hurt their chances of winning by playing too conservatively, Holzhauer told Business Insider in an interview conducted over email. Often the least risky long-term strategy can appear very bold in the short-term.In investing jargon, Holzhauer's risk tolerance was high: He was comfortable gambling a lot of money because he felt his odds of success were good.Financial advisers will use a client's comfort with risk to figure out how that client's portfolio should look. An investor who isn't afraid of losses might end up with more exposure to riskier stocks, when could lead to bigger rewards. A more cautious one might end up with more money in steadier instruments like bonds.As a result of applying that idea, Holzhauer chose the most valuable clues on the Jeopardy! board right away, and bet every dollar he could on the show's Daily Doubles. That strategy carried a real danger of blowing a big lead and flaming out to the guffaws of trivia buffs who watch Jeopardy! every night.But in most games, Holzhauer quickly accumulated so much money that the other players never had a chance. That allowed him to build a 32-game winning streak before his eventual defeat.Before Holzhauer, the typical Jeopardy! winner earned about $20,000, and the biggest single-day haul ever was $77,000. Thanks to his outsize wagers, Holzhauer averaged just under $77,000 per victory. His best take was $131,127.Read more: America's No. 1-ranked wealth manager for the ultrarich breaks down the 3 mistakes every millennial investor should avoid - and what they should do insteadAsked about risk, many would-be investors might think about how they'll feel if their portfolio loses a lot of its value. Holzhauer's playing style, though, was informed by a second consideration: He thought about the future gains he might miss out on if he played things too safely and lost a game he could have won.In other words, he understood that playing it safe comes with its own risks.Those dangers can be subtle or even invisible, but they can still be costly in the long run. So he reasons that he wasn't living that dangerously when he wagered $20,000 on a single trivia question. His method meant his opponents had few opportunities to beat him.Holzhauer's experience as a gambler - where losses are an inevitable part of doing business - helped him feel comfortable with a strategy that involved more overt risks. The other big factor was Holzhauer's extensive preparation, which gave him great confidence.I focused largely on practicing my buzzer timing and learning the most important recurring subjects, so I could play the game on autopilot - the same way I approach gambling, he said. I'll never understand how some people go in unprepared and expect to win.He added: Do they think Steph Curry was just born with a magical shooter's touch? NOW WATCH: This is the shortest route for a road trip across the US to see 50 national landmarks function receiveMessage(event){ console.log(event.data.fullscreen); Android.fullscreen(event.data.fullscreen); }window.addEventListener(message, receiveMessage, false);

He smashed 'Jeopardy!' records on the way to winning $2.5 million. Here's how champion James Holzhauer sets himself apart with his approach to risk.

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