My Pi-spective on Risk

(A pi-spective is when you talk about something with only 314 words)

Risk is about the chance and cost of being wrong. Our brains don't like risk.

We come up with all sorts of foolishness to avoid thinking about it. People have made careers profiting from our fear of uncertainty.

Uncertainty is our natural state. Certainty is about coherency, which is about making a story that fits.

Perception is reality and we don't like uncertainty. So we increase the chance and cost of being wrong by avoiding uncertainty. We create risk.

Risk is also the essence of business. This is about committing blood and treasure to an uncertain future. Uncertainty again.

Success in business is the ability to accept more risk. Or put another way, change more of the future. This risk we want.

It makes no sense to talk about minimizing risk if it means avoiding uncertainty and taking intentional change out of the future.

So don't do it.

Get clear about the change you want to make and get comfortable with uncertainty. Google 'probabilistic quantification'. Go on. I dare you.

Looks scary and complicated doesn't it. That's why it's easier to reach for a heat map. And come up with lots of 'medium' risks that confirm our view of the world.

We have lazy brains. Probabilistic quantification. It's hard to say. Say it ten times. Say it when drunk: it might make more sense.

But it's something to get used to. Because those heat maps do one thing well: provide an illusion of control. And goodness knows we have too much of that already.

Risk is the chance and cost of being wrong. We want it if we want to change the future. We need to understand it if we want to avoid overconfidence, narrow framing and confirmation bias.

Risk is a subset of uncertainty. Uncertainty is where there is more than one possibility. What's possible is up to you.

So think about it

Rohan Light

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Wellington, New Zealand https://about.me/lightrohan

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