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Through the Lens of Risk 3/99

Reading Time: 6 minutes

Just a couple of times I have been asked – but when I have, the answer I give does not seem to be satisfactory, “risk” – is the answer, “what did you learn?” And that was the question.

It’s a question that I can’t really answer because I didn’t learn a thing or two. I didn’t learn a new concept. What I have learned has bled into many areas of my life – it is impossible to summarize it this way. But one thing I do want to summarize today – what I have learned about Risk – and just a couple of things – how viewing things through the Lens of Risk has changed how I see and handle them.

Generally speaking – Risk is a sort of a domain that works anywhere. But it’s helpful to know that risk comes in different classes. What has been repeated to vomiting this year – deaths in car accident crash is a different risk class than wars, and they both are different from pandemics. Different likelihoods, different magnitudes, and different methods of reaching those magnitudes. Car accidents do not spread virally like viruses, and neither of them comes with the possible consequences as does war (even though one could argue that in any case, the result is death – that’s not the only metric to take into consideration).

Now, more specifically speaking – a few things I have thought many times this year is about how risk relates to trust. How it relates to confidence and a need for control. For a while before getting to know the risk crowd, the philosophy and works around it and related to it, I was on my own and was exploring what the grand science of psychology has to offer. From a psychology perspective trust, confidence and control are very different from how I see them now. In psychology, phrases are used like trust-issues, low confidence, over-confidence, control-freaks… Now that I have managed to see how risk ties into all those three – these descriptors (let alone their cure) seem very “magical” (not in the positive sense).

Trust
While from psychology alone I would learn that people have “trust issues”, and from the behavioral science crowd, I keep getting directed to the ncase.me/trust/ game – thinking about it in regards to risk it cleared up a few things.
What are the things people talk about when they talk about trust? Young girls talk about trusting their secrets to their potential partners. This usually means talking about something traumatic or talking about what they hate – things that a partner that later would like to get rid of them would use to make life unbearable with them.

The most harmful form of trust would be the one where people leave responsibilities of their own up to someone else. Look, this is me and all my shards of glass – I am now handing it over to you, please don’t mishandle me. Why people might be doing this could be something very simple. Have you ever seen over-sized young seagulls squealing at their parents, chasing them, opening their mouths so the parent would feed them like they used to? It’s the same thing.

The trust game comes a little closer to the risk part – but it attempts to frame trading with other people into a system. As if trust and trade are supposed to be possible to automate somehow.

In the end what it seems to come down to – what’s the possible maximum cost/loss, and what’s the possible normal of maximum payoff. We don’t assess trading the same goods with the same money but with different people the same way – in our gut there is something based on what we feel more comfortable trading with someone and less comfortable with another.

Confidence
This is another aspect psychology only seems to complicate for all the wrong reasons. Yes, there is a strong relevance of being confident when you want to persuade (or manipulate) someone. People are more likely to follow you when you seem confident about where you are going. Especially when it is apparent that you will also pay a price if you are wrong – not someone else. But confidence is something snakes can master, too – and not because they are great at deceit and know what they are doing – but because positive feedback from their followers encourages them to repeat what they have been doing to gain all that reward…

It’s not confidence when a blind man is running towards the cliff – that’s mania.

Confidence might seem to create the illusion to the follower that their leader is confident because they know what is ahead, they know what they are doing, they know what the price is and they know what the payoff will be. That’s what the people are following (in their minds) – not a blind man running towards a cliff.

Psychology, in that regard, brings us shiny nuggets like fake-it-til-you-make it, get competent and that will also make you confident. What most people achieve doing these self-affirmations and mindlessly squeaking the running wheel to get cosmetically stronger – is manic delusions – not knowledge and knowledge-backed confidence. Knowledge-backed confidence is impossible when it comes to bigger things – even when it comes to science (hello, Popper!).

Confidence is over-rated. Everything around us is uncertain as fuck – and you becoming confident won’t change that fact. In the back of your head, you KNOW that something will fuck you up while you try to sleep because instead of clipping tails and getting insurances you have been busy trying to convince and argue what a great and competent person you are. I’m not really talking about you, I don’t even know who you are, okay?

So, the best we can get – as Mr. Risk Hedger himself says, “hedge all you tail exposures.”

Control

Another interesting domain that reading shit about psychology messed up for me was control. Trying to define or understand control without risk, without skin in the game – you’re just fumbling around in the dark. We want to control as much as we possibly can when our own life is on the line (or some people will worry about status or whatever other interesting fashionable things they are being competitive about). And others will “control” their situation by trying to throw other people under the bus, using them as meat-shields, manipulating and coercing others to take risks for them.

Exploring Risk
These are just a few things I have started to handle and see differently after I started seeing how risk ties into it.

For me – my real-world risk explorations have only begun – more so from real-life itself, I presume than from books and courses.

Even though RWRI was two weeks long, the scope it aims to cover is larger than that. The curriculum is longer and more thorough – and technically attainable even without getting into probability and math (which I am planning to brush up on, but we’ll see – I’m not such a great follower of plans when they are self-generated – it appears to be impossible to hold ourselves accountable alone);

In case you have nothing better to do than to read
Here are some books to start with, if you already haven’t, that teach to fumble in the dark in more observant ways!

Incerto (Fooled By Randomness, Black Swan, Antifragile, Skin in the Game – Taleb) – so far I have read all those twice – and both times they expanded – reading those has been a sort of a meditation which has helped me start paying attention to things I didn’t and wouldn’t before – about risk, personality, uncertainty, experts, philosophy, health, food, relationships, my own personal callings;

Thinking Fast, Thinking Slow – Kahneman – every time I meet someone new who is somewhat into Besci, they advise I should totally read that book. I did long before I found what Taleb wrong (and while reading TFTS – I kept thinking what does a Ballet play have to do with what the guy was talking about in the book). Today I say no one should ever read that particular book without following it up with some Gigerenzer (Gut Feelings or Risk Savvy, please).

Alchemy – Rory Sutherland – because my daytime work is related to marketing, advertising, design, branding – Alchemy was the perfect overlap of Risk, what’s interesting in Besci, and what works in Marketing.

Connected, Blueprint – Nicholas Christakis – he views society and networks through a mild lens of complexity – the studies referred to in the book are interesting, the observations made in this book, strangely enough, made me rethink much of what I write into my fiction thing – I realized what he writes in the books indeed does seem to hold true in what I observe in my personal life, too – narrowing down some “rules” around us helped me spot and eliminate some inconsistencies regarding people, communities – those kinds of things in the story.

Christopher Alexander – The Timeless Way of Building – even though it’s more like a philosophy of architecture – I’d say it’s a philosophy for building or creating anything. That possibly includes programming, design, art, stories, music… That book actually made me re-arrange my living-space in ways I wouldn’t have before 🙂

Laters o/
My learning and reading have only just begun, so that list is short. I’ve way more books to read than I have managed to read so far, and I have even more books to yet discover.

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