Calculating Risk

I ride motorcycles and I used to fly airplanes. I’ve also climbed mountains, skydived, scuba dived, traveled alone in Asia, Europe, the Americas, and the Middle East (twice during terrorist attacks—I didn’t plan it that way), traveled to remote areas with no other humans in sight, done archaeology at the Giza pyramids, been a tour guide in Egypt, and I’m starting a new career at an age when much of my cohort see retirement on the horizon. I don’t consider myself a risk taker.
The U.S. Parachute Association’s Web site states, “Nobody would argue that skydiving is a safe thing to do.” Yet, during 2007, “USPA members reported making nearly 2.2 million jumps.” That seems like a lot of risk by presumably sane individuals. But in that same year there were only eighteen fatalities in the sport.
So what is risk?

n. a situation that may result in possible loss or injury

v. to take action that may result in a negative outcome

That’s a definition of risk but how good are we at actually assessing risk? If we’re not very good at assessing it, how do we know when we’re actually taking a risk?

We encounter risks daily, large and small. Risk a disappointing meal at a new restaurant, being bored by a Netflix selection, or running into heavy traffic on a new route to work, and the risk is minimal because there is not that much at stake. We don’t really consider these things risky.
Change a career, get married, buy a house, or choose a major medical procedure, and we’d probably all agree that the stakes rise precipitously. Life, liberty, and the pursuit of happiness may all be at stake, but the potential rewards are commensurately greater as well.
Outcomes are uncertain. And this makes assessing risk, even by objective analysis (i.e., cost-benefit) … well … risky. There are often too many variables to consider and, frankly, most of them are not reliable indicators of the potential success or failure of an individual action. Most people do not take the time to consider all of the variables, and our brains are easily swayed by presentation and emotion.
Your decision to buy a Sony TV instead of a Samsung might seem to be solidly based in the logic of reviews or reliability statistics. But even if the data have objective merit, they are only relevant statistically and provide no certainty about the reliability of the individual TV that you buy (hence we like warranties).
Even with lots of data in hand, our internal systems for assessing risk are still not very precise. If I tell you that a surgery you’re contemplating has a twenty-percent probability of dangerous complications, you’ll assess the risk differently than if I tell you that it has eighty-percent probability of complete success, even though both statements are true.
We also have biases that skew our assessment of risk. We weigh factors that we believe will affect a probable outcome, and then give more weight to negative factors if we already feel the potential reward does not warrant the perceived risks, or give more weight to positive factors if we already feel the potential reward exceeds the perceived risks.
It’s difficult to be objective about risk. But whether or not we research thoroughly before making a decision, we generally believe that the outcome of risk will be in our favor. We feel our assessment of risk is usually good enough.
The psychology for assessing risk doesn’t need to be better than “good enough,” because most of us avoid extreme risk, if possible, and we trust our ability to handle the consequences of a minor risk. We perceive our chances of survival as pretty good without a lot of deliberation. Statistically, this makes sense. But individually, it’s a bit of magical thinking (nonscientific causal reasoning), because ordinary people doing ordinary things die in extraordinary ways every day.
I tend to over-research any contemplated action, but this isn’t logical. It overwhelms me with information and never provides me with much useful information regarding probable outcomes of a decision. The research most of us do about decisions is an attempt to reduce the perceived level of uncertainty. Because there is usually nothing we can do to reduce the actual level of uncertainty.
So, we’re not very good at accurately assessing risk. It’s our subjective assessment about what’s at stake that makes us consider an action worthy of risk. It’s our feelings about risk that matter, not objective measurements regarding probable outcomes.
Risk, then, requires an attitude; it is an ability to tolerate uncertainty.
I don’t necessarily see value in risk-taking for its own sake. I see more value in an ability to accept whatever outcome is the result of an action. This is probably a better skill for evaluating whether to take an action than is the analytical process of determining probability of a desired outcome.
Life will always have outcomes that cannot be predicted ahead of time, and a happy life must embrace the ability to positively assess unfavorable outcomes. If you choose how you feel about any outcome that might occur, then every outcome is potentially beneficial.
That won’t make you better at assessing risks, but it might make you more tolerant of taking risks.
Brian Hunt is a Seattle-area writer.