Risk vs. Fear

Risk is defined as the sta­tis­ti­cal prob­a­bil­i­ty of a neg­a­tive event occur­ring.

When you walk across the street, there is a sta­tis­ti­cal risk that you may be hit by a car.

Whether you are aware of the risk or not is irrel­e­vant. The math still applies.

Whether you believe the risk is real is not rel­e­vant. The math still applies.

Whether you think the risk doesn’t apply to you is not rel­e­vant. The math still applies.

Here’s the thing most peo­ple com­plete­ly mis­un­der­stand about risk. They look at the out­come as a proxy for deter­min­ing the risk.

If I jump off a bridge in a wing­suit and don’t die, it must not have been a high-risk deci­sion… because, well, I didn’t die.

Con­verse­ly, if I see a news report about some­one dying from a shark attack while swim­ming in the ocean, then it must be a high-risk activ­i­ty, because, well… I saw the video of some­one dying.

These are noth­ing more than sub­jec­tive per­cep­tions of risk that are also… com­plete­ly irrel­e­vant to the actu­al risk you face.

People’s per­cep­tions of risk are noto­ri­ous­ly inac­cu­rate. For exam­ple, most peo­ple fear sharks a lot more than mos­qui­toes.

Last year, there were only 64 unpro­voked shark attacks world­wide, of which four peo­ple died. In com­par­i­son, over one mil­lion peo­ple died from mos­qui­to bites.

In this case, people’s fear of sharks vs. mos­qui­toes is wide­ly dif­fer­ent than the sta­tis­ti­cal risk of death.

In oth­er words…

Risk is about sta­tis­tics.

Fear is about psy­chol­o­gy (and how you per­cep­tu­al­ly esti­mate the risk) and emo­tions (how you feel) about the risk.

Late­ly, I’ve noticed a num­ber of acquain­tances who have decid­ed to “not live in fear.”

This is in the con­text of the COVID-19 pan­dem­ic.

As a state­ment of per­son­al val­ues or life phi­los­o­phy, I have no prob­lems with this approach.

What I do have a prob­lem with is when such an atti­tude ignores actu­al sta­tis­ti­cal risk.

Ignor­ing a risk doesn’t make the risk go away. The math is still the math.

So, what’s a smart way to make deci­sions that involve risk, fear, and uncer­tain­ty?

Here are a few guide­lines:

• If the sta­tis­ti­cal risk of a neg­a­tive out­come is unknown, the high/low range of the risk must nec­es­sar­i­ly be extreme­ly wide.
  [Note: This is the ratio­nale behind the con­cept of the “min­i­mum viable prod­uct (MVP).” It’s an inex­pen­sive way to get actu­al mar­ket data on sales con­ver­sions and mar­ket demand. It nar­rows the high/low range of risk con­sid­er­ably.]
• When a risk is unknown, rather than expos­ing your­self to an unknown risk with an unknown mag­ni­tude of con­se­quences, it is often worth invest­ing in ways to deter­mine the risk or at least get it into a nar­row­er range.
• It’s impor­tant to dis­tin­guish between risks that can be reduced ver­sus risks that can­not.
• If a risk can be reduced, then it makes sense to take action to reduce that risk. There is no point in feel­ing scared about a reducible risk. What you should do instead is mit­i­gate the risk and pre­pare for it to min­i­mize its impact. (This is why office build­ings have fire extin­guish­ers and sprin­kler sys­tems.)
• If a risk can­not be reduced, then it tru­ly doesn’t make sense to have anx­i­ety, stress, or fear over it, because you can’t actu­al­ly do any­thing about it. In the cat­e­go­ry of risks you can’t do any­thing about, I per­son­al­ly try to “live with­out fear.”

Log­i­cal­ly speak­ing, it makes no sense to have fear. Either the risk can be man­aged and you should be busy man­ag­ing it, or it’s not man­age­able and there’s no point in let­ting fear run your life.

That said, we are all human beings and fear is a nat­ur­al emo­tion. For exam­ple, despite know­ing the fatal­i­ty rate of sky­div­ing, I will nev­er vol­un­tar­i­ly jump out of a per­fect­ly good air­plane.

It scares the crap out of me.

How­ev­er, I know that my reac­tion is pure­ly an emo­tion­al one. And that is the key here. It’s okay to feel scared… just don’t con­fuse how you feel about a risk with the actu­al sta­tis­ti­cal risk itself.