Risk, Reward, and Perceived Risk
Risk concerns the expected value of one or more results of one or more future events. Technically, the value of those results may be positive or negative. However, general usage tends focus only on potential harm that may arise from a future event, which may accrue either from incurring a cost (”downside risk”) or by failing to attain some benefit (”upside risk”) - Wikipedia
Flying small airplanes and driving a Citroen 2cv are considered risky by some people. So sometimes people think my wife and I are risk-seekers. In the past I’ve been an entrepreneur and my wife has her own business now too. These too are sometimes considered risky endeavors.
But there’s actual risk: (probability of an accident) X (the loss per accident). Then there’s perceived risk, “those little airplanes are always crashing”, “small old cars will kill you in an accident”, and “large companies are always more secure”.
There are some risks that are larger in flying than driving: altitude for example. Then some things more risky in driving too. In flying I don’t have some yahoo on his or her cell phone at 70 mph just 6 feet away from me and drifting into my lane for example. In the plane, I’m much more in control of my own situation. If I avoid zooming too close to the ground and flying too slow, don’t fly in weather I’m not trained or equipped for, and make sure I have enough gas, then I’ve just avoided most of the accident causes!
Small cars are not always more dangerous: they can move out of the way more easily. And recent economic news makes it clear that large companies aren’t secure. Perceived risk is not real risk, it’s just not accurate.
Bruce Schneier has a great article pointing out that we systematically perceive risk incorrectly saying, “People have trouble estimating risks for anything not exactly like their normal situation.” This psychology has also been studied (see “Stumbling on Happiness“).
There’s a lot written about mitigating risk. This just how to avoid risky situations. There are various ways to do that: sit at home and don’t do anything is one extreme. But my wife and I handle risk in several ways: using training, and maintenance to prevent some of the types of risks. And where those won’t work, simply avoiding putting ourselves into that situation. I.e drive the backroad instead of the highway in the 2cv. Life is more than simply avoiding risk. We have decided it’s more risky to get to the end of our lives not having enjoyed them. Or as my wife puts it very simply, “Life is for the living”.
But I’m still not keen on bungy jumping.