Perception of Risk

You’ve all seen photos of building construction workers in the early 1900’s.  It was said that crew foremen could expect one man to die for every $1million spent on a skyscraper.  Five men died during the 1929 to 1931 construction of the Empire State Building and 27 workers died by the time the Brooklyn Bridge opened in 1883.   How did the workers become so blasé about the risks?

Have you ever read about the early days of the automobile?  Red Flag laws required drivers to have a person wave a red flag or lantern in front of their vehicle.  The most infamous of these Laws was enacted in Pennsylvania circa 1896, when legislators unanimously passed a bill through both houses of the state legislature, which would require all motorists piloting their “horseless carriages”, upon chance encounters with cattle or livestock to (1) immediately stop the vehicle, (2) “immediately and as rapidly as possible … disassemble the automobile”, and (3) “conceal the various components out of sight, behind nearby bushes” until equestrian or livestock is sufficiently pacified.  Mercifully, common sense prevailed and the bill did not become law.  Automobile risk madness a century ago has morphed into “what risk?” today.  Curiously, we have no trouble travelling at speeds of 100 + km/h, with a painted line and mutual trust the only thing preventing an almost certain death.   Risk vs Reward?  Go figure.

Today, 30,000 people per year will die in the USA in traffic related accidents.  The number is about 1,200 in Australia.  We worry about our plane crashing, but we’re more likely to die on the way to the airport.  We’re hesitant to go back into the water after watching Jaws, but have no trouble driving to the beach to walk the dog.  Where’s the logic in that?

Like the proverbial frog in a pot of warm water with the heat slowly turned up, our perception of risk may change imperceptibly over time.  However, this very thing determines our response.

I was recently running a conference where a senior member of an industry network shared some incidents that led him to reassess his perception of risk.  As we all know, risk is the product of likelihood and consequence, and although technically neutral (neither good nor bad), we generally tend to give risk a negative connotation.  That is, we usually attempt to avoid a negative consequence when managing risk.  I find that fascinating, since reward can also be the result.  More on that later.  Back to our conference speaker.

His perception of risk was biased due to his personal experience with the issues, resulting in an artificially low likelihood level.  However, as he did more research, he found that similar incidents do occur.  He now treats this type of incident with a more realistic, fact-based perception of risk.  In fact, everyone at the Conference does too!  Industry networks and research in general help us to recalibrate our thinking about risk.  If only the frog could read a thermometer!

We tend to do a decent job with risk assessment of physical machine failures, especially when armed with the shared knowledge of trusted colleagues.  The trust inherent in a network relationship is a powerful thing.  I guess that’s because there are no hidden agendas and people genuinely want others to work safely and to succeed.

However, when we move away from industry to more complex societal issues, risk assessment becomes more difficult, even though it’s even more critical.  Important issues like freedom of speech, immigration, climate change and protection of essential values must be debated in the market place of ideas.  We each must form defensible views on key issues that will leave a lasting legacy for our children’s children.  Where do we find the data on which to base our assessments of likelihood and consequence?  What’s true and what’s a lie?  Mainstream media?  I don’t think so.  On November 8^th we all heard something like: “[1]Hillary Clinton has an 85% chance to win.  A victory by Mr. Trump remains possible: Mrs. Clinton’s chance of losing is about the same as the probability that an N.F.L. kicker misses a 37-yard field goal.”  Then a few days later, facing massive subscription cancellations, The NY Times promised to ‘rededicate’ themselves to the ‘fundamental mission of Times journalism’ — honest reporting.

As a simple blogger, it’s not my mission to bash big media.  Rather, I want to encourage everyone to do intelligent homework.   Don’t just swallow what others are telling you because it’s difficult to know who is genuine and who has a hidden agenda.  Surround yourself with a diverse group of thinkers.  Join a network.  Read widely.  Put your ideas out there.  Allow your thinking to be challenged.  Follow the evidence where it leads.  Be prepared to change what you believe to be true based on superior evidence and sound argument.

I’d like to end with the mother of all risks.   It is not an easy one to deal with because it cannot be rationally or empirically assessed.  What is the most certain of all events, yet shocks us every time it occurs to someone we know?  We cannot argue its likelihood, only the timing is uncertain.  Now, depending on your worldview, the consequence will generally range from eternal torment to annihilation to eternal bliss.  I just hope those people, sitting atop the skyscrapers and jumping behind the wheel took the time to do a Take 5 with their lives.  I trust you will too.

[1] http://www.nytimes.com/interactive/2016/upshot/presidential-polls-forecast.html?_r=0