How good are you at assessing risk?

Are you a risk-taker? Or perhaps you’re risk-averse? 

 

I’ve never warmed to either term, as they seem to oversimplify a rather complex topic. When it comes to risk, I prefer to use the term risk-aware.

 

One might surmise that if a person is risk-aware, she takes the time to assess both the consequence (e.g., what’s the worst that can happen) and its likelihood. 

 

For major decisions, that makes abundant sense: Should I accept the offer? Drive or fly? Invest in AI? Get the vaccine? Join my friend for ziplining, or bungee jumping?

 

But for the countless everyday decisions, who has the time? Should I buy organic strawberries or just the regulars?

 

“Risk taking has a mixed reputation,” note authors Emma Clifton, Felix Day and Ken Ong. “On one hand, it is celebrated for its links to human discovery and endeavor. Astronaut Neil Armstrong famously proposed that ‘there can be no great accomplishment without risk.’” 

 

And author Adnan Manzoor reminds us: “Risk management is not solely [about] minimizing risk – it’s also about taking them too!”  

 

FAULTY THINKING

It’s commonly said that human beings are not particularly good at making decisions. A few concepts are in play: 

 

The affect heuristic. Kenny Skagerlund, in a piece for Psychology Today, writes, “People often make judgments about risk using their emotional responses rather than making effortful deliberations – the affect heuristic.” He adds, “The affect heuristic is a kind of mental shortcut.” 

 

Optimistic bias. “[There’s a] very, very basic and well-established finding in social psychology,” says Dr. Helweg-Larsen, as quoted by A.C. Shilton in an article for the New York Times, “which is that people think that their own risk is less than that of other people’s risk.”

 

Confirmation bias. This is the brain’s tendency to seek out information that confirms our existing beliefs. Confirmation bias is particularly strong both in politics and health, but when it comes to risk, it can lead us to rely on incomplete or biased information. 

 

THE RISK GENE

In recent years, researchers have begun to study the link between genetics and risk tolerance. Authors Clifton, Day and Ong explain, “Researchers have long suspected that there may be genetic factors involved,” but that this link “hasn’t been confirmed until now. In our new study, published in Communications Biology, we have uncovered 26 genetic variants specifically linked to risk taking.” 

 

Another study, reported by Heather Buschman in Nature Genetics said scientists have “identified 124 genetic variants associated with a person’s willingness to take risks.”  

 

TWO STRATEGIES  

What can we do to mitigate risk? Here are two of my favorites. 

 

“You should surround yourself with the proper individuals,” suggests Manzoor, which I suppose means building a network of friends who routinely vet consequences and likelihoods. 

 

This approach seems to parallel a concept called “rational ignorance.” 

 

Katherine Igoe explains, “Rational ignorance means that it’s rational to delegate authority to others to help make decisions and minimize the dangers in our lives.”

 

A second strategy? Improve our ability to reflect. 

 

Notes Skagerlund, “Scoring high on cognitive reflection may allow a person to identify an [emotional] response but be able to override the gut feeling in favor of an evaluation made in a more deliberate state.” 

 

All of which is to say: think, pause, and take your time. 

 

Then consider yourself to be risk-aware.