The Three Sides of Risk

(b) en.wikipedia says that "freshwater economists" are called that because they were associated with the Chicago school[2], on the great lakes. A second connotation, for sailors, is that a freshwater sailor will run risks that a salt water sailor will explicitly incur many costs to avoid, precisely because the tail-end is not as serious within rescue distance of shore.

(for more nautical metaphor, compare brown-water navy vs blue-water navy)

[1] currently back down to 3,2% https://www.arbeit.swiss/dam/secoalv/de/dokumente/publikatio... (In the 90s it was briefly even above 5%.)

[2] https://en.wikipedia.org/wiki/Saltwater_and_freshwater_econo...

Bonus clip: https://www.youtube.com/watch?v=P9JcNWaMXTc

To mebi du amalof da belek; da belek fosho na du amalof to. (You may love space; space does not love you.)

At the end of the video they list all of the interviewees, all of whom had subsequently died. If you think about the amount of mass in the snow 9+ rocks, trees etc) and the churning dynamics you realize all those "techniques" you might learn are mumbo jumbo.

We show this video to our students (it's so old it's on a DVD), while teaching them how to avoid likely avalanche zones in the first place. Despite that I still carry an avalanche pole and beacon.

Too much effort is often put into preventing low cost issues and scolding those who make them.

Beyond hurting morale, it reduces efficiency and innovation because everyone is afraid to make even a trivial mistake.

What I'm trying to say is...

"Move fast and break shit! ...But maybe not that shit over there because it's actually quite critical"

I liked this PDF so much I bought the book.

https://arxiv.org/abs/2001.10488

Speaking of avalanches and covid, they share an interesting property:

You don’t know how close you are to a catastrophe until it’s too late. It’s fine until it’s not. And in many cases you’re proper fucked. There’s very little in between.

Until that moment, many people see any precautions as unnecessary, boring, patronising, paranoid, and so on. Be that because they are reckless, clueless, or both.

And once people do die, everybody is up in arms about the authorities not doing anything, the victims being at fault, why didn’t we do intervene, it would have been so easy. And so on.

There has to be a name for auch a thing.

So as someone who knows about avalanches, it is frustrating to see careless attitudes towards covid.

1. The odds you will get hit.

2. The average consequences of getting hit.

3. The tail-end consequences of getting hit.

It claims that tail-end consequences which are low probability , high impact events like coronavirus pandemics are all that matter. One thing, I learnt from insurance industry is that a lot of people underestimate the odds of getting hit. We are inherently reactive creatures and not proactive.

But I’ve been saying for decades that “risk” is not the chances of something happening, which is how most people understand it. Risk is (the chance of something happening) x (the consequences of it happening).

Imagine a 2x4 beam, 24’ long, lying on the floor, and I tell you to walk along the top of it without touching the floor. If you do, I’ll give you a sherbet lemon.

Now imagine it’s a 2x4, 24’ long between two office buildings, the one you’re in is on fire and this is the only way out.

The chances of you falling off the beam are the same (within a margin of error, assuming a non-windy day, etc. etc), but the risk to your life is much much higher in the second case.

Risk encompasses consequence, and it always surprises me how few people understand that in meetings when I’m describing a new approach, or criticizing a new service conformation.