Risk Aversion

“We are extremely risk averse.”

“We literally try to think of the worst case on not only just one thing going wrong, but other things going wrong at the same time.”

~ Warren Buffett (talking about his company)

Freedom from fear of loss is ideal, but having some fear of loss makes sense. If you want to be like St. Francis and give up everything, there’s nothing wrong with that, but if you hope to have anything in life you’ll need to give some attention to managing risk.

Everything is at risk, all the time. We can’t eliminate it entirely, but we can reduce it.

NASA has a contingency plan for everything they can think of that might go wrong with space shuttle launches and missions. They’ll even scrub a mission if the weather isn’t absolutely perfect. People involved in the space program, including the astronauts, are willing to accept the risks that comes with going to space (currently the risk is approximately 1 in 250). But they don’t accept any more risk than necessary. They’ll do everything they can to make the mission as safe as possible. As astronaut, Chis Hadfield, has said, “no astronaut launches to space with their fingers crossed. That’s not how we deal with risk.”

As individuals, it’s not possible to have a contingency plan for every possible risk in life. Astronauts have a large team of experts helping them, which we don’t. There are plenty of experts out there that can help us, but we have to go through the extra step of finding them, and we likely won’t find them all. That said, there’s still a lot we can do to manage risk and we can find at least some of the experts we need to help guide us, by reading lots of books, taking courses, etc.

We have only one life and we want to live it well. Through continuous learning, we can acquire certain mental filters and check lists that can help us take no more risk than necessary.

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