Most of us are at least a little overconfident because of two truths:
- No one knows what the future will look like.
- You can’t make decisions unless you think you know what the future will look like.
Life is a little easier if you expect a certain percentage of it to go wrong no matter how hard you try.
Smart people screw up.
Good people have bad days.
Nice people lose their temper.
Pablo Escobar expected 10% of the cash he stored in warehouses to be eaten by rats or spoiled by mold. That was if everything went well.
Some downsides are unavoidable. You can push back, but they’ll never die. They’re part of life, and you might as well learn to accept them than pretend perfection exists.
Three in particular get in the way when thinking about risk.
1. It’s impossible to think about risk and opportunity without a reference point. And your reference point is at best incomplete if not totally wrong.
How risky do you think Covid-19 is? What should we do about it? What happens next?
No one can answer those without acknowledging what Covid-19 looks like in the eyes of different people.
An 80-year-old with asthma doesn’t think about its risks the same way a healthy 20 year old does.
A parent with young kids doesn’t think about working from home like a single person does.
A restaurant owner doesn’t think about economic opportunity like a software engineer does.
So people come to vastly different answers about Covid’s future – not because one is more right than the other, but because they’re thinking about the same problem with different reference points.
Everything we think about risk and opportunity is colored by our own unique situation and personal experience. I do it, you do it. It’s unavoidable.
All risk and opportunity has to be measured against a set of baseline expectations. But since different people who’ve experienced different things and want different outcomes have different expectations, two people thinking about the same problem come to different conclusions.
Both expect their conclusions to be right. Both are mystified when they’re often wrong.
*Featured post photo by Tobias Hüske on Unsplash