Personal Risk Assessment

>> January 6, 2020

>> Blog Post #6

A couple of years ago I read an article that made quite an impression on me. Someone had posted a link to it on one of the bitcoin forums I read daily and the description he made of it triggered my interest.

I believe the link I had received was for the post on the ZeroHedge website, but after a little search I found the original article to be this one.

The reason why I’m posting it here is that one of the examples hit home for me. The main point in this article is that people don’t assess risk properly. I personally don’t believe the most interesting part is the financial implication of not getting rich as it is not one of the things that I give the most importance to in life. What I thought was really interesting was the downside risk and how my personal assessment of it was skewed.

A lot of people, at least where I come from, tell you that quitting or losing your job is terrible, especially when you have a house and a family because you might not be able to manage. I’m keeping the argument fairly generic, and it’s actually not very well worded, but the main point here is that the argument always feels very definitive and that it’s always fairly vague.

When I look about it today, I feel that the intuitive way that a lot of people receive that argument is “You should be fucking scared, cause you risk going from 100 to 0”. And no you don’t.

Once I saw that my biggest downside risk was to stay in the professional situation I had and not to either have to:

  • flip burgers for a few weeks / months – say a 20% chance and honestly, I think that would be unfortunate
  • work the same job elsewhere for a 30% salary cut for a year or so – say a 30% chance
  • work the same job elsewhere for the same salary – that leaves 50%

I saw things more clearly and almost immediately my mind started working for the benefit of one, and only one thing: me

I could have failed to try.

Now worse thing that could happen to me is fail while trying.

Let me know in the comments what you think of that article and if you too have fallen into that assessment trap. I’ll definitely come back to this as I am convinced that it has a lot to do with how we are educated and how society is actually happy when we are trapped in that situation as some people benefit from it. Just not you.

4 thoughts on “Personal Risk Assessment”

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