The Heuristics Of Risk
Working with risk is complicated. If you work in law enforcement or the military, you’ve got spreadsheets and computers and checklists to help you with risks. If you work in finance, you’ve got algorithms to help you make good decisions about risk. If you’re an entrepreneur, you’ve got mentors (hopefully) and bankers and consultants who help you analyze and minimize the risks to your business.
When you’re a spy in the field, you don’t get much help with risks. You don’t have consultants or algorithms to help you. You don’t have computers, and the only checklists are in your head. It’s just you making decisions about risk, with life and death consequences.
So you develop mental tools for handling risks. Tools that fit in your head. They’re the heuristics of risk.
In the coming A Spy’s Guide To Risk, we’ll talk about some of those heuristics.
But first, we’ll talk about the two types of risk.
The first type of risk is the risk most people worry about it. It’s the risk that you’ll get a bad result after you act. Or worse, that a bad result will come no matter what you do.
In the Data-Analysis-Decision-Action process, the first type of risk comes after action, but before a result (to know more about this process, read A Spy’s Guide To Thinking):
But there’s also a second type of risk. The second type of risk comes in the lead up to action. It’s the risk that you got bad data, did bad analysis, made a bad decision or took the wrong action. It’s the risk that you got things wrong at the front end of the D-A-D-A process:
If you don’t look at the second type of risk, you may miss opportunities, and you may walk into unnecessary danger.
We’ll talk about both kinds of risk in A Spy’s Guide To Risk.
More importantly, we’ll talk about useful heuristics for solving them.
We’ll start with the “factors” underneath each risk. Some people call them “risk factors.” Others call them “causal factors.” They go by different names, but they’re the things that precede the result.
We’ll talk about using those “factors.” We’ll talk about how you layer them on each other to prevent the downside. And how you eliminate them to make the upside more likely.
We’ll talk about how gamblers use them to avoid the “problem of ruin.” We’ll talk about using probability, subjective and otherwise. We’ll talk about how when things happen is often more important than what happens.
And we’ll do it all inside the story of one of my risky days as a spy.
A Spy’s Guide To Risk is coming soon.