Unrealized Risks Are Still Real Costs
Andy Smith
Reading “Fooled by Randomness” by Nassim Taleb.
Taking lots of notes as I go — I’ll sort through them when I finish and maybe write something more detailed.
But right now one simple thought keeps spinning in my head (unsurprisingly, since it runs as a thick thread through the entire book). It’s long been obvious to me personally, yet completely non-obvious to people around me.
If you left the stove on unattended and went to the store for an hour, and nothing happened — that doesn’t mean everything is fine. It means you just incurred a direct loss equal to the probability of fire multiplied by the cost of restoring your apartment after one.
If a risk didn’t materialize this particular time, that doesn’t mean it should be thrown out of consideration.
I’ve started noticing many people around me who don’t grasp this simple and obvious idea — they “just live.” I don’t understand them.
What scares me most is that I probably don’t notice similar behavior in myself and act the same way. How to fix this?