Secret of being Rich, Mastering Wealth: a Risk Manager Approach

Secret of being Rich, Mastering Wealth: a Risk Manager Approach

Jul 4th, 2013

Secret of being Rich, Mastering Wealth: a Risk Manager Approach

Rarely we stop a second to ask ourselves if looking only at highly successful examples  is “right”, and if doing that will help us even, simply, to stay alive and well.
As a matter of fact, we do not read with the same avidity stories about failures, and I would even dare to say that failures are rarely told, analyzed, and certainly do not become best sellers. Losers do not generally become “motivational speakers” unless they can show the world some kind of “happy ending”.

If you open a business in a country because there are many successful similar businesses, you should actually first look at how many similar businesses failed in that country, to get the full understanding of the situation. Hopefully that will make you consider what should be done differently, better in order to avoid such failures. By looking at the successful cases only, you are making two common risk assessment mistakes:

a) your are biasing your judgement,
b) you are censoring reality.

Bias and censoring are extremely common “capital sins” in risk assessment and risk management. History is full of such cases, although they are generally not labeled as such.

Another bias is the so called “survivor bias”: society prefers speakers who shine as examples of making it through adversity, of struggling against the odds and winning. One rarely takes away from these inspirational figures advice on what not to do, on what should be avoided. Being successful, they don’t know what went wrong in the vast majority of cases and we would even argue that most of the time they do not even recognize how “lucky” they were, why they were successful.

Failure information is lost along with the people who don’t make it out of bad situations or who don’t make it on the cover of business magazines – people who don’t get invited to become motivational/ public speakers or opinionists.

That’s why a serious risk assessment should always have a chapter on past history of failures and accidents. Now, do not think that’s the end of the story….you cannot assume that the future will replicate the past when you do a risk assessment: but this will be discussed another time.

Tagged with: , , , , , ,

Category: Risk analysis, Risk management

Leave a Reply

Your email address will not be published. Required fields are marked *

Riskope Blog latests posts

  • Holistic Geoethical Slopes’ Portfolio Risk Assessment in Geological Society
  • 2-12-2020
  • We are proud to publish Holistic Geoethical Slopes’ Portfolio Risk Assessment in Geological Society, London, Special Publications, 508. We want…
  • Read More
  • The impact of standard of care on dams survivability
  • 25-11-2020
  • Using ORE2_Tailings we can quantify the impact of standard of care on dams survivability. In this blogpost we take three…
  • Read More
  • Tactical and strategic planning to mitigate divergent events
  • 18-11-2020
  • Tactical and strategic planning to mitigate divergent events is one of the themes of our next book. The term divergent…
  • Read More
  • Get in Touch
  • Learn more about our services by contacting us today
  • t +1 604-341-4485
  • +39 347-700-7420

Hosted and powered by WR London.