Dunn's Digest: What is Risk?

Farm Pics, Quote, Thought, Question

Life on the Farm:

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Quote of the Week:

Arthur Brooks, author and academic, on the Modern Wisdom Podcast #1043, defines the difference between risk and uncertainty.

Risk and uncertainty are different. And people use them interchangeably. Uncertainty means you don’t know what might happen, so you can’t assign probabilities, so you can’t manage contingencies. Risk is that you know what might happen, so you can assign probabilities, so you can manage contingencies. That’s the reason that people feel better when they buy insurance. Insurance is a happiness business. What it does is it converts uncertainty into risk and it no longer becomes a source of misery. That’s why anybody who buys a life insurance policy feels better after they do it because they’ve just turned their uncertainty into risk. Uncertainty is a source of fear.

And that reminds me of this I heard from Alex Hormozi:

‘Fear only exists in the vague, not the specific.’

Because, as Arthur said above, once it is specific, it becomes risk, not uncertainty. And risk is measurable and manageable.

Question:

Where can I translate my uncertainty into measurable risks?

Uncertain about my job security VS… 5% chance I get sacked this year. Ok, cool.

Uncertain about my proficiency in this relationship VS… I will be 100% me and hold 0% back. Nice. Easy.

                          In good health,

                             Harvey