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Over the past couple of weeks, one of the sadder stories was that of Richard Hammond crashing during an attempt on the British land speed record. The reaction has varied from the sympathetic (over £200,000 has been raised for the West Yorkshire Air Ambulance following the crash) to the plainly silly. One of the loudest responses has been to call for the ending of Top Gear and similar shows because they put the hosts/drivers at too much risk.
We all deal with risk daily, but it’s a sad indictment of modern life that we can’t recognise the difference between threat and risk and constantly miscalculate the risk associated with actions - underestimating where one is in control and overestimating them where one is not. A fantastic example of this is travel - cars are by far the most dangerous way to get around (and statistically the most likely cause of my death), yet, I feel safer when I’m driving - because I’m in control (and obviously the best driver in the world). My mistake is one shared by most people - I’m aware of it, but still do it!
One of the problems with this effect is that it leads to bad policy, at all levels (personal, corporate and national) - people are just not good at estimating the risk associated with actions having a natural overconfidence in their own abilities and mistrusting others. This is reflected in the way that people approach their lives, they see themselves as being in control of their health (smoking won’t kill me!), but being bothered by external pollutants. One of the worst examples of this at a personal level is how people treat their children - rush straight home from school, don’t talk to strangers can be good advice in certain circumstances, but what exactly is the aim? Statistically, the people most likely to abuse (or for that matter kidnap) a child are either the parents themselves, or a close friend or family member! Do parents lay awake at night worrying that their partner, friend or brother might abuse a child, or do they worry about the mysterious (and almost non-existant) man who hangs around outside the school? It’s all about what parents think they have control over.
One of the other scary aspects of modern life is the school of thought that risk should be eliminated (which brings me back to my opening paragraph!). Frankly, it’s impossible and undesirable (in most cases) to do so completely - what needs to be performed is risk management. Proper management of risk should lead to economic questions - it is, after all, about getting the best result for the smallest outlay until the level of risk is acceptable for the marginal cost. This will usually be where the cost to reduce an expected amortised loss will be greater than that loss itself, but there are exceptions (the cost of preventing counterfeit currency is actually greater than the value of the currency itself, but the secondary effects of widespread counterfeiting would be a loss of confidence, hence value, of the currency).
In other areas, risk is actually a good thing. The very nature of investment requires an element of risk to provide a reward - even something as simple and safe as depositing money in a bank account, is, at the heart of it, a bet around the interest rate, inflation and opportunity cost of spending it right now or investing in another opportunity.
Where dangerous activities are anticipated it is right that a threat be reduced to an acceptable level - human life is paramount after all (a large impact), but there should be a nod to the men who have furthered humanity by pushing the boundaries - explorers, scientists (Curie is a fantastic example here) and others. I don’t compare Richard Hammond to any of these people, but Earth would be a poorer place without showmen taking chances to entertain and, let’s face it, everyone loves a good car crash…
