Confession of a chicken

[Leo Chan]

I know most, if not all, of you are better than me in terms of windsurfing and kiteboarding skill. Most definitely, you are all better men and women than I am. I really enjoy meeting and riding with all of you. And I hope what I am writing here will help you make right decisions in most aspect of your life involving risk.

I was in kiteforum for about a year and decided there are too many idiots there for me to waste my precious time on. I might not be good at windsurfing, kitebording or talk sheeot. But one thing I am absolutely certain is I take more risks than most of you can ever imagine. I know it is hard to believe, given all the posts about safety I made. I love taking risks. Mostly, I just take financial risks, but most people would kill themselves for far less than I could lose in any given day. But I take calculated risks. I am a professor in finance and economics and one of the subject I teach is risk management. I also teach statistics. I know more about risk, measurement of risk and risk management than I could care for. One of the most misunderstood concept in statistics is the probability of an event occurring prior to the actual event and after the event is completely different. After the fact, it either happen or it didn't. If it didn't, the outcome is 0%. If it did, the outcome is 100%. Also, conditional probability is rarely additive. When you add two events that have probability of 1 in 1,000,000 chance, it doesn't mean it has 1 in 500,000 chance. The probability is much, much higher. All the talks about the risk of driving is higher than flying is nonsense. A defensive driving technique combined with the right condition and safety equipments in a car make driving far safer than flying in an airplane that is not well cared for.

My point is this: when you mixed average probability and conditional probability, you will be taking on more undue risks than you would like (or could afford). When you take on more risk with your life, the outcome is either 0% or 100%. You always hopping for 0%. In almost all cases, every life risking event you will participate on is independent. The problem with most people is when they succeeded avoiding one event, they add on elements that will increase the conditional probability without knowing that's what they are doing. Some people called it overconfidence. I called it stupidity.

Risk management involves taking measures to reduce the probability of risk from occurring. This requires you to make risk assessment each time you go out. From what I read, there were a few 100% certain event happened to someone in UWA or known to UWA members. I hope this will never happen to anyone I know. Take risks, but always know how to measure them and learn how to manage them. The funny thing with this approach is you will ended up with more fun in the long run.

[Craig Goudie]

I have a slightly different slant. (You knew it was coming dincha ;*) )

Most definitely, you are all better men and women than I am.

I'm not really sure what "better" is, but I doubt it.

But one thing I am absolutely certain is I take more risks than most of you can ever imagine.

I don't know buddy, you'd be surprised at what I might imagine ;*)

I know it is hard to believe, given all the posts about safety I made. I love taking risks. Mostly, I just take financial risks, but most people would kill themselves for far less than I could lose in any given day.

Suicide over money sounds pretty stupid to me, but, getting your adrenaline thrills over risking money
is certainly understandable, it ain't my way, but you should try the "World Series of Poker".

But I take calculated risks. I am a professor in finance and economics and one of the subject I teach is risk management. I also teach statistics. I know more about risk, measurement of risk and risk management than I could care for.

Might I suggest that, some (maybe most) who take physical risks have done the same calculations.
Some of those calculations might be in their spinal chord and muscle memory, but it's no less valid.
Certainly there are those who aren't prepared for what they attempt, and they select themselves out
of the gene pool (or at least the stock market). That presents a hardship to those they leave, and
that is what should be considered most, in my opinion.

One of the most misunderstood concept in statistics is the probability of an event occurring prior to the actual event and after the event is completely different. After the fact, it either happen or it didn't. If it didn't, the outcome is 0%. If it did, the outcome is 100%. Also, conditional probability is rarely additive. When you add two events that have probability of 1 in 1,000,000 chance, it doesn't mean it has 1 in 500,000 chance. The probability is much, much higher. All the talks about the risk of driving is higher than flying is nonsense. A defensive driving technique combined with the right condition and safety equipments in a car make driving far safer than flying in an airplane that is not well cared for. .

I'm no professor, but it's only in the limit (mathematically) that the probabilities reach 0 or 100 percent.
In between there are varying degrees of damage that may result. I have some damage as a result
of risk. Would I change the way I've lived? Let me get back to you in another 20 years (if I live that
long) on that. ;*)

My point is this: when you mixed average probability and conditional probability, you will be taking on more undue risks than you would like (or could afford). When you take on more risk with your life, the outcome is either 0% or 100%. You always hopping for 0%. In almost all cases, every life risking event you will participate on is independent. The problem with most people is when they succeeded avoiding one event, they add on elements that will increase the conditional probability without knowing that's what they are doing. Some people called it overconfidence. I called it stupidity.

Risk management involves taking measures to reduce the probability of risk from occurring. This requires you to make risk assessment each time you go out. From what I read, there were a few 100% certain event happened to someone in UWA or known to UWA members. I hope this will never happen to anyone I know. Take risks, but always know how to measure them and learn how to manage them. The funny thing with this approach is you will ended up with more fun in the long run.

Everybody has their threshold (a diet of twinkies and soda seems really risky to me), but unless
there's a new law on free will, they get to set it. I became less of a risk taker when I got married,
and considerably less when my children were born. My Mom always said dying is easy for you and hard
for those you leave. Sage. Pain seems to be more of a limiting factor than fear at my current stage
(maybe it's fear of pain that's limiting me ;*) ).

And my point is, a life lived without risk isn't much of a life. As I tell my daughter (she's always bugging
me about my diet) I'd rather live well, than live long. Your mileage should be what you decide on.

-Craig

[Leo Chan]

I have a slightly different slant. (You knew it was coming dincha ;*) )

Your twist is always welcome.

But one thing I am absolutely certain is I take more risks than most of you can ever imagine.

I don't know buddy, you'd be surprised at what I might imagine ;*)

True. I always underestimate people's imagination.

Suicide over money sounds pretty stupid to me, but, getting your adrenaline thrills over risking money
is certainly understandable, it ain't my way, but you should try the "World Series of Poker".

You'll be surprised how many people do this stupid thing: suicide over money. In fact, money is the number one cause for problems and violence in our society. So, maybe I should rethink this. People are more stupid than we think. Risking money in "World Series of Poker" is very different than risking money you earned with your hard work. In fact, the people who are in the "World Series of Poker" are suffering from "House Money Effect". They risk far more than they would without knowing. Most of them don't really care if they lose because they think they only risk the initial amount the put in. Stupid. . .

But I take calculated risks. I am a professor in finance and economics and one of the subject I teach is risk management. I also teach statistics. I know more about risk, measurement of risk and risk management than I could care for.

I might I suggest that, some (maybe most) who take physical risks have done the same calculations.
Some of those calculations might be in their spinal chord and muscle memory, but it's no less valid.
Certainly there are those who aren't prepared for what they attempt, and they select themselves out
of the gene pool (or at least the stock market). That presents a hardship to those they leave behind, and
that is what should be considered most, in my opinion.

My knowledge in this area is exactly the opposite of what you think: most people don't have any clue about the kind of risk they put themselves into. I am a big fan of the Darwin Awards. So, leaving some of them out of the gene pool works just fine for me. As for the stock market, the reason why I am in there is because I know more about risk than they do and they ended up sending their hard earn money to me. You'll be surprised how little they learn from each lesson. They always comeback, just as stupid as before.

Leaving someone behind is what I am trying to help people prevent.

I'm no professor, but it's only in the limit (mathematically) that the probabilities reach 0 or 100 percent.
In between there are varying degrees of damage that may result. I have some damage as a result
of risk. Would I change the way I've lived? Let me get back to you in another 20 years (if I live that
long) on that. ;*)

The outcome of an experiment is actually either 0% or 100% after the experiment. What you are talking about various degree of damages. When you set a limited degree of damages to be acceptable, that count as 0%. Something that makes you change the way you live your life is counted as 100%. I hope the way you live your life will never change.

Everybody has their threshold (a diet of twinkies and soda seems really risky to me), but unless
there's a new law on free will, they get to set it. I became less of a risk taker when I got married,
and considerably less when my children were born. My Mom always said dying is easy for you and hard
for those you leave. Sage. Pain seems to be more of a limiting factor than fear at my current stage
(maybe it's fear of pain that's limiting me ;*) ).

And my point is a life lived without risk isn't much of a life. As I tell my daughter (she's always bugging
me about my diet) I'd rather live well, than live long. Your mileage should be what you decide on.

-Craig

Craig, I think you misunderstood my intention. This is not about not taking risk. Taking risk is what makes life fun and makes innovation possible. But there are different degree of risk and things you can do to reduce those risk factors that can eliminate a person from a gene pool. Most accidents happen because people ignore those risk factors. But I also see why this post might be useless. People who likes to take risk are usually more likely to take on more risk after each death-escaping attempt.

I think most of you agrees that after marriage and have kids, your risking taking habit changed. You are less incline to take risk. But that is a wrong way to think about about. In fact, you are not taking less risk. You are just not willing to take on the same risk because the payoff of the risk taking is different when you have wife and kids.

Let's look a simple example (I am using male for simplicity, feel free to use female in your example):

A single person who has very little regard for his/her friends and family. So, this person placed the value losing the chance to be with his/her friends and family at a value of $10,000. This person also likes to take risk (all risk is is just adrenaline) and each successful attempt brings about $100 worth of reward. Let's say the probability of death is 1 in 100,000. The expected payoff is $99.9899.

Now, assuming that this person now has a wife and he value his wife's companionship at $1,000,000. What kind of risk would he willing to take with this new value on the losing side? 1 in 100,000,000!

So, what kind of risk you are willing to take depends on the value you put on the winning side and losing side. There is a reason why so many poor people go into dangerous occupations. The value on the winning side is so much bigger than the value on the losing side. The main issue with this example is the probability is almost always unknown until a certain number of people attempted the experiment. Even in the presence of perfect information, most people also has difficulty understand that conditional probability is not additive. They often underestimated the danger until it is too late.


This is my last post on this topic.

Enjoy Maui!