Be a Good Steward of Risk

To make good decisions, you must be a good steward of risk.

If you were omniscient, you’d never need to worry about risk. You’d know the outcome to every situation, and there would be no uncertainty about the future.

You, however, are not omniscient. You are a flawed creature to which the future is often a mystery. And that’s what makes you, and life, beautiful.

To be a good steward of risk means to be prepared; to take a bit of the “mystery” out of the future. The more you know about your situation, the better you can predict the future, and the better you can make good decisions to accomplish your goals.

The four tenets of being a good steward of risk are:

  1. Know who is involved (including yourself), and why they are involved.
  2. Familiarize yourself with your situation’s circumstances.
  3. Predict how those involved might behave, and what actions they might take.
  4. Put it all together in the context of the system that you are in.

(For more detailed information on these tenets, check out Conflict Decision-Making.)

Falling Down, and Getting Back Up

This is easy advice to give, but can be hard to follow. I’ll sometimes fail to follow my own advice, which is both embarrassing and humbling. It is a reminder that when I am in the middle of a conflict, it can be hard to think clearly. This is one reason talking to someone outside of the conflict can provide a clearer and more levelheaded perspective.

So, how do I usually fail at being a good steward of risk? It’s usually by being lazy: I either don’t try to truly understand the situation or I fall back on convenient heuristics (these usually go hand in hand).

Now, heuristics aren’t bad, per se. They exist because they often work, and work well. However, a heuristic becomes convenient when we use it without considering other descriptive alternatives. Convenient heuristics are convenient because they are the quick and easy options. And they are dangerous because they can cause us to fall prey to cognitive biases and make poor decisions.

The important part of being a good steward of risk is being tenacious and self-reflective. We all eventually fall down, and mistakes are inevitable. But, by being tenacious and self-reflective we can ensure that we get back up. One mental trick I use to catch myself when I fall, and to pick myself back up, is the mental TV show.

The Mental TV Show

I use this mental trick to check in on myself: am I thinking about a situation clearly, or am I being a lazy decision-maker?

The mental TV show is exactly what it sounds like. I imagine that I am watching TV, and the show is a sitcom about me and my situation. There are two versions of myself that I am imagining: the viewer-me, and the sitcom-me. And I ask myself, “what would the viewer-me be saying to the TV?”

I pay close attention to what the viewer-me is saying about the sitcom-me. If I am yelling at the TV (usually about doing something stupid, and that I should know better), I know very quickly that I’m doing something wrong. Furthermore, the viewer-me is usually also saying exactly what I need to do in order to get back on track.

The mental TV show is about giving myself the proper perspective to truly understand the situation so that I can be a good steward of risk.

Who’s Your Model Steward?

The four tenets, above, are broad and generalized to fit most situations. However, your specific situation might have a specific model of risk analysis that is more applicable. A good model of risk analysis will address each of these tenets in greater detail, and greater predictive accuracy. A poor model of risk analysis will fall short on one or more of these tenets, and leave you on the ground should you fall down.

So, as you think about being a good steward of risk, consider who might be your role model, and what models of risk analysis might guide you best. And, keep in mind that if you find yourself too close to the situation, a little bit of perspective can do wonders to help clear your mind.

Recommended Reading:

The mental TV show is very similar to William Ury’s (2007) recommendation “Don’t react: Go to the balcony” in Getting Past No: Negotiating in Difficult Situations, a book I highly recommend.

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