How to quantify risk

Three people playing Jenga symbolising risk management

We live in world of miscalculated risk. This article gives some examples of that and some actual data to help people and businesses make more accurate assessments.

Examples of miscalculated risk

Here are some examples from my own personal experience:

  • My friend used to take the London Underground to work every day. After the 7/7 bombings, his wife told him stop. So now he cycles to work.
  • I have another friend who has two children. He and his wife refuse to get them inoculated against mumps, measles and rubella. Instead, they plan on an 18-year course of homeopathic ‘inoculations’.
  • Another friend will only buy a lottery ticket on a rollover week, when the prize is bigger.  (Coincidentally, her father was struck by lightning.  Twice.  And lived. So perhaps her family really is a special case.)
  • I am a pilot flying light aircraft. The media report light plane crashes with the same fervour as big airliner crashes. Yet more people die on the roads in the UK every day than die annually in light aircraft crashes. Annual road deaths are never reported. The result? People feel fine about driving to the airport but terrified about flying.
  • There was huge outrage in the media about illusionist Derren Brown’s televised Russian Roulette. He’s too clever to take any chances at all but everybody fell for it.

So, I was fascinated to hear about Dr. Frank Duckworth’s attempts to come up with a scale to measure risks. It is similar to the Richter scale for earthquakes.

How risky is it?

  • 8.0 Suicide
  • 7.2 Russian roulette (one game, one bullet) [I don’t think this applies to Derren Brown]
  • 7.1 Continuing smoking cigarettes (male aged 35 – 40 a day)
  • 6.9 Continuing smoking cigarettes (male aged 35 – 20 a day)
  • 6.7 Continuing smoking cigarettes (male aged 35 – 10 a day)
  • 6.4 Deep sea fishing (40 year career)
  • 6.3 Rock climbing over 20 years
  • 5.5 Accidental falls (new born male)
  • 5.5 Lifetime car travel (new born male)
  • 5.5 Dying while vacuuming, washing up or walking down the street
  • 4.6 Murder (new born male)
  • 4.2 Rock climbing (one session)
  • 1.9 100 mile car journey (sober middle aged driver)
  • 1.7 100 mile flight
  • 1.6 Destructive asteroid impact (in the life-time of a new born male)
  • 0.3 100 mile rail journey

Sources: The SumChance News 7.11

Quantifying business risks

A few years ago we created this infographic for former Articulate client, Polecat which covers the same ground but also looks at the risks to businesses.

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