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The author identifies 3 things - the chances of X happening, the consequences of X happening, and the long-term effects of X happening. Personally I don’t separ

The author identifies 3 things - the chances of X happening, the consequences of X happening, and the long-term effects of X happening. Personally I don’t separate (2) and (3). If X involves you breaking your spine, then long term consequences are indicated, to my view... But I’ve been saying for decades that “risk” is not the chances of something happening, which is how most people understand it. Risk is (the chance of something happening) x (the consequences of it happening). Imagine a 2x4 beam, 24’ long, lying on the floor, and I tell you to walk along the top of it without touching the floor. If you do, I’ll give you a sherbet lemon. Now imagine it’s a 2x4, 24’ long between two office buildings, the one you’re in is on fire and this is the only way out. The chances of you falling off the beam are the same (within a margin of error, assuming a non-windy day, etc. etc), but the risk to your life is much much higher in the second case. Risk encompasses consequence, and it always surprises me how few people understand that in meetings when I’m describing a new approach, or criticizing a new service conformation.

jm__87 6y ago
I interpreted the bullet point about "tail-end consequences" as tail risk, i.e. a worst case scenario event with low likelihood of occurring. In the author's story, he mentions they only considered the likely consequences of skiing out of bounds: getting caught and getting in trouble with their coaches. They never considered the worst case scenario of dying in an avalanche.
- spacedcowboy 6y ago
  I guess what I'm saying is I think it's a distinction without a difference. It's a consequence - subdividing into "likely consequence" and "oh,shit! consequence" seems artificial. All that means is that you haven't properly understood the risk, IMHO :)
  - jm__87 6y ago
    I honestly have no idea what you're talking about. Agree to disagree :) Edit: actually I went back and read your comment again and I misread the second part of your comment to indicate that I didn't understand something. I get what you mean, but I think tail risk can get ignored a bit more when you're quantifying risk, because it is very difficult to quantify.
  - Terretta 6y ago
    Interpreting long-tail risk of consequences the same as long-term risk consequences is simply mistaken. A likely risk of time spent outside is sunburn. A long term risk of time spent outside is skin cancer. A long tail risk of time spent outside is getting hit by lightning.

jm__87 6y ago

I interpreted the bullet point about "tail-end consequences" as tail risk, i.e. a worst case scenario event with low likelihood of occurring. In the author's story, he mentions they only considered the likely consequences of skiing out of bounds: getting caught and getting in trouble with their coaches. They never considered the worst case scenario of dying in an avalanche.

spacedcowboy 6y ago
I guess what I'm saying is I think it's a distinction without a difference. It's a consequence - subdividing into "likely consequence" and "oh,shit! consequence" seems artificial. All that means is that you haven't properly understood the risk, IMHO :)
- jm__87 6y ago
  I honestly have no idea what you're talking about. Agree to disagree :) Edit: actually I went back and read your comment again and I misread the second part of your comment to indicate that I didn't understand something. I get what you mean, but I think tail risk can get ignored a bit more when you're quantifying risk, because it is very difficult to quantify.
- Terretta 6y ago
  Interpreting long-tail risk of consequences the same as long-term risk consequences is simply mistaken. A likely risk of time spent outside is sunburn. A long term risk of time spent outside is skin cancer. A long tail risk of time spent outside is getting hit by lightning.