An Insight a Day

Big Risks Are Easy to Underestimate Because They Come From Small Risks That Multiply

From Collaborative Fund, one of the three big lessons from 2020:

If asked, “What are the odds that a group of scraggly young men can inflict massive damage on the strongest and most militarized nation in the world?” you might reasonably reply “extremely low.” Maybe even zero.

But if asked, “What are the odds a group of scraggly young man can be radicalized by a charismatic maniac (extremely high), sneak box-cutter knives through airport security (not hard), use those knives to kill pilots (easy), commandeer a plane (reasonably easy) and crash it into a building (inevitable at this point), your answer might be, “How could we not have seen this coming?”

Big risks are easy to overlook because they’re just a chain reaction of small events, each of which is easy to shrug off. A bunch of mundane things happen at the right time, in the right order, and multiply into an event that might look impossible if you only view the final outcome in isolation. Math is hard, but exponential math is deceiving.

Covid is the same.

A virus shutting down the global economy and killing millions of people seemed remote enough for most people to never contemplate. Before a year ago it sounded like the one-in-billions freak accident only seen in movies.

But break the last year into smaller pieces.

A virus transferred from animal to human (has happened forever) and those humans interacted with other people (of course). It was a mystery for a while (understandable) and bad news was likely suppressed (political incentives, don’t yell fire in a theater). Other countries thought it would be contained (exceptionalism, standard denial) and didn’t act fast enough (bureaucracy, lack of leadership). We weren’t prepared (common over-optimism) and the reaction to masks and lockdowns became heated (of course) so as to become sporadic (diversity, same as ever). Feelings turned tribal (standard during an election year) and a rush to move on led to premature reopenings (standard denial, the inevitability of different people experiencing different realities).

Each of those events on their own seems obvious, even common. But when you multiply them together you get something surprising, even unprecedented.

Big risks are always like that, which makes them too easy to underestimate. How starkly we have been reminded over the last year.

Too often, we underestimate the risk of a big disaster happening because we can't imagine how it would actually unfold. But most of the time, these big disasters are the result of multiple small problems or failures happening one after the other. That's why it’s so easy to overlook big disasters, the probability of them happening isn't as slim as you think once you break them into parts.