Certainty of Risk
December  2012
David Skinner
Everything we do in life is shaped by risk - from the risk of crossing  the street, to fly or to drive, to cheat or be honest. How we play the game of risk is what separates us all, a business 

Everything we do in life is shaped by risk - from the risk of crossing  the street, to fly or to drive, to cheat or be honest. How we play the game of risk is what separates us all, a business 

person from the rest of us, on or off  the street. And in the end -- does it really?
A Day In The Life
We act with certitude when others act before us with satisfactory results. We board elevators, cross busy streets and enter illicit affairs expecting risk will deal fairly with us -- if not 

evenly. Life for the average person is not about avoiding risk, it is about seeking opportunity. Risks are mere misses that we live and love to talk about. It's the lottery we seek! 
Collectively society determines the allowable risk of its citizens. The yellow crosswalk we cannot pass; the seat belts worn when driving. Yet a person in business chooses to live their 

lives on the edge of that cross walk, to accept the chance of gain or loss, to weigh seat belts against catastrophic accidents. These are the characteristics of a business person that sets 

them apart from others. Weighing the risk versus the reward!
The Types of Risk
Risk is the equivalent of doubt or as we may call it here - uncertainty. 
Uncertainty is often measured as a percentage of return on currency. 
When conveyance and uncertainty is involved, risk accelerates by it's square.
When matters extend beyond the norm an insurance company is commonly involved using actuarial tables to normalize" events betwixt the human choice and the almighty 

result". 
In extreme cases circumstances may exceed even actuarial tables as the following illustrates.
person from the rest of us, on or off  the street. And in the end -- does it really?
A Day In The Life
We act with certitude when others act before us with satisfactory results. We board elevators, cross busy streets and enter illicit affairs expecting risk will deal fairly with us -- if not 

evenly. Life for the average person is not about avoiding risk, it is about seeking opportunity. Risks are mere misses that we live and love to talk about. It's the lottery we seek! 
Collectively society determines the allowable risk of its citizens. The yellow crosswalk we cannot pass; the seat belts worn when driving. Yet a person in business chooses to live their 

lives on the edge of that cross walk, to accept the chance of gain or loss, to weigh seat belts against catastrophic accidents. These are the characteristics of a business person that sets 

them apart from others. Weighing the risk versus the reward!
The Types of Risk
Risk is the equivalent of doubt or as we may call it here - uncertainty. 
Uncertainty is often measured as a percentage of return on currency. 
When conveyance and uncertainty is involved, risk accelerates by it's square.
When matters extend beyond the norm an insurance company is commonly involved using actuarial tables to normalize" events betwixt the human choice and the almighty 

result". 
In extreme cases circumstances may exceed even actuarial tables as the following illustrates.
Everything we do in life is shaped by risk - from the risk of crossing  the street, to fly or to drive, to cheat or be honest. How we play the game of risk is what separates us all, a business 

person from the rest of us, on or off  the street. And in the end -- does it really?
A Day In The Life
We act with certitude when others act before us with satisfactory results. We board elevators, cross busy streets and enter illicit affairs expecting risk will deal fairly with us -- if not 

evenly. Life for the average person is not about avoiding risk, it is about seeking opportunity. Risks are mere misses that we live and love to talk about. It's the lottery we seek! 
Collectively society determines the allowable risk of its citizens. The yellow crosswalk we cannot pass; the seat belts worn when driving. Yet a person in business chooses to live their 

lives on the edge of that cross walk, to accept the chance of gain or loss, to weigh seat belts against catastrophic accidents. These are the characteristics of a business person that sets 

them apart from others. Weighing the risk versus the reward!
The Types of Risk
Risk is the equivalent of doubt or as we may call it here - uncertainty. 
Uncertainty is often measured as a percentage of return on currency. 
When conveyance and uncertainty is involved, risk accelerates by it's square.
When matters extend beyond the norm an insurance company is commonly involved using actuarial tables to normalize" events betwixt the human choice and the almighty 

result". 
In extreme cases circumstances may exceed even actuarial tables as the following illustrates.

Everything we do in life is shaped by risk - the risk of crossing the street, to fly or drive, to cheat or not. Society tells us, handling risk should determine our fortunes in life, however some would argue the opposite is true and apparently have proved it! 


Regardless . . .  Identifying and managing risk is normally a central determinate of business success or failure. In the process of managing, how you handle risk is at best, not an educational call, but a heartfelt one and will likely determine your end.


A Day In The Life

We act with certainty when others before us experience satisfactory results attempting what we intend to do. We board elevators, cross busy streets and start-up businesses with no other thesis than "the guy before us did". So the question before us is: These are all risk laden decisions we make personally, how much do we know about the "certainty" of risk before we put ourselves and our loved ones under its spell?


Collectively society and tradition determines allowable risk for us all. The center yellow line indicates where safely you may pass. Warning labels on cigarette products direct us to a healthier lifestyle. Yet a person in business chooses to live their lives at a greater risk for the possibility of an even greater gain. Agreed? 


These are the characteristics of an entrepreneur that sets them apart from others. If you are one of these, then I ask you, have you learned the difference between these four types of risk? Here they are presented and how you need to choose to deal with each of them.


1. Certain-Certainty

This is business as usual. "Hard work and a good product" normally are enough to overcome the certainty of gain and the certainty of risk in every case.  


2. Certain-Uncertainty

There are times however, beyond our plans when circumstances change and may even endanger our business; like a competitor moving into the neighborhood, equipment breakdowns or suppliers going out of business. A shrewd business person is always certain that something uncertain will eventually happen and has "contingency plans" ready for just such a potential situation.              


3. Uncertain-Certainty

Even the most worrisome of us know there are uncertain aspects of nature - while the eventual timing and consequences may prove certain are  too great to predict. For this we buy an insurance policy for our businesses and homes covering everything beyond which we may not humanly control. 


Insurance companies work on actuarial tables, "what happens to everyone else but may not to you" and they understand how common yet costly such catastrophes can be. For that they enter a contract of insurance coverage and charge you a premium fee. They become the statistical risk takers - not you! They cover your bases when complexity and catastrophe are too great for common sense. After all you're running a business! 


4. Uncertain Uncertainty

When common business practices fail, contingency plans collapse, insurance claims are denied and an asteroid is headed on a collision course with earth -- there is only one thing left to do: Pray to the Almighty and kiss it all goodbye!  


       THAT'S THE CERTAINTY OF RISK!