As human beings, we are naturally petrified of risk and uncertainty. But our lives are little more certain than a game of poker – and we’d do well to embrace that!
Caspar Berry, professional poker player extraordinaire, knows exactly what it means to take risks. But he admits that it can be a scary business.
“People are broadly hard wired to be risk-averse and that’s not a bad thing per se. It keeps them alive. Its kept our species alive for however many thousands of years.”
“What we call risk aversion is essentially a desire to succeed in the short term. And a desire to succeed is another way of describing a fear or aversion to loss and risk.
“It’s a legacy of a period when we were, like almost every other animal, driven by only short term goals; eating, sleeping and procreation. It’s only a problem when we couple this with a desire to achieve long term goals like sales figures. In this scenario our desire to succeed in the short term, to close every sale we try and make for example, conflicts with this long term goal and it becomes a problem.”
Life is like a game of poker…
Caspar was first introduced to Poker by a friend when on a holiday to Las Vegas in the summer of 1999. “With my background in – and love for – economics, I got it immediately. Poker is just a game of resource allocation on a terrain of uncertainty which, when you think about it, at a fundamental level is all that we ever do in business and life every day!”
And that’s Caspar’s philosophy in a nutshell. He equates the uncertainty of our everyday, working lives to game of poker to explain our inherent risk aversion whilst encouraging us to challenge that natural instinct to flee from risk. “I try to show in my work how and why the world is more uncertain than we like to think a lot of the time and why we create that illusion – in order to be able to get through the average day.
“We need certainty and we need the illusion of control in order to be able to function. we shouldn’t be too hard on ourselves… it’s in our genes!”
The benefits of risk
If it’s in our genes why on earth fight it? Is there any real benefit to injecting a little extra uncertainty if it pains us so very much to do so?
Apparently, yes! According to Caspar studies show that the more we acknowledge and embrace uncertainty the better our judgement and decision-making apparatus.
“There’s not a lot we can do about most uncertainty: manage risk where we can; mitigate it where possible. But the economics of risk and reward say that resource allocation is most efficient where we can embrace uncertainty, think probabilistically and stop looking for the outcome most likely to succeed.
“By riding the volatility to some extent we can get better ROI as a result.
“Certainty is nice but efficiency and the bottom line is what is important. Take a long term view, accept greater ‘negative’ outcomes’ and ‘negative metrics’ and focus on the metrics that matter.”
Does Caspar believe we should take more risks in our working lives?
“We should. But it’s easy to say. In order to be able to do so we need to be aligned both with our own expectations and those of our organisations.
It’s no good one person saying they’re going to accept greater volatility for greater long term returns: the person who judges them whether it’s themselves a colleague or boss, also needs to be on the same journey. I don’t judge anyone negatively for not being able to push the latitude and risk level but it’s important to engage in a conversation in order to try.
“Its our own results we’re sabotaging, sometimes inadvertently, if we don’t!”
Caspar Berry is speaking at Big Ideas Summit London today. Register as a digital delegate to hear more from him and follow the day’s action live.