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Splitting the Certain from the Uncertain Future

Posted in on
April 4, 2021

Author: Ron Dembo

Ranger Roy Sullivan of Shenandoah National Park was a brawny man with a broad, rugged face who spent most of his life outdoors. He had a passion for freshwater fishing and was much-loved for his affable nature. But Sullivan was also known for something else: being struck by lightning seven times during the course of his career as a ranger.

This unfortunate feat earned Sullivan the nickname “The Human Lightning Rod”. Indeed, he became so suspicious of storms that he began carrying around a bucket of water everywhere he went in case lightning set him on fire.

On more than one occasion, this bucket came to his aid.

What Are the Chances?

According to the US National Weather Service, the odds of getting struck once over an 80-year period is about one in ten thousand. So, if the strikes were independent events, the probability of being hit seven times would be (1:10000)7, or 1:1028 – that’s absurdly unlikely.

This kind of statistic is essentially meaningless. Take a risk thinker who, when she hears about a possibility of a thunderstorm in the weather forecast, stays indoors or in her car. Her chances of getting struck by lightning are effectively zero. Now look at the risk taker who hears about a thunderstorm but ignores it and goes out to the golf course. His chance of getting struck is much higher than 1 in 10,000.

In other words, your chances of getting struck depend heavily on whether you hedge your risks or take chances.

Look at Sullivan. For a start, the nature of his work as a ranger meant he was constantly outdoors and therefore more exposed to the weather. And he was also living in Virginia, which averages 35 to 45 thunderstorm days per year – much more than the national average. Also, when he was first struck in 1942, Sullivan was standing in a fire lookout tower with no lightning rod, which was located on a high vantage point. So, his odds of getting hit were actually much higher than average.

In short, averages are misleading!

Knowing Your Problem

Like every problem involving risk, lightning strikes combine both uncertain (stochastic) and certain (deterministic) elements.

Stochastic (STO-KAS-TICK): an event or data that is not known with absolute certainty.

Deterministic: an event or data that is known with absolute certainty.

That lightning will strike in a thunderstorm is almost guaranteed (deterministic). That your car is safe from lightning in a thunderstorm is guaranteed (deterministic). But exactly where and when lightning will strike is radically uncertain (stochastic).

Likewise, that the middle of a golf course or the top of a tower is dangerous in a thunderstorm is a given. That you might be struck in such circumstances is significant. But you can manage (hedge) your risk by simply getting into your car.

This is a metaphor for how you should think about any problem involving future uncertainty. Ask yourself, what is stochastic, and what is deterministic? Then act accordingly. Deterministic problems can be solved with planning, efficiency, and practice. Stochastic is when your only option is to hedge your bets.

Make Your World More Deterministic

We may never be able to predict where lightning will strike. But that doesn’t mean we can’t make a few simple decisions to help us reduce the dangers of this risk.

If we know we can deal with the deterministic, then good strategy comes down to making the equation more deterministic – as in the case of our risk thinker.

I don’t know where lightning will strike, but I do know it’s almost impossible to hit me if I’m inside a brick-and-mortar house. And likewise, I know that I’m pretty much asking for it if I head out onto a golf course in the middle of a rainstorm and start waving a big metal stick around. So, there are a few simple things I can do to reduce my exposure to uncertainty – a few easy decisions that can make my world more deterministic and thereby increase my control over the future. That’s risk thinking in a nutshell.

Think about climate change. If we know burning fossil fuels will lead to higher world temperatures and more extreme weather, then whatever we can do to reduce carbon in the atmosphere with known technologies makes it easier to manage the remaining radical uncertainty, such as the consequences of a runaway climate.

So, we do have some control over our future, and we can shift the odds in our favour.

Forecasting: The Unloved Companion to Risk Thinking

Weather forecasting (really, any forecasting) has improved greatly over the years. You can get one for 14 days ahead and it’s seldom wrong. That’s thanks to massive supercomputers we now have doing modelling, which takes a lot of the stochastic parts out of the equation. As big data gets bigger and we get faster computers and better machine learning and AI, we will be able to make even better forecasts.

With forecasting we can extend the deterministic horizon with a greater degree of accuracy. In fact, for all its faults when misused, forecasting plays a great role in problem solving and in decision making. It allows us to enlarge the percentage of the equation that is deterministic by reducing the uncertainty.

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