86: The 4 unintended side-effects of risk aversion and what to do about them

Risk is knowing there’s a steep cliff at the side of a mountain road.

Risk management is having metal guard rails to stop you inadvertently driving off the cliff.

Risk appetite is how far or close to the cliff-edge the guard rails let you drive. (Or possibly how easy or difficult it is for you to break through the guard rails.)

Risk aversion is simply closing the mountain road to begin with, and having to go the long way round instead.

When we become more worried about risk, four unintended thin...