The Year of Being Agile -- Agile Risk Management, Informed Intuition, the Hard Part

In our last installment, we collated a list of known risks in our lives and we identified the ones we could do something about. But that's the easy part and it's only a start.

It's much more important to identify the risks you don't know about, the "unknown unknowns" to quote some douchebag. And that's more challenging and doesn't just require objectivity, but also informed intuition.

This is going to touch on some some of my old posts, so I recommend following the links.

Here are the three approaches I've identified that can help you get a feel for where the risks are that aren't objectively obvious:

1. Divination
2. Fragility identification
3. Alternative analysis

Divination loves dirty laundry. I've long found that the Tarot, for example, is better at delivering the bad news than the good. I used to think this was just me or the nature of the cards. After all, different types of divination have different modes, approaches, or areas of focus. For example, when I want advice on how to act or conduct myself in any situation, I turn to the I Ching. That said, it turns out that divination is actually objectively better at predicting dross than gold. I learned about the research on this from Gordon's Chaos Protocols so I'll just recommend you go read it if you haven't. 

This makes divination perfect for what we are currently doing and brings us to Taleb's Black Swan. I've written on this before and so would like to direct you the following two posts:

They outline not only what a black swan is, but also provide a tarot layout designed to predict them. I do a modified version of this reading for money (note, the offer for a free trial reading is long expired) and have refined it considerably over time. But there's still a lot here that can be helpful if you want to do your own readings. Here's a quick rundown:
  1. For each major area of your life, draw a "what's coming card"
  2. For any that are worrisome, draw additional cards to help you figure out what's coming and what the result will be
  3. Finally identify what you might be able to do about this (and save this data for your mitigation planning, which I will be talking about soon)
Fragility Identification
Another Taleb gem. His Antifragile is highly recommended reading and I've discussed the subject here before. Basically, fragile things are those that are harmed by disorder, stable things are those that aren't impacted by disorder, and antifragile things are those that are helped by disorder. The more your life skews away from the former and toward the latter the better (I have a couple of posts on this already in case you want more info.)

For risk analysis, this means that areas of fragility in your life point to a place with a hidden risk. Let me give you a real-life example.

Some years ago the other contributing adult in our household had a serious accident. The kind of thing that changes everything that comes after. The accident was just that, a freak occurrence situation that no amount of risk analysis would have prevented (though good health and strength mitigated the effects, a perfect example of antifragility at work). This event exposed all kinds of crazy fragility in our household systems. Places where things were too complex, too rigid, or too leveraged to deal with that kind of shock. That allowed us to make changes that help us be more stable or, even better, more antifragile moving forward.

This however is NOT the recommended method. A better method would be systematically looking at hallmarks of fragility in order to see where you might have a weakness. Taleb conveniently wrote an article on this at the country level and I took it down to household scale here on the blog. You could do worse that going through the exercise in that post annually in order to identify your personal fragility risk level.

Alternative Analysis
Let's talk about Zombies. Specifically, let's talk about the movie World War Z. This movie (which is nothing like the book) is a fast-paced action film that does a good job of showing just how thin the veneer of civilization is and let's Brad Pitt look good while saving the world. The book was better, but the end of the movie more satisfying.

The part that interests us here is one particular conversation that Pitt's character has in Israel. While trying to stop the zombie outbreak, he hears that Israel somehow had advanced notice, enough to complete a massive wall around the city. The exchange is worth watching, crank up the volume as the dialog at the start is kind of quiet.

Note the bit at the beginning about how human nature means we can't see bad things coming.

This exchange fascinated me and set me to researching. Now, Israel doesn't really have a "10th man doctrine" -- what they do have is an IDF force called the Red Team with a similar backstory that plays a Devil's Advocate role. I'd be surprised if they were the only ones.

And the term "Red Team" rang a bell when I read in Judith Curry's climatology blog that the EPA was planning on having a climate red team to take the alternate position on climate change. Which brings me to Alternative Analysis.

Alternative analysis is a collection of techniques that encourage users to analyze risks, expand options, and vet solutions through the process of taking the alternate view. This site includes a really nice summary. The idea is that you strip away your own biases by taking either a contrary position or an outside one. For example, let's look at bunch of statements that you might make when analyzing your risks and take the contrary position:
  • My job is secure for now -- but what if it isn't and you walk in tomorrow and find your building locked
  • I'm in good health -- except that shit happens even to young healthy people
  • I love the place I live -- until you wake up one morning and realize you don't
  • I have a great relationship -- who's underpants are these?
  • I could never live in the city / the country / the South / LA -- but where are the job opportunities, the cheapest land, the best opportunities?
  • The [insert political party] are the bad guys and [other party] are the good guys -- except when they aren't
Take the opposite position and explore your fundamental assumptions. You may not change your mind, but you might highlight some weaknesses in the system or places where you haven't thought things through.

Next Steps
OK, most people don't have a fun time looking at the risks in their life (I may be a bit odd in this respect) but remember, the goal is to use the knowledge you gain to do something about those risks -- and do it in an agile way.

That's up next.


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