I wanted to start with some typical math problems in school:

  • Two cars started from the same point, at 5 am, travelling in opposite directions at 40 and 50 mph respectively. At what time will they be 450 miles apart?
  • At 9 am a car (A) began a journey from a point, travelling at 40 mph. At 10 am another car (B) started travelling from the same point at 60 mph in the same direction as car (A). At what time will car B pass car A?

Or how about a geometry problem:

  • Find the length of the unknown side, a, of the right triangle below.

Triangle_a_9_12

  • A rectangle has an area of 96cm2. The width is four less than the length. What is the perimeter?

What’s wrong with those problems?

Let’s take this problem as an example: At 9 am a car (A) began a journey from a point, travelling at 40 mph. At 10 am another car (B) started travelling from the same point at 60 mph in the same direction as car (A). At what time will car B pass car A?

What is the answer? Most kids and their teachers would tell you it’s 12pm. Sure… in an academic world. What’s the probability that car B would pass car A at exactly 12pm in real life? It’s close to zero of course. Traffic jams, punctured tires, accidents, weather, none of that exists in the academic world.

Our kids are taught that problems have precise single possible solutions. Every problem in school must have a single correct answer. Nothing could be further from the truth in reality.

What should we be teaching our kids?

We need to teach kids about uncertainty and optionality. Being alive means making decisions under uncertainty, something that kids in school are completely unprepared. The real life rarely, if ever, has a single correct answer, there are usually multiple good choices and multiple bad choices. A distribution one might say.

Every real life decision is a trade off between risk and reward. We need to teach kids to make choices under uncertainty to choose the options which have greater probability of positive outcome. We also need to teach kids to appreciate the role of the chance on the outcomes of their decisions. It should be ok to make a good decision and just be unlucky. Kids should also learn that lucky outcomes happen to even the worst decisions and that’s also ok, but it’s not a sustainable life strategy.

Uncertainty needs to be appreciated, not ignored. Appreciating uncertainty teaches kids to stop blaming others and learn to take advantage of the situation instead.

Many years ago I wrote a chapter for the Ministry of Finance sponsored high-school textbook on risk management. Now that I have kids of my own, I think I will start teaching probabilistic thinking and optionality much earlier.

That’s why I created RAW2020, an online place to learn about better decision making and quantitative risk analysis. Even for kids.

Votes: 0
E-mail me when people leave their comments –

Alex is an experienced executive across strategic, investment and operational risks and insurance working within multibillion dollar corporations in Australia, GCC and Europe. Successfully implemented changes to quantitative risk analysis, risk-based decision making and neuroscience.

Saved more than $13 million per year in premiums on cargo and PD/BI insurance through industry leading quantitative risk analysis without changing deductibles or limits. Successfully presenting corporate risk profile at the Ministry of finance and helping secure more than $1B in extra funding.

Author of the most popular free risk management book in the world, more than 150K downloads in 3 languages. Risk manager of the year, FERMA, 2021, Honourable mention 2021, RIMS. Risk manager of the year, RUSRISK, 2014, Best ERM Implementation, RUSRISK, 2014, Best risk management training, RUSRISK, 2013, 2014, 2015, finalist in risk management awards in 2018 and 2019.

YOUTUBE: <a href="https://www.youtube.com/channel/UCog9jkDZdiRps2w27MZ5Azg">https://www.youtube.com/channel/UCog9jkDZdiRps2w27MZ5Azg</a>
BLOG: <a href="https://riskacademy.blog">https://riskacademy.blog</a>

You need to be a member of Global Risk Community to add comments!

Join Global Risk Community

    About Us

    The GlobalRisk Community is a thriving community of risk managers and associated service providers. Our purpose is to foster business, networking and educational explorations among members. Our goal is to be the worlds premier Risk forum and contribute to better understanding of the complex world of risk.

    Business Partners

    For companies wanting to create a greater visibility for their products and services among their prospects in the Risk market: Send your business partnership request by filling in the form here!

lead