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December 20, 2021

When it comes to risk, things aren't always as bad as they seem

The world sure looks scary. The television bombards you with so many images of European economic chaos, disaster and mishap that you hardly even want to come out of your cave.

But things may not be that bad, says former journalist David Ropeik in his recent book How Risky is it, Really?

The way we perceive danger is driven far more by rapid, emotional responses than by any reasoned calculation of actual risk, he maintains, pointing to the brain’s risk assessment system and how it can result in gaps between perception and fact.

Basically, we're wired to act now, think later. Our subconscious mind and instincts shape our basic attitudes and decisions long before you have all the facts at hand, forming a “perception gap” between facts and fear.

When our fears don't match the facts, we make choices that actually create additional risks, says Ropeik. We figure we're safer when we have control, yet driving a car is close to 60 times more dangerous than being flown in a plane.

Another factor that can turn our fears up or down is the relationship between benefit versus risk. The greater the reward, the less we worry about the associated risk. The smaller the payoff, the larger looms the danger.

Although we like to see ourselves as balanced, our brains are wired to think that either we're safe or we're in danger. Going around calculating odds all the time just isn't something we're built to do.


 By Gordon Powers, MSN Money




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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...