Risk is all around us. From war to pandemics, tornadoes to bank failures, we live in a world full of risks. Although in the modern world we find new risks like cybercrime and rogue artificial intelligence, people have been grappling with how to deal with risk since ancient times. The etymology of the word “risk” itself is disputed, but some theorize that the word comes to us through the Latin risicum or the Greek rhiza, which refer to the hazards associated to sailing, while other accounts trace it to the French risque and Italian risco for “run into danger”. If risk is a universal aspect of life, can we learn anything about dealing with risk from the ancient philosophers? Specifically, can the Stoics provide any insights into how we can improve at risk management in our professional and personal lives?
First, what do we mean by risk management? Unfortunately, risk-based terminology is notoriously difficult to agree upon, with practitioners across different fields employing their own specialized vocabulary. But at a very high level, the process of risk management typically involves identifying risks, then quantifying them, prioritizing the top risks, and implementing controls that lower the risk to an acceptable level. This might sound complicated, but we practice risk management all the time without realizing it. When we wear a helmet while riding our bicycle, use antivirus software on our computer, or save money for retirement, we are managing various risks. Similarly, companies must manage risks that threaten the success of the enterprise – financial risks, supply chain risks, cyber risks, worker safety risks, reputational risks, and so on.
To Manage Risk, First Visualize It
Importantly, the first step to effective risk management is to identify the risks that are relevant. After all, it is difficult to manage a risk that you do not know exists. The Stoics recognized that life was unpredictable, full of ups and downs. The practice of negative visualization (premeditatio malorum) was discussed by the Stoic philosophers as a way of mentally confronting setbacks, mishaps, and hardships by thinking through what might happen ahead of time. The person who thinks through what adverse scenarios may occur in the future is better positioned to deal with difficulties than the person who was not expecting anything bad to happen. As Seneca described it:
Nothing is durable, whether for an individual or for a society… This is why we need to envisage every possibility and to strengthen the spirit to deal with the things which may conceivably come about. Rehearse them in your mind: exile, torture, war, shipwreck. … All the terms of our human lot should be before our eyes; we should be anticipating not merely all that commonly happens but all that is conceivably capable of happening, if we do not want to be overwhelmed and struck numb by rare events as if they were unprecedented ones; fortune needs envisaging in a thoroughly comprehensive way. (Letter XCI.7-8)
Epictetus similarly proposed the following advice:
Whenever planning an action, mentally rehearse what the plan entails. If you are heading out to bathe, picture to yourself the typical scene at the bathhouse – people splashing, pushing, yelling and pinching your clothes. You will complete the act with more composure if you say at the outset, ‘I want a bath, but at the same time I want to keep my will aligned with nature.’ Do it with every act. That way if something occurs to spoil your bath, you will have ready the thought, ‘Well, this was not my only intention, I also meant to keep my will in line with nature – which is impossible if I go all to pieces whenever anything bad happens. (Enchiridion, 4)
Seneca and Epictetus are recommending that individuals run through negative scenarios in their mind as a way to prepare for eventual hardships. The parallel to modern risk management is clear. When setting out to formally analyze risks, one is guided by a central set of questions: “What can go wrong?”, “How likely is it?”, and “If it occurs, what are the consequences?”. Figuring out what can go wrong is the logical first step to thinking about, and dealing with, risk.
Of course, we all do this to some extent in our own lives. We wear our seatbelt and drive safely because we can visualize the negative consequences of getting into a car accident. We try to exercise and eat well because we visualize the negative consequences of poor health. In these examples, generating negative visualizations not only helps us to identify potential mishaps that may be lurking in the future, but also helps us to apply preventative measures to lower our risk.
Risk Control Strategies: Escaping from Disaster
Identifying potential risks is a necessary first step, but risk management does not stop there. Often it is necessary to find ways to reduce the risks in our lives that we deem to be too high. This might involve lowering the likelihood of an adverse event, or reducing the severity of the impact should that event materialize. By thinking about what might go wrong in the future, a person can identify what safeguards and countermeasures are appropriate to lessen that particular risk. Seneca describes the nature of this as follows:
I will keep the enemy at bay by means of a wall, and fortresses of sheer height will forestall even great armies by their difficulty of approach; a harbor offers us defence from a storm; roofs ward off the violent downpourings from clouds, the rain that falls without end; if you flee from a blaze it does not give chase; to combat threats of thunder and of the sky there are the remedies of houses below ground and caves dug deep into the earth. The well-known fire from heaven does not penetrate the earth, but is beaten back by the slight obstruction of the ground. When plague occurs we are at liberty to change the place where we dwell. Escape is possible from every disaster. (Natural Questions, Book VI On Earthquakes.1.6)
Here Seneca is giving practical advice about how to link a potential negative future event with an action that can reduce one’s risk. This is not to say that all of these risk control strategies are 100% effective or practical. Going inside if it is raining is a good strategy, but there is still the small chance that your roof will leak and you’ll get wet anyway.
In general, there are multiple recognized strategies for controlling risks. One is avoidance, where a person refrains from doing a risky thing altogether. Not skydiving is a risk avoidance strategy for the risks associated with skydiving. Another strategy is mitigation, where we try to reduce the risk to a lesser quantity. The actions mentioned by Seneca above are largely mitigations, because they reduce the risk but don’t necessarily guarantee that the leftover risk (risk managers call this residual risk) goes down to zero. As an example, companies go to great lengths to pick a portfolio of research and development projects that they think will be successful, but inevitably some projects still fail. Third, one can transfer a risk to a third party. Insurance is the classical example of a risk transfer mechanism. Finally, one can accept a risk and move forward with a course of action knowing that they still face some risk. By thinking carefully about risks and applying appropriate control strategies, a person can feel more confident about accepting the risks that life has in store.
Confidence in the Face of Risk
All of this thinking about “what can go wrong” can seem overwhelming and a bit scary. But that is obviously not the intent of risk management. As Epictetus taught, many things are not within our control (or not up to us) – only our actions are up to us. External events might happen to us that are negative, but what is important is how we react to such events. We wouldn’t need risk management if bad things never happened, after all. At the same time, risk management equips us with tools to plan and react to risks in a positive way. Since our actions are within our control, we can take proactive steps to prevent risks from happening in the first place, and to mitigate the impacts of risks that do occur. Effective planning before bad things happen, and effective responses when they do happen, can make a large difference in the end result, and can provide peace of mind as well. Seneca describes the peace of mind that comes with effective preparation for risk:
The man who fears death will never do anything worthy of a man who is alive; but he who knows that these were the conditions drawn up for him when he was conceived will live according to this rule and at the same time, through the same strength of mind, he will ensure that none of what happens to him will come unexpectedly. For by looking ahead to all that may happen as though it were going to happen, he will soften the attacks of all ills, which bring nothing unforeseen to those who are prepared and expectant, but come as a serious blow to those who show no concern and expect only blessings. (On Tranquility of the Mind, Chapter 11)
Thinking about risks before they happen changes how we perceive them. Research on risk perception shows that risks that are perceived as controllable, observable, and voluntarily undertaken are typically viewed as less “risky”. Planning ahead for risks makes us feel more confident that we will be able to address them effectively, while the worst risks are the ones that catch us off guard, as Seneca pointed out. This is why we do things like participate in fire drills – knowing what to do in the case of an emergency gives us confidence that we can respond to a real emergency properly.
While it is important to think about what could potentially go wrong, it is important not to fall into inaction, dwelling on what is out of our control. Instead, preparing for the trials of life can equip us with the fortitude to face the problems that inevitably arise. As Epictetus wrote:
Why should I worry about what happens if I am armed with the virtue of fortitude? Nothing can trouble or upset me, or even seem annoying. Instead of meeting misfortune with groans and tears, I will call upon the faculty especially provided to deal with it. (Discourses I.6.29)
In conclusion, the world is a risky place, and a lot of things can happen that are out of our control. But that doesn’t render us helpless. We have under our control the actions that we take to effectively manage risks. Even though it may seem unpleasant to think about risks, there is great value in the exercise – it helps us to identify future problems that may occur, and aids our planning as we try to figure out how to effectively avoid, mitigate, transfer, or accept them. And ultimately, risks don’t seem so scary when they have been identified and we realize that we are capable of responding to whatever risks life throws our way.
Zachary A. Collier, Ph.D., is Assistant Professor of Management at Radford University.
