Zero Risk Bias

Zero Risk Bias

Time for Reflection 

When it comes to issues related to our health, housing, safety and security, don't we all look for a fool-proof solution, where we expect a complete elimination of the possible risks ?

Somewhere, while expecting a complete elimination of the possible risks, we have fallen trap to the "zero-risk" bias.

Definition

Zero Risk Bias is the tendency to prefer the complete elimination of a risk even when alternative options produce a greater overall reduction in risk. So, while making a choice, our brains prefer to select an option that totally eliminates the risk over options that could, in fact, eliminate more risks and end up with better results. This bias leads us to ensure absolute certainty of outcome while making decisions.We prefer guaranteed benefits over the possibility of much more significant benefits. 

This bias makes use of the human tendency to prefer large decrease in small risks to small decrease in large risks, even when the overall benefit of the latter is vastly superior to the former. Zero risk bias is an extreme form of this behavior, often triggered under conditions of uncertainty.

Few possible reasons for the bias to occur are

• thinking proportionally instead of thinking quantitatively
• minimizing cognitive strain - by eliminating one risk entirely, we reduce the amount of cognitive strain we face, making the option more appealing. 

This bias has applications in many areas such as financial investments, laws related to food and health, sales and marketing, quality adherence and assurance in various domains. This bias proves to be a blessing in disguise when we talk about eliminating zero % harmful elements from food products. Many of the public health/ hygiene, safety campaigns may also promote a zero elimination for the larger benefit of the masses. But for many other area, its at the discretion of the customer/ investor/ stakeholder, like, an investor, might opt for a choice based on his/ her risk and return appetite. 

Zero-risk bias can be reduced by re-framing the problem and building in a different perspective to the problem/ situation, focused on the other side. Being aware of the potential risks helps in addressing the problem at hand. Perhaps the most important strategy to mitigate the impact of zero-risk bias is to be well aware that we live and thrive in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world. This VUCA world is dynamic in nature and full of risks where every moment could present a new challenge. The best way to thrive in this VUCA world is to upgrade our decision-making and critical thinking skills so that we become more rational in our approach. 

Risk is Real - Don't Avoid It, Just Embrace It !