Understanding Risk and Avoiding Unnecessary Risks

Risk is a spectrum and understanding the probabilities and associated outcomes is crucial. Professional gamblers and people in finance are always cautious about unnecessary risks. The perception of risk varies among individuals based on their probability assessments and the value they place on the potential outcomes. While avoiding risk may seem prudent, it also comes with opportunity costs. For example, not swimming in the ocean due to fear of sharks means missing out on the joy of being in the cool water on a summer day.