Risk tolerance fascinates me.
Here’s an example: The flash of time it takes to pull on a seat belt — or the minute and a half buckling in a preschooler — could save a life in case of a wreck. Statistics bear this out.
Yet while the risk-to-reward ratio seems to me to make the seat belt an obvious choice, some people are still up for the risk of going without.
In assessing vehicular risk, we’ve all heard the maxim: “It’s not you. It’s the other drivers.”
True, driving under the idea that you’re protecting yourself from other drivers at the same time you’re protecting them from you will usually get you from Point A to Point B.
On the other hand, some drivers accept automotive risks — for themselves and others — almost without thinking: Driving too fast, forgetting turn signals, texting while driving — even ignoring vehicle maintenance, or failing to renew insurance.
Recently, I’ve been thinking about risk tolerance almost constantly. It colors practically every interaction I have with practically every person I’m in contact with, at a distance or otherwise.
Remember the empty highways in the spring and the people taking advantage of them to do Cannonball Runs? Intriguing — and some pretty big risks.
What makes some risk more palatable? It’s hard to say. I’d be up for a Cannonball Run, maybe, but not for leaving our 4-year-old unbuckled.
For these and many, many more driving examples, we have laws governing how much risk we’re permitted to accept or foist on others. Short answer: None of it. The only risk that’s endorsed is getting in the vehicle and going somewhere.
Farmers accept risk daily. For a farmer who watches the markets move on the DTN monitor, that acceptance comes on a second-by-second basis.
From a third-person perspective (and, certainly, sometimes from a first-person perspective), some of these risks seem astronomical. Sinking hundreds of thousands of dollars into crop production when a good-sized storm can damage or destroy the crop can definitely be daunting.
Working with cattle means accepting the risk that the best herd management may not stand up to a blizzard, flood, or lousy market conditions based on factors in some other part of the world.
There is risk management in place, though. Federal crop insurance ensures that if there’s a massive failure, the government (using funds provided by all of us) is there to pick up the pieces. If a farmer doesn’t buy crop insurance, that operation also doesn’t receive USDA program payments. In addition, many bankers won’t lend without the insurance safety net in place.
Livestock insurance is a much smaller portion of the insurance picture, but it and government programs following widespread documented livestock loss are also in place.
Aside, no farmers prefer an insurance check or government handout to good production and the ability to make it on their own. A good crop and healthy herd is vastly more satisfying. And, if you’re getting an insurance check and/or program deposit, you’re not making any money.
The priority placed on food affordability in the U.S. has perpetuated this system. In a clash of farm programs vs. independent decisions, the risk of many more people not being able to afford food has been deemed worth the cost of farm programs.
In farming, and in all of life, risk budgeting allows us to accept risk in one area and decline risk in another area.
Buy cows? Financial risk. Build a shop? Financial risk. Choose one, both, or neither?
Go to church? Covid risk. Go to Christmas dinner with grandparents? Covid risk. Choose one, both, or neither?
All individuals on the planet accept or decline risk of all different kinds, managing their risk in light of their own tolerance and situations.
With this in mind, why do we get so bent out of shape about other people’s choices about risks? We don’t upbraid people for preferring stocks to bonds, or bonds to stocks. Those risk decisions often affect more than one person’s well-being, just as risk decisions about farming and coronavirus affect more than one person.
Every person manages his or her own risk budget. You have yours. I have mine. If you choose to wear a mask so that your personal risk budget will let you interact with more people, by all means, do so. If you choose to be an employee because business ownership involves too much risk, by all means, do so.
I’m prone to accepting big risks — the risks of farming and freelancing, a double whammy of entrepreneurship in a single household — but not the smaller ones. I’ve learned my lesson about recipes I find on the internet. Usually if a recipe doesn’t come out of a test kitchen, it’s not worth trying. My risk budget doesn’t have space for that.
I will do my level best not to rant at you about your daily risk choices, though even I have a limit regarding things that are both illegal and risky. If you’re ignoring the stop arm on the school bus, I’ll probably call the sheriff.
Maybe people think my farm family is nuts for how we make our living. If so, they keep it to themselves. Also, no one really passes judgment on what recipes I choose. In either case, it doesn’t seem like the people we know are going to take us to task in person or on social media for these risk choices.
Risk is simply part of being human. What is foolhardy to one is a way of life to another. It’s good for all of us to approach other people with kindness and an understanding that others’ risk budgets aren’t the same as our own.
This Soils and Streams column first appeared in the Dec. 12, 2020, issue of the Kearney Hub.