Risk vs. Fear


Risk is defined as the statistical probability of a negative event occurring.

When you walk across the street, there is a statistical risk that you may be hit by a car.

Whether you are aware of the risk or not is irrelevant. The math still applies.

Whether you believe the risk is real is not relevant. The math still applies.

Whether you think the risk doesn’t apply to you is not relevant. The math still applies.

Here’s the thing most people completely misunderstand about risk. They look at the outcome as a proxy for determining the risk.

If I jump off a bridge in a wingsuit and don’t die, it must not have been a high-risk decision… because, well, I didn’t die.

Conversely, if I see a news report about someone dying from a shark attack while swimming in the ocean, then it must be a high-risk activity, because, well… I saw the video of someone dying.

These are nothing more than subjective perceptions of risk that are also… completely irrelevant to the actual risk you face.

People’s perceptions of risk are notoriously inaccurate. For example, most people fear sharks a lot more than mosquitoes.

Last year, there were only 64 unprovoked shark attacks worldwide, of which four people died. In comparison, over one million people died from mosquito bites.

In this case, people’s fear of sharks vs. mosquitoes is widely different than the statistical risk of death.

In other words…

Risk is about statistics.

Fear is about psychology (and how you perceptually estimate the risk) and emotions (how you feel) about the risk.

Lately, I’ve noticed a number of acquaintances who have decided to “not live in fear.”

This is in the context of the COVID-19 pandemic.

As a statement of personal values or life philosophy, I have no problems with this approach.

What I do have a problem with is when such an attitude ignores actual statistical risk.

Ignoring a risk doesn’t make the risk go away. The math is still the math.

So, what’s a smart way to make decisions that involve risk, fear, and uncertainty?

Here are a few guidelines:

  • If the statistical risk of a negative outcome is unknown, the high/low range of the risk must necessarily be extremely wide.
    [Note: This is the rationale behind the concept of the “minimum viable product.” It’s an inexpensive way to get actual market data on sales conversions and market demand. It narrows the high/low range of risk considerably.]
  • When a risk is unknown, rather than exposing yourself to an unknown risk with an unknown magnitude of consequences, it is often worth investing in ways to determine the risk or at least get it into a narrower range.
  • It’s important to distinguish between risks that can be reduced versus risks that cannot.
  • If a risk can be reduced, then it makes sense to take action to reduce that risk. There is no point in feeling scared about a reducible risk. What you should do instead is mitigate the risk and prepare for it to minimize its impact. (This is why office buildings have fire extinguishers and sprinkler systems.)
  • If a risk cannot be reduced, then it truly doesn’t make sense to have anxiety, stress, or fear over it, because you can’t actually do anything about it. In the category of risks you can’t do anything about, I personally try to “live without fear.”

Logically speaking, it makes no sense to have fear. Either the risk can be managed and you should be busy managing it, or it’s not manageable and there’s no point in letting fear run your life.

That said, we are all human beings and fear is a natural emotion. For example, despite knowing the fatality rate of skydiving, I will never voluntarily jump out of a perfectly good airplane.

It scares the crap out of me.

However, I know that my reaction is purely an emotional one. And that is the key here. It’s okay to feel scared… just don’t confuse how you feel about a risk with the actual statistical risk itself.

Additional Resources

If you enjoyed this article, I recommend joining my email newsletter. You’ll be notified when I publish other articles and helpful guides for improving your SaaS business. Submit the form below to sign up. Also, use the email icon below to share this article with someone else who might find it useful.

If you’re the founder and CEO of a SaaS company looking for help in developing a distribution channel strategy, please Click Here for more info.

Yes, I want to receive free articles on
How to Scale and Grow a SaaS Business
First Name *
Email *

This form collects your email so that we can send you the free materials you requested. Check out our Privacy Policy for details on how we protect and manage your submitted data.


Leave a Comment

Your email address will not be published.

Scroll to Top