ABSTRACT
Uncertainty is inherent in life, but most of us nevertheless find it and insecurity very uncomfortable.
We are not programmed to anticipate “black swans” – extreme events or phenomena that were not predicted and that fall outside our normal experience. Rather, we focus on sources of uncertainty that are more familiar.
That does not make it any easier to cope with the uncertainty, which people generally try to manage as predictably as they can – however paradoxical that may be. We need some practical measures to help us manage this uncertainty.
We also need to understand the relationship between uncertainty and risk, and how risk, in turn, can best be measured and managed. There are strategies and tools that can help us in this regard, including in particular decision trees; but we must be aware how important subjective judgement remains.
This takes us into the territory of Prospect Theory, which the chapter briefly outlines, and an understanding of people’s risk tolerance – or their risk aversion.
This is considered against the backdrop of the illusion of perfection, and the fact of imperfection. How far can professionals live with imperfection – and when does it constitute professional negligence/malpractice?
