Chris Davenport – TRANSCRIPT
Welcome everybody. It’s great to be here. How many of you guys think these extreme skiers are crazy? Most of you, the stuff you see in movies, right? Yeah, it certainly looks that way. I’m going to do my best today to dispel that myth. When I heard that the theme of this talk was risk versus reward, I was really excited, because I live in a world that is pretty much defined by risk and reward. In fact, I would say it defines my life, my profession. I’m out there doing dangerous things all the time.
Some time ago, as I started getting older, maybe ten years ago, I started thinking more about how to manage risk. We all want to get to a ripe old age in life, and be skiing with our grandchildren, and make it through. I started taking a bit of an analytical approach to what I do as a skier, so that I can hopefully make it through. So I’m going to talk a little bit about mastering the art of risk management as we deal with the mountains, and I’m going to use a trip that I did, that I guided on Mount Everest last year, just about a year ago, to sort of frame the structure for this conversation.
So what is risk? We all know the word. You probably use it, you know what a risky thing is, but really, what is the definition of risk? For me it’s an action or an activity that has the potential to go wrong. It can be so many different things. It could be a ski run, a mountain climb, it could be a business deal, an investment, a relationship. There’s so many different things that can be risky. It’s kind of risky standing up here on the stage right now.
I could totally blow it. But what’s the worst that could happen? Maybe I’d be embarrassed. So once we know what risk really is, we can think about why we, as humans, take risks. It’s sort of illogical; we should want to preserve ourselves so we get to that ripe old age, but no, humans love taking risks. Why? It’s exciting.
It’s fun to blast down a mountain and feel the powder snow in your face. It’s fun to climb a fourteener. It’s fun, it’s a thrill, it’s adrenaline to be out doing these kind of sports. We take risks to make money, we take risks to bolster our reputation or our image. All sorts of reasons out there for why we would take risks, but again it’s very illogical.
Why sit at a gambling table and waste money? That time you win, your brain goes, “Oh, I really like that!” Even though the other nine times out of ten you lost. But this is the quick and easy of why we go out and take risks. On Mount Everest, I chose to go there for pretty much all of those reasons. Yes, I was being paid as a guide, so there was the financial incentive. It was really fun, even though it’s long and hard, it’s really fun and exciting.
There was the possibility that it would enhance my reputation as a guide if we were successful. On the opposite side of that, if you aren’t successful, the risk of failure, coming back, not getting the summit, is great and there’s a lot of other potential risks that I’ll talk about in just a second.
So how do we identify these things when we go up on a Colorado fourteener, we go up on Mount Everest, we look at the mountains and we have to open our eyes, our ears, and all of our senses to soak up what we see and what we feel, and look around us. On Mount Everest, the risks are crevasses, like this big crack that I skid by here. You don’t want to fall in that; you’ll never come out.
Avalanches, of course. Just two weeks ago, the media was full of Mount Everest stories because there were a lot of accidents. People were getting hit by rockfall, people were falling, there were medical emergencies, all sorts of bad stuff happening. A lot of that comes from people that probably shouldn’t be there in the first place. That’s a risk that they choose to take, perhaps stepping outside of their comfort zone or over the boundaries of what they’re capable of to go up to Mount Everest.
Estimating the risk is really just an assessment of the probability of something happening. We know bad things can happen. Lighting can strike, your car can crash, you can fall, an avalanche can happen, but will it happen? That’s the important thing to understand. We know all this bad stuff, we’ve seen the risks in front of us, we’ve identified them, but will theses things happen? This is where your experience is huge. If you’ve climbed all of the Colorado fourteeners, you’ve gained a wealth of knowledge that you can use to make good decisions.
If you’ve been in the banking business for 30 years, you have a wealth of knowledge and experience which you use to inform your decisions. For me, I’ve grown up as a skier in the mountains, so that’s the most comfortable place. I’m much more comfortable on top of a fourteener than I am walking down a city street, where I feel like I have less control. So in estimating the risk, we’re looking at what’s the probability of something bad happening? Now, we want to manage these things. We know what the risks are, we know what the probability is, or at least we hope we know.