How accurately do we measure the real risk in risks we take in our personal and professional lives? Often we do not do it well enough. It came through to me vividly last month.

In May 2019 I completed a trek to Bali Pass in the Himalayas. Situated at 4950 metres (16260 feet) the 6-day, 66 kilometre trek was quite a challenge. Our team started from about 2700 metres (8800 feet) and trekked up to Bali Pass.The crossover descent to camp at 3415 metres (11200 feet) took 9-10 hours. It was much more dangerous than I had anticipated.

I had failed to assess the danger and risk when I signed up for the trek. I wonder how often we, as corporate leaders, make erroneous judgement of risk.

Experience isn’t enough 
I am an experienced trekker with several 4000-5300 metre treks under my belt. But I had not done any in the past eight years. I am much older too. I had, therefore, diligently trained for fitness.

I was in good physical condition in spite a hip replacement surgery and asthmatic lungs. I had done some research and learned it was a risky endeavour but not nearly enough to know just how much.

Unforeseen or foreseeable? 
The sharp decline immediately after the Pass, a particularly trecherous traverse across a steep snow slope, and the wet and slippery descent from a cliff – nearly vertical in some sections – added significantly to the dangers. I was quite unaware how tricky the descent was. The risk was compounded by heavy snowfall in the higher reaches in the early season (12-18 May). I could have paid greater attention to weather conditions in mid-May but I had not. Risks of an accident were palpable and consequences much too high.

Fortunately all members of our party returned safely. In part it was because the trek leader and guide were competent, helpful, and strong. And we were lucky.

Failure of judgement 
I realise I could have made better judgement. Would I have made a different decision? Probably not. Perhaps because I so keenly wanted to do a challenging trek, and had already decided on Bali Pass, I did not make a diligent evaluation.

This type of decision problem is not uncommon in business. Once the leadership has decided on a course of action, they rarely review it critically, at least not sufficiently rigorously. Confirmation bias strengthens belief in the chosen path.

WYSIATI syndrome 
Sometimes risk assessment is superficial; the obvious and easily found data seems to present a coherent picture. A committed attempt is not made to seek little known or hard to find information. As Daniel Kahneman has pointed out they, as I did, suffer from the WYSIATI (What You See Is All There Is) syndrome.

Confirmation bias explains why leaders often overlook the fact that the vast majority of mergers and acquisitions destroy shareholder value. WYSIATI is one of the main reasons for failure of most entrepreneurial ventures. Overlooking the need to make objective judgement of risk can also manifest in decisions to enter new markets, create new products, or significantly adding production capacity, among countless other instances. They also afflict our choices of investment, career changes, and relationships.

Rigorous assessment of risk 
I believe I could have done better. I could have spent more time on the Net looking for more information on the terrain, weather, timing, as I did on return. I did not realise how much fresh snow makes slopes unstable. I could have found and spoken to others who had done the Bali Pass trek. It would not have been difficult to find and speak wth trek leader(s) who have guided others through the Pass. These thoughts did not even occur to me.

Competenceexperience and adaptability are important instruments in managing and mitigating risk. But they are not substitutes for objective and rigorous assessment of pitfalls. In major decisions business leaders cannot afford to count on luck.

The breathtaking visuals! 
Here are a few pictures from the trek .

Here is a video of how Bali pass actually looks like.

You may want to know what Arjun Majumdar, founder of India Hikesfeels about Bali Pass.