Three Reasons We Are Blind To Risks

We all fall prey to unforeseen risks, and are blind to them due to three reasons:

1. The rewards(and potential rewards) obscures one's risk, as demonstrated by gamblers and stock market investors. One remedy is to ask yourself what these rewards are preventing you from seeing.
2. Loss aversion coupled with our existing sunk costs pushes us towards taking further risk even when it is resulting in losses. One needs to analyse sunk costs on a regular basis.
3. Future aversion, where we make decisions on the(unpredictable) future using present data. The way to address this is to act without data, understanding how the business landscape changes. It also helps to reframe ‘punishment’ for any misstep as an important learning.