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Talking Poker – and Risk – with EuroCACS Keynoter Caspar Berry

| Posted at 2:56 PM by ISACA News | Category: Risk Management | Permalink | Email this Post | Comments (0)

Caspar BerryEditor’s note: Motivational business speaker Caspar Berry will bring his unique poker player’s perspective on risk to his opening keynote address at EuroCACS 2018, which will take place 28-30 May in Edinburgh, Scotland. Berry recently visited with ISACA Now to discuss topics such as overcoming the fear of failure and the dynamics of risk-aversion. The following is an edited transcript:

ISACA Now: You contend that all decision-makers are investors. What do you mean by that?
I mean that all decisions are investment decisions when you break them down. All decisions are resource allocation decisions. Allocations of money, yes, but often time. Sometimes we measure time in hours, but sometimes in less tangible units of passion or patience or dedication. All these resources are limited, and all are being allocated in a world of inherent uncertainty. By that, I don't mean the next five years. The next five minutes are uncertain … So, we're all investors, because everything we do is an allocation of a scarce resource in an uncertain world with a view of getting some kind of return on that investment by a variety of different criteria. That’s what investment is, at a fundamental level, and that's what we're all doing thousands of times a day.

ISACA Now: In an enterprise context, how can decision-makers push past their fear of failure?
In any context, the key to pushing through fear of failure is to understand what fear of failure is and where it comes from. Actually, what we colloquially call fear of failure is the product of two – arguably three – very prosaic psychological phenomena acting on us all the time. At the basic level is what we call “loss aversion,” a product of the diminishing marginal utility we get from most things we consume. Then there's time preference, which encourages us to seek short-term rewards and thus eschew long-term investments or delayed gratification. Then there's our judgment, which makes us pessimistic that new things can work compared to old things that apparently do.

In pretty much all these cases, the trick is to think long-term. In many contexts, that is an act of overriding our basic psychological hardwiring, which is still mostly – though not totally – designed to get us home safely at the end of each day. But, a poker player is not concerned about results at the end of any particular day. It’s irrelevant to us. We're concerned with maximizing our long-term expected value. If you do the right thing, then the law of large numbers gives you what you deserve at the end of the long term.

ISACA Now: Do you believe that millennials and other younger members of the workforce are any more or less risk-averse than those who came before them?
I don't think there is any data that proves this either way, per se. A lot of metrics for measuring risk tolerance are bunkum, anyway. Much of what we call risk tolerance is actually a product of the timeframe of judgement that people are thinking of the consequences of failure within ... don't get me started.

My gut, however, says that broadly speaking, millennials are inherently no more or less risk-tolerant than older generations. I hate the brushes with which a lot of people tar the millennial generation. That video on YouTube of Simon Sinek saying how short-term they all are and how they're all the beneficiaries of nepotism are also bunkum. (That’s logically impossible by the way; how can they all be beneficiaries of nepotism over people of their own generation??) Not a single statistic is cited. You may as well ask a man in a pub.

The reality is that risk tolerance is a product of genetics (which won't have changed noticeably between boomers and millennials) and circumstance. So, for example, if someone sees less future in following the tried-and-tested path of university and then a corporate job, they may be inclined to take more risk in their life, but no more than their parents would have done had they been in that situation. Indeed, look at my grandparents’ generation. They put their lives literally on the line every day in a way that we would never think of doing, but only because the alternative was Nazi occupation. They weren't genetically different; they just had different situations producing different upsides and downsides, or what economists call incentives.

ISACA Now: How does one become a professional poker player? What set you on that path?
Oh, that's easy. Poker is the easiest career in the world to get into. You just go to Las Vegas ... put your money on the table, and ta da!


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