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Friday, July 17, 2020

Benefits to Risks Ratio

The one phrase that I have heard my dad use way too many times during discussions across topics is the concept of 'benefits to risks ratio'. This is essentially a ratio of a quantifiable number of risks to the quantifiable number of benefits on performing an action, or sometimes inaction. This is a concept that is widely seen especially in medical contexts, and clinical trials, but it's application is across every decision we make. Why is this so important?

Practically, it is impossible to do any activity with 0 risks, or even 0 benefits. The risk or the benefit can be temporary, permanent, and can vary in a zillion degrees of severity. Not only is there a difference in severity, the same risk or benefit will be of different impacts to different people, as it is highly individual-dependent. So, in real life, almost every other decision that we take in a given situation would match with what is described above. And, that is why it becomes important to carry this concept of benefits to risks ratio with us all the time. 

The ratio is not golden. It differs from person to person. Every person has a quality or capacity for absorbing risks, and a quantified ratio can immediately help us identify whether we can give it a shot or not. There is no single yes or no to any decision that we take, and therefore it becomes imperative that we conclude after a logical analysis of the benefits we expect to have, and also the losses we need to incur to get those benefits. There may be several risks and benefits that we will not even be aware of, so it is better to at least take a rational approach with what we do know, which will largely avoid disappointment at a later stage. Before doing anything, it is important for us to pause and think. And, there couldn’t be a better way to do it rather than look at the benefits and the risks. 

It is not to be misunderstood that if the risks are more than benefits, then you must not place your bet on it. That’s not what this is for. The benefits to risks that you analyse is to make an informed decision, but the decision and your gut feeling is all yours. For example, when a surgery has to be done, there is always an analysis of what are the benefits and what are the risks. It's not about the number of risks, or number of benefits, but it may vary and depend on a whole set of factors like the significance of each benefit or risk for that patient, the age of the patient, and so many more things. So, a surgery may be performed even with high risks if the benefit is significant enough for the patient, or if it is the choice of the patient.

Since this is a factor that my dad keeps using to analyse, somewhere I also caught on it to think for a moment from this angle about any choice I make. What do I gain? And, what do I lose? For some small activities, our brain automatically does this and makes a choice. However, some activities may be slightly more complex that we need to consciously think in this perspective. Life is full of events where the probability is almost never 1 or 0, it’s always in between!

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