Practical lessons in assessing exotic risks

I am having a few days of surfing lessons in Bali on the way home from a business trip. Its actually quite productive because I get back from two hours of lessons pretty close to wrecked at 9.30 AM and eat. Then it is work for a bit, have a massage, work for a bit more, go out and be a tourist, eat, work and sleep. I have taken to calling my room at the surf camp "the office" which horrifies the other guests (mostly younger European - especially German speaking backpackers).

Yesterday however was unproductive. I rode a motor-scooter to Tanah Lot - a kitsch bunch of markets and an unusual coastal Hindu Temple. Now riding a motor-scooter in Bali is not risk free - indeed it is exhilarating with risk. However I thought I could reasonably list all the risks.

I could not.

I rode past a horse-drawn cart and the horse lent over and bit my shoulder.

Lesson 1: Its the risks that you can't see that get you. No risk assessment is complete without leaving space for what Donald Rumsfeld called the "unknown unknowns".

Anyway a quick perusal of the internet raises my alarm. Bali was rabies free until 2008 when what was probably a single rabid dog came from Java. Bali being Hindu has dogs roaming around - symbols of good luck. They would not be tolerated like that in most of Moslem Indonesia. There have been well over 100 deaths from rabies in the past few years in Bali. A tourist recently died after being bitten by a monkey.

A further perusal of the internet suggests that it is possible to get rabies from horses - indeed several cases have been confirmed in Canada. Horses it seems are curious creatures and have been known to walk up to strange-acting foxes leaving them vulnerable.

After some advice from some regular Bali goers I wind up at the Bali Clinic in Seminyak (a suburb of the tourist-and-flesh haunt of Kuta). This clinic is run by a mix of Western and local trained doctors and the triage process sends infectious disease cases to one of the local doctors trained at Sriwijaya University in South Sumatra. Now I know nothing about that school and little about South Sumatra other than that it is a well known Petri-dish of infectious tropical diseases (and some very good surfing). My guess is that the average doctor coming out of a university in Sumatra knows more about infectious tropical diseases than all but a handful of Harvard graduates.

So with some discomfort I conclude I am in the right hands.

The doctor sends me home. He is aware that rabies is transmitted by horses sometimes (but rarely) in North America. He is also aware that bats are a vector in some parts of the world. But to his knowledge there has never been a case of rabies in Indonesia from any animal other than a dog, a cat or a monkey. He does however clean out the wound and gives me the expected superficial iodine treatment.

The doctor is almost certainly right. Indeed I would put the chance of him being right at over 99.99 percent.

But if he is wrong I die.

This is a risk I hate taking. Every piece of my being hates taking this risk. In financial markets if you take a risk no matter how seemingly small where an outcome is total failure if you are wrong and you are taking it at the advice of a so-called expert you are likely to blow up.

Partly that is because financial experts exist to make medical experts look good. And it is because financial experts are conflicted in a way that medical experts are not. Indeed it is often because most financial experts are really just salesmen selling you the risks that their employers do not want to take.

Finally it is also because financial risks are distributed so abnormally and in financial markets you take them repeatedly - day-in-day out. Where I only got bitten by a horse once. And things you do repeatedly will get you in the end - but things you do only once probably will not if the risk-level is low enough. If you get into the habit of taking repeated wipe-out risk in financial markets you will eventually be got. I guess if I got into the habit of being bitten by strange animals in Bali I would eventually be got too.

But here I am, lying in the "office" in Bali taking precisely a risk that I promise my clients I will never take: the risk of blow-up on the assurance of an "expert".

Maybe this is the hypochondria of exotic risks. I am flying home with Garuda Airlines - and some will tell me that is an unacceptable risk too. They are now quoted as an airline with a "much improved" safety record. Whatever. It is a plane. I am in the hands of "experts" and I do it all the time.




John