Less than two months have passed since the WHO declared the Corona virus as pandemic disease. Nonetheless, the status has nearly touched everyone’s life.
Uncertainty and doubt are now the rules. Unemployment has now reached unprecedented levels, industries are disrupted, and everyone is still figuring out how to deal with the new normal.
I such tough times, we cannot handle more risks. We need to take our decision-making processes seriously and improve our skills.
Fortunately, there are many ways to reduce the risks while making our decisions
- One way is to share the risk with others. For example, if you’re investing in a new project, find co-founders, and share the risk with others.
- Reduce the risk by diversification. Investing in equities, buy ETFs and funds, or better indices ETFs and funds. Buy bonds and certificates and keep some cash reserves.
- If you’re buying a car or a house, insure it in case of accidents.
- Use the decision-making tools to help you reduce the uncertainty.
- Start by drawing decision charts, sketches, and sheets, then incorporate the consequences in writing, and decide your risk tolerance level. See the earlier Consequence Table.
- Gain as much knowledge on the subject as you can, in all ways, including self-knowledge, expert opinion, and local advice.
You can also reduce the risk by buying time if you are stuck in an uncertain situation, or there is an elevated risk. A time-buying strategy means making a decision that doesn’t have many consequences first. These types of decisions are a tiny deviation from the status quo. Then you wait until you have gathered more information, or you are in a better situation to make a decision.
For example, you are in a sailing boat, expecting the weather to worsen within the next hours, so you decide to move into the bay until you see how things go. Or you have a stock trading account and another checking account. You expect the stock market to take a dip, but you’re not sure, and you want to be ready with cash when the market goes down. So, you decide to transfer some money to the trading account and not to buy stocks until you gather more information.
Short term planning
It’s wise not to get involved in long-term planning when you’re in uncertain or risky situations. Instead, plan for the short term. Keep your options open and make small decisions that open up your opportunities instead of closing future decision options. For example, if you live in a country with political unrest, don’t get for a mortgage to buy a house. Renting will be more suitable at the time.
Similarly, when one of my friends emigrated to a new country, he didn’t want to spend all his money on new business. He started to learn a new language and built new social networks instead. He opted to open new opportunities rather than spending all his money and risking losing it all. He opened future decision options instead of closing them.
Remember, you can always survive in uncertain conditions by using the right decision-making tools.