VEZINA: Asking the Right Questions When Assessing Risk

Or a bit like a lottery ticket buying home insurance.

While many people who buy lottery tickets believe they will win, they also believe they will be involved in a car crash or will be involved in a building that they personally affect. I believe that I will not be caught in a fire in a fire.

Lottery advertisements are inherently assertive.

But there are underlying assumptions that subtly mislead consumers.

The odds of a particular person winning her 6/6 match in Lotto 649 are the sum of the possible number combinations He is 1 in 13,983,816.

The odds of any person winning a 6/6 match in the lotto 649 draw are about the same as the number of people playing the lottery in any draw, and he has a 1 in 13,983,816 chance of winning. is.

For example, if his 4.6 million adults in Ontario play 649, there is a probability of about 4,600,000 / 13,983,816, or a 32.9% chance that someone will win 6/6 games. Become.

But that's the chance the lottery has to pay out his 6/6 grand prize, not the chance that a particular person like you wins.

Individuals participate in lotteries under the assumption that they will never win, and their spending is more effective in using their money for the thrill of taking risks compared to other entertainment options. If we consider using

After all, gambling in government-run lotteries is legal in Canada, and everyone has different risk appetites, tolerances and abilities.

On the other hand, it is not wise to plan your life decisions on the assumption that you will win the lottery.

Buying insurance and contingency planning itself actually follows similar psychology to buying lottery tickets, but in reverse.

For example, it is very unlikely that a particular building will catch fire on a particular day (like winning the lottery), but it is possible that some building will catch fire. sex is very low. The day is a given.

The same is true for a specific vehicle involved in an accident as opposed to any vehicle.

Your car may not crash tomorrow, but it is guaranteed to crash somewhere else.

Therefore, if someone does not understand the value of buying a lottery ticket, they may win the lottery, damage property in a fire, or be involved in a car accident that could damage their home or car. No need to buy insurance. , are all very rare occurrences.

Even if the ideal outcome of buying insurance or planning for emergencies is that you never have to use it, ``Don't win the lottery just because you never win. It seems counterintuitive to say, "I don't want to lose" rather than buying .

But the question is, how much is your peace of mind worth?

For most people, getting insurance against low-frequency risks such as fires and car accidents is a personal investment in mental health and peace of mind.

So if something bad happens, it probably won't, but it's good to know that you have the resources to deal with it.

A related question to ask yourself when buying a lottery ticket is, "Is it okay if I don't win?"

A related question to ask yourself when buying insurance is, "If I've never lost, am I okay?"

Many in the emergency sector disagree with this line of thinking, arguing that it will lead to less spending on emergency insurance and less preparedness when emergencies occur.

But the reality is that many risk controls do more harm than good unless people understand what risks they are taking and appreciate the value of controlling those risks. affects

The most important part of emergency preparedness is not to be surprised when an emergency occurs.

If you're not careful, implementing risk management without understanding its implications can be like thinking you're going to win the lottery.

— Alex Vezina is CEO of Prepared Canada Corp. and teaches Disaster and Emergency Management at York University. He can be contacted at info@prepared. ca