Understanding the Effect of Risk Aversion on Risk

As we progress, society must intelligently address the following question: How much risk is acceptable? How we answer this question could have important consequences for the future state of our nation and the dynamics of its social structure. In this work, we will elucidate and demonstrate, using a physically based model, that the attempt to eliminate all thinkable risks in our society may be setting us up for even larger risks. In order to illustrate this point the simplest example is something with which we are all familiar and have known from the time we were very young. When children burn their finger on a hot item they learn the consequences of touching fire. This small risk has taught the child to avoid larger risks. In trying to avoid these small risks as well as larger risks, one runs the dual danger of not learning from the small events and of having difficulty in differentiating between large and small risks. We will illustrate this problem with a series of social dynamics examples from the operation of NASA to network operation and then make an analogy to a complex system model for this type of dynamics. From these results, recommendations will be made for the types of risk responses that improve the situation versus those that worsen the situation. In order to progress, society has to recognize that accidents are unavoidable and therefore an intelligent risk management program must be implemented that is aimed toward avoiding or reducing major accidents. It is not possible to avoid all risk but it is more prudent to avoid the greater risk situations for society.