Art. 05 · What a risk costs · 3 min read
A single number is a red flag
Nobody knows exactly what the risk at your building is. An estimate that states its own uncertainty is worth more than one that hides it.
Every risk figure is an estimate built from limited data about buildings that are not quite yours, in years that were not quite this one. That is not a criticism. It is the nature of the problem. The question is what an honest answer looks like.
An honest answer is a range: "somewhere between £6,000 and £11,000 a year, most likely near £8,000." A dishonest answer, or more often an unthinking one, is £8,412.37. The second sounds more authoritative and contains strictly less information, because it has thrown away the one thing you needed: how sure anyone is.
Ranges are also more useful, because they let you test a decision at both ends. If a plan only works at the optimistic end of the band, it is not a plan; it is a bet you have not admitted to making.
There is one more thing to ask of a range: does it get narrower? A band that is the same width this year as last year means nothing has been learned. Bands should tighten as more is known about the property, the history and the market. A supplier whose uncertainty never reduces is not measuring. They are guessing consistently.
Use it
- Ask for the range, always. "What's the low end, what's the high end, and what would move it?" is a fair question to put to anyone giving you a number.
- Test your decision at the bad end. If it still works, proceed with confidence. If it doesn't, you have found the real question.
- Distrust unearned decimals. Four significant figures from a chain of rough inputs is a presentation choice, not a measurement.