Steve Irwin the international crocodile hunting celebrity from Australia died while filming a new TV program on Australia’s Great Barrier Reef. A videotape of the incident is purported to show Irwin on one side of a stingray, while a camera man was on the other side. It is possible the stingray felt trapped, his tail came up, and spiked Irwin in the chest. The spike managed to get under Irwin’s rib cage, and pierce the heart. After that it couldn’t have been long before Irwin died from the piercing.

What does this personal tragedy have to teach us about risk? The first thing to know is that Irwin was a pro, and never forget it. A professional is constantly assessing risk both on a conscious level, and an unconscious level. He’s measuring it; he’s taking into the calculus of what he has to do. A professional tries not to go outside his zone of control.

Irwin however entered the stingray’s comfort zone, and the sting ray then perceived him as a threat. When Irwin got so close that the stingray was able to pierce him with his barb, the stingray exercised that option. We all know that Irwin has proven himself countless times to be comfortable with situations where the rest of us would be “out of here”.

In the case of the ocean incident, Irwin was not the professional. He was in many ways like the rest of us. His knowledge involved face to face encounters with crocodiles, and snakes. He took their measure, and they took his. In the ocean, he was out of his element. He probably had no idea how much risk he was facing.

This was certainly true of thousands of people in New Orleans during Hurricane Katrina. If you are counting on the federal government to save you during a hurricane, you’d better make sure your insurance is paid up. You’re on your own in this world.

Irwin was a natural risk taker. He transferred his knowledge of risk in the reptilian world to the ocean, and he came up short. Only a handful of people have died from a stingray related injury. Yes, Irwin should have known that this was a possibility, but he lacked the knowledge of sea life that he had of alligators and snakes. Face to face with a crocodile, there is no question that Irwin understood the natural instinctive moves of the reptile, and would come out on top in that situation. It just wasn’t true of the stingray. Irwin probably had no idea how a stingray would react to an invasion of space.

Let’s look at another situation. All of us are use to seeing a story in the newspapers several times per year that goes like this. “Mother leaves children alone, 5 perish in fire”. The story never ever talks about how many times in the past the mother in question left the children alone. There is always the implication that this is the first time this has happened. This is what you need to know about risk. Very rarely, does somebody who is involved with risk, GET CALLED ON IT THE FIRST TIME.

Usually you get a couple of free passes. I am sure that each of the women in these stories who have left their children alone and subsequently perished in a fire, have left them alone before. They have probably left the kids alone more times than we can count. At some point, you do get called on it. The game of luck runs out.

The Croc Hunter Steve Irwin’s luck ran out over Labor Day weekend. It might have taken another 10 years, but when you constantly put yourself in danger, your luck will run out. Your professionalism will at some point be overwhelmed by the sheer statistical number of times that you are testing yourself.

Firemen have this problem as well. There is no group that is more courageous than those of firemen. They never know how a fire is going to truly move, or climb up a wall, or if a staircase is going to cave in, or a roof they are standing on. All the professionalism in the world can not compensate for the rules of probability, and engaging in risk taking.

Stories are now surfacing about how the hundreds of firemen who entered the World Trade Center buildings in a attempt to save lives had a feel for the risk they were undertaking. Each of them knew that a fire this big had never happened before. They knew that they had never had to use their skills so high up in a skyscraper before. Since the World Trade Center attack was an entirely new, not in the book scenario, there was no way to gauge the risk involved. As a result 343 courageous firemen were lost in the tragedy that ensued.

In my own work as a money manager, I have to gauge risk every moment of the day. For me it’s financial risk. I have been amazed through the decades that very few investors talk about risk. They all talk about the possible gains that they can make, but no one ever talks about the downside. One should always weigh the upside versus the downside. In the case of stocks, you don’t want to be involved unless there’s five points of upside for every point of downside.

Start thinking about risk and incorporate it into your daily work. You don’t want to be like my friend Hans the genius who called me from a phone booth on Avenue of the Americas in NY about 15 years ago. While talking he saw a man crossing the street against the light. A truck destroyed him as he attempted to dash between cars. Hans said, “Richard, I bet he’s tried to beat that traffic every day for the last 20 years, today it caught up with him.”

Goodbye and Good Luck