Risk Mitigation

As many of you may have realised; this web site has had torrid time recently. My site is hosted by a Texas based ISP and up until recently the company boasted 99.9% uptime reliability until:

On Saturday, May 31st at 4:55pm CDT in our H1 data center, electrical gear shorted, creating an explosion and fire that knocked down three walls surrounding our electrical equipment room. Thankfully, no one was injured. In addition, no customer servers were damaged or lost. All servers are down.

We have determined that no servers in the data centre have been damaged. Nonetheless, they are down because power is out. Teams across the board are working to take appropriate action.

In our latest assessment, we have determined that networking gear has not been damaged, but we are without power so assessments continue. All disaster recovery systems are in motion, and we have teams already working in the data center.

The ISP maintains 6000 servers and hosts as many (if not more) web sites. Even with a disaster recovery plan (all good businesses have one) it still took Linksky 4 days to get back to normal.

Nil effect on slipperytoad (bar a few days downtime) the same cannot be said about some commercial sites hosted by the ISP and the ramifications of 4 days of lost revenue for some businesses will be far reaching.

The incident could be construed as an act of god, bad luck or poor risk analysis and got me thinking about risk management. What lessons can be learned from this event as applied to betting?

A good selection method which achieves better that random chance is critical for all punters. Here risk mitigation is easy; you trial your method “on paper” until you get a positive result. You gain confidence in the method with no financial consequences and no harm done.

Buoyed with a positive result and confidence you now start punting with real money from the betting bank.

We all know that our betting bank is our life line, blow it and you are out of the game until you can build up another one (I’m on my 4th or 5th bank). If you are foolish enough to bet with money you cannot afford to lose then you are done for.

Therefore, for punters the objective of any risk management strategy is to reduce the risk of decimating the betting bank to zilch.

Assuming a good selection system, the main threats to the betting bank are

1. You
2. Poor Money Management

(1) is related to the classic and well documented human behaviours of “being on the tilt”, “chasing loses”, “anger”, “frustration” etc and I have enough personal experience of these psychological traits to know that in my current state of mind I have these tendencies well under control.

Betting baseball helps a lot. The games are in the early hours of the morning UK time and hence I cannot get emotionally tied to the result by watching the game. The process thus far is game analysis, “fire and forget” bets, go to sleep, wake up, check the betting account for profit or loss, reload and fire again.

With horse racing, if a notebook horse is not running in a race or a grade 1 meeting is not carded for the day I have no involvement is racing whatsoever. Again I am not tied to results or motivated to “get involved” because it’s on or I’m watching.

For (2) it all about bet sizing/staking. A robotic same bet regardless of odds (level % stakes of bank) is the preferred method at moment but I do recognise that once I experience a positive expectation then this approach needs to be optimised.

The incident above also got me thinking again about chaos and chaotic events as applied to horse racing.

Because things are ticking along nicely, I may revisit the methods outlined in my lesser of evils investigation to determine if I should add a small element of risk to the betting portfolio by putting in low grade races.

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