I have had cause to write about the future in this column over the years. And this is not because I have any experience in clairvoyance. Significantly, l am led to frequently write about the future because l have realised that a lot of people always look to the “future” to the extent that they forget to live in the present. You can’t really blame some of them, to be honest.
This is because a number of factors have led to this phenomenon of people failing to live in the present, but rather choosing to live in hope for something better in the future. Society has a role to play here.
Because of the social settings and other beliefs, be they religious or otherwise, some people decide not to confront present problems with the needed zeal and commitment to overcome them, but would rather adopt a half-hearted approach, hoping that “there would be light at the end of the tunnel”. With the torch held high in that tunnel of depression, anxiety and frustration, many have been racing for so many years but still cannot find the finish line. This is where, if care is not taken, anger turns into frustration and then extreme depression!
What l am trying to allude to, with this first submission of 2023, is to highlight the fact that the future is important, for sure, but exploiting the opportunities that lie hidden within the current state of play is key to achieving the future you so desperately want. Tomorrow never comes, as you very much know, so the present, which is a true present, is what is needed to make it happen in the future.
And this brings me to the numerous promises we make to ourselves whenever we are about to start a new year. I am pretty sure that in the last days or hours of December 2022 you made a number of promises. Some stylishly call them “new year resolutions” because they involve decisions to either shun bad habits or develop good ones. Be that as it may, the process still involves some kind of personal commitments, which, of course, must be realistic enough so that you may be able to meet them.
Well, if you are expecting predictions from me, you will be disappointed! l have no predictions of novel nature to share with you for this year— and not that l have ever engaged in this game in the past. Not at all. However, what I do have to share with you this year, probably, is something you have heard or read about several times over.
In this column too, I have written about it. So my prediction goes like this: all predictions for 2023 are cloudy with uncertainties, therefore, be measured and ensure that you have risk mitigating measures in place to deal with all risks in 2023 as you lay out your plans for the year! That is all.
In fact, economists illustrate uncertainty in various ways. Sometimes, they may use a market-based measure of volatility to demonstrate movements over a horizon and mark out the possible headwinds or tale winds, and how they impact on risks in the outlook. You and I also do risk assessments all the time, to deal with uncertainties. If there is a spike in the price of your favourite product, for example, where there are alternatives you switch to that. Households and businesses are the best watchers of market developments, and, in fact, key drivers of economic decisions with their actions and inaction.
In economics, the terminology of Frank Knight (1921) is often used to distinguish the concepts of “risk” and “uncertainty”. Ok, let’s start 2023 with a refresher on what risk and uncertainty are. In broad terms, risk refers to cases where we know the potential outcomes and the probability of them happening, while uncertainty refers to cases where we don’t know the possible outcomes (or their probabilities) in advance. Therefore, we must not only pray for the right action but also for our decisions to be successful.
If you look back at developments in 2022, for example, you can deeply reflect on how uncertainty from new shocks hitting the global economy caused increases in energy prices, or how the pandemic of 2020 caused economic uncertainty.
The lingering effects are still there. So as you experience those uncertainties, how you deal with them would largely be influenced by the risk measures you put in place before these risks emanating from the global economic uncertainties set in. Of course you didn’t know it would happen, but you can still absorb them if you have the right shock absorbers. And the good ones always have cushions!
As l explained in the November 2020 edition of this column, consider your risks, and take the appropriate mitigating measures because life is full of risks and uncertainties. Here, I used developments in 2020 to explain how we may experience flaws in our decision-making.
“According to those in the know, 2020 has been a year like no other, and one we will never forget. In fact, the reasons are not far-fetched either, as we have witnessed a global pandemic, closure of borders, and a consequential economic downturn, which has been described as the biggest in nearly a century. Significantly, none of this was expected at the start of this year, and this gives credence to the fact that there are very few absolutes in life”, is what I wrote in the referenced article.
Further, I stated that “it means that we are controlled by forces bigger and greater than us. There are market forces, of course, which punishes those who fail to heed its power. But in 2020, we experienced a seismic shift in social and economic conditions not because of the market going through a correction of some sort, but mainly because a seemingly health issue had knocked down some of the strongly built financial structures that were meant to serve as economic shock absorbers. All of this was not anticipated at the start of the year”.
And l posed this question too: “Do you remember the enthusiasm that greeted the arrival of 2020?”
Let me repeat the same question this year too: “Do you remember the enthusiasm that greeted the arrival of 2023?” Things can still go wrong, you know!
It is, indeed, a risky life, and looking to the future, it is always hard to predict, with certainty, the trajectory we will be on- personal and business life. We can never know, with certainty that the plans that we have made would work accordingly. Life’s uncertainties also make life interesting.
I wish you the very best for 2023, and always remember that in this uncertain world, it is very common to experience shocks. So be on your guard with the right risk measures, and be measured with your goals and expectations.