Heather Anderson I'm anxiously awaiting the release of Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe. Author Greg Ip, a financial and economic journalist for Wall Street Journal and The Economist, observed that although we have learned a staggering amount about human nature and disaster, we still experience car crashes, floods and financial crises.

In fact, our attempts to stay safe are actually producing more exposure to the risks we are trying to avoid.

Consider this excerpt from the book, which was reviewed by my favorite economist, Tyler Cowen, in his popular Marginal Revolution blog.

The experiment found that people with no impairment to the brain's emotional center were much more conservative. After losing money on one coin toss, only 40% of them agreed to invest on the next — but 85% of the brain-damaged patients did. By the end of the game, the brain-damaged patients had earned an average of $25.70 while the healthy players averaged $22.60.

Most of us are familiar with the famous quote from Michael Jordan, who said he's missed more than 9,000 shots in his career, and 26 times, was trusted to take the game-winning shot and missed. His willingness to fail is why he succeeded.

Granted, basketball is only a game. It's not financial management (except in Las Vegas). Credit unions can't risk missing game-winning shots in their attempts to win.

But consider the staggering statistics in another excerpt from the book.

By Spellberg's reckoning, the odds of an adverse reaction to an antibiotic, such as an allergic reaction, are about 1 in 10, whereas the odds that someone will suffer because antibiotics were wrongly withheld are about 1 in 10,000. Nonetheless, most physicians do not want to run the risk of letting a patient suffer when an antibiotic could help.

Dr. Brad Spellberg is an infectious disease specialist who has led the effort to find new ways to fight disease. As we all know, the overuse of antibiotics has led to the development of drug resistant infections, which pose more risk than the run-of-the-mill diseases antibiotics were originally developed to cure.

He told PBS two years ago that after antibiotics were discovered, it opened doors in the field of medicine that allowed doctors to not only treat diseases, but also perform complicated surgeries like organ transplants and apply treatments like chemotherapy.

Such technological advances have been lifesavers to many. But has our risk of contracting those diseases decreased? Have we gained quality along with the increased quantity of our life expectancies?

Spellberg observed it's astonishing that in the 21^st century, we've run out of drugs and have bacteria that are resistant to pretty much everything. Functionally, antibiotics and their perceived safety set medicine back 80 years.

Credit unions are overwhelmed with regulations and laws intended to protect financial cooperatives and consumers. The idea is that the more regs there are, the safer we'll be.

And yet, everyone admits today's regulations probably won't prevent the next crisis. In fact, regulators will be so busy enforcing current rules, they probably won't even see the next crisis coming.

Cybersecurity is another area in which our never-ending pursuit of security is futile. EMV chip cards are supposed to eliminate the risk of magnetic strip technology. Yet Diebold revealed thieves have already installed new ATM skimmers that are placed between the ATM's chip reader and the card's chip, and successfully have stolen card information.

Already, cyberattacks have mutated and are EMV-resistant.

The NCUA board will finalize its risk-based capital rule Oct. 15. The rule was built upon technological advances that allow for precise modeling and complex matrices that pinpoint exactly where risk might occur and, presumably, mitigate it.

But is this rule just another regulatory antibiotic that will produce the next financial crisis? After all, corporate credit unions nearly buried the industry with investments in mortgage-backed securities, which at the time were considered risk-free. That perceived safety masked the true risks of concentration and mezzanine tranches.

Regulators are damned if they do and damned if they don't. If the NCUA doesn't write tougher rules, they'll be blamed for the next crisis just like they were the last one.

However, regulators and legislators in every industry must reconsider their strategy of prescribing treatments to keep us safe and instead holistically accept risk and promote health.

Instant Insights /

The Pursuit of Safety Increases Our Risk

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