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Equation #11 · Chapter 4
Risk Tax RT
Risk Tax
RT · Ch 4(P_fail × cost of disaster) + (panic × career cost). The number running in their amygdala.
Worked example — A $500K pilot in front of a VP of Ops
He privately puts the odds of failure at 30%. He's fairly rattled about it — call the panic 0.5 — and he reckons owning a failure like this costs him his next role, about $800K of career.
It came out at 1.1× the deal. Green — he can say yes without it being a career decision.
Raise his panic to 0.9 and the same deal reads 1.7× — yellow. Nothing about your product changed. Your entire job in that room is the second term: who else has done this, what the rollback looks like, and whose name is on it if it fails.
Your turn — change one number
Result550
Green. Low tax. They can say yes without fear.