Net Present Value of Going to the Sea-side

One of the courses where I give lectures during the spring 2015 is the Risk Management. What is the first thought that comes up hearing “risk”? I would say “something unknown” and “something you cannot fully control”. The interesting nature of human is that most commonly (this is my assumption, not observed experimentally) everyone looks for safety and, therefore, studies, works, makes family and friends, and dies (this one is certain for sure – no risk involved). But at the same time everyone is looking for adventure. Some people do sports (that can hurt you), other are gambling, other are traveling, other perform on stage in front of auditory etc. If we google “adventure” (and of course Wikipedia is there for us to explain the term) it says it is an exciting or unusual experience. It may also be a bold, usually risky undertaking, with an uncertain outcome.

Life is a Risk Management. You balance your risk-averse and risk-taking habits.

This was what we did with my sister on Sunday, February 22. Dace is good at photography, I am good at reading, sitting, smiling and laughing, and looking to camera. This was the risk-averse part – we only did that we thought we are good at. But we did it together in this “photo-taking project” manner for the first time, and that was a risky part. We had no clue what is going to come out from our project. So we took a chair from home and went to the sea-side. Before we left, my Mam said – don’t get cold! What she meant is “do not risk too much”.

We all do, oh, yes, we do! So I smiled back quietly. Comment: it was around 15degrees and windy outside. Here are some pictures that came out of our project.

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Actually, I think, the studying and working is kind of a risky thing I am doing. How I started to bring risk in my routines? When choosing the topic for my bachelor thesis in 2011, there was a list of potential topics that I used. It was prepared by my supervisor, with many possibilities in different fields. So I marked with yellow every topic I had never studied before and went to my Dad with a question “which one sounds like an interesting topic to write about?” and together we coloured three topics in red. Then I just picked one, I felt is the best. The bachelor thesis I wrote is “The Quantitative Methods of Project Risk Management”. It seems so funny – first I take risk and choose topic pretty randomly with no background in the field, then I write how to measure the risks of projects and do some further calculations about projects in Latvia, but now I am giving lectures in the University of Latvia about Risk Management. And it all began by taking a risk.

So today I am going to continue my talk about the Net Present Values, which is one of the approaches used in Project and Risk-Management. From the Wikipedia, NPV is defined as the sum of the present values of incoming and outgoing cash flows over a period of time. Risk is imported here through heavier discounting, applying sensitivity and scenario analysis, looking for break-even points, and using probability distribution function to find expected outcomes.

I got curios what is the Net Present Value of Going to the Sea-side to take some photo-shoots with a chair and a book, and without any experience. I know my costs – the fuel, time / alternative costs, the same for my sister. But did I (we) gain anything? Or will I?

How can you evaluate “fun”, “experience”, “laugh” or just doing something great together with sister? I would say – it was a huge income at the time 0 and I hope, as I remember that day in the future, it will bring me more inner smile moments (my income) whenever I want.

 Photo by Dace https://thesuninarctic.wordpress.com/

Whenever you can say “I love what I do”, costs don’t matter.

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