When played properly, the game of poker can be an intricate and complex one. Each hand is its own separate event and within each, many micro decisions must be made depending on variants including the hand dealt to a player, the cards revealed on the table and the choices of other players.
There is a strong element of risk, known to some as bluffing, but equally, there is reward to be had for playing in a more adventurous manner by raising the blinds or making all-in calls. Of course, the cautious approach to safeguard chips is also recommendable and with the two approaches, we get an overview of the risk management involved in the game.
The concept of bankrolls in a poker game is not too dissimilar to personal finances in life. There are decisions to be made when it comes to spending. Whether an item can be afforded, how that will affect future purchases, and if a purchase is necessary or driven by emotion. All these decisions are made every day, and lessons can be taken from the logic behind decision making on a poker table.
Remove the Emotion
When we talk about risk management, that does not exclusively mean with finances and purchases. Risks appear at all turns and junctures. They are taken daily in corporate settings. Changing jobs and relocating comes with risk. With decisions and because we are human beings, there is always an element of emotion involved.
Emotion can play a decisive role in swaying a decision in life and on the poker table too. And here is one of the lessons for risk management. Poker is a game full of calculations and decision making based on logic derived from the events on the table.
Therefore, not letting emotion dictate decision making can help bring clarity to thought and allow strategies to play out as intended. Off the poker table, the same logic applies. Impulse sometimes gives way to logic, but removing emotion, or at least controlling it, can help manage any risky situation better.
Follow the Process, Not the Result
On the poker table, a round develops in a standard fashion. With different variations of poker present on the ever-evolving online casino platforms as well as the presence of live dealer poker that adds an element of realism with real person dealers to heighten the emotional impact, this diverges somewhat.
However, if we use Texas Hold’em as an example, a hand is received by players before rounds of betting, calling or raising are performed between the flop, turn, and river cards being dealt onto the table. There is then the final round of betting to determine a winner. With all these stages in an individual round, the result is often a long way away, even with pocket Aces.
Therefore, the micro decisions made at each stage contribute to the result in a process-driven approach. Conversely, assuming that two Aces is an automatic winner, the result-driven approach, can create a riskier situation.
When it comes to risk management of any type in daily life, there is often a common protocol to follow. The process is like the development of a round in poker. Regardless of whether management is taking place in the finance, legal, or security industry, the same process is executed. Identify, assess, evaluate, treat, and monitor is the standard protocol when managing risk.
This stage-by-stage protocol mirrors the thinking process that can be used for each individual decision made at each stage of a hand. If the evaluation did not lead to an immediate folding of a hand, which is also fine. Essentially, risk management is a thought-out process, with managers not jumping the gun in the same way a promising opening hand might not turn out to be a winning one.
Final Thought: Is Risk Management One Big Game of Poker?
Having fleshed out some of the ways poker can influence risk management theory, people could be led to believe that life is just one big game of poker. You play with the hand you are dealt, not everything falls in place, and at some stage, you need to be adaptable or even quit while you are ahead.
However, when it comes to aspects that influence decision making, lessons can also be taken from the poker table. One of the key elements connecting poker and life is the presence of emotion. Emotion can spur on but also cloud judgment. It is impossible to ignore, but crucial to life. Mastering this could be the key to correctly assessing risk, on and off the poker table.
