Soon after I got my private pilot’s license, I subscribed to a monthly publication that outlined aviation incidents and accidents. I initially read them as a dutiful new pilot, but soon it was more for the incredulous stories. Most loss is caused by human error and most human errors are the result of stupidity, not risk. ‘Stupidity’ comes from losing control under pressure.
There was one guy who decided to impress his mates who were having a barbecue on the side of a river. He thought it a good idea to fly up the river and under the power lines — he clipped the tail of the aircraft and plunged to his death.
Some accidents are due to aircraft failure, weather, or someone else’s fault, but a surprising number are pilot error. The key principle taught to new pilots regarding how to deal with pressure is “aviate, navigate, communicate”. In other words: first, keep the aircraft flying; then worry about where you are going and only then, talk to the people involved.
I had the unfortunate necessity to use this principle twice in the air. On both occasions we had engine problems – both were life-threatening. In fact, the second was a take-off from a bush airfield in the Kruger National Park with my family on board, and we were flying at treetop level. ‘Aviate, navigate, communicate’ kept me very focused.
This simple principle can be adapted to any situation in order to reduce human error. All it does is help you remain sensible to give you the best chance of a successful outcome. Why make it more difficult than it needs to be.
A critical first step, however, is to be aware of the situation in which you are operating. Known as ‘situational awareness’, it’s the ability to be aware of where you are, what’s happening around you, and whether anyone or anything is a threat. And if there is a threat, having a method to remain in control in order to deal with it.
There is an enormous amount of research that shows that investor behaviour is the greatest contributor to investor returns. When asset prices fall, investors panic. They lose control of their emotions and their decision-making suffers. Money is highly emotional and as a person’s wealth or their perception of their wealth changes, their emotions are exaggerated.
Under financial pressure, ‘cash flow now, cash flow future, communicate the plan’ is similar to the pilot’s mantra that can be used. ‘Cash flow now’ is all about surviving the short term; ‘cash flow future’ is where your revenue will come from in the future, and ‘communicate the plan’ – keep everyone in the picture.
There is always a perception of risk but in reality, the past 10 years have been particularly benign. Recent times have been more testing and as usual, we have seen a higher number of views on how to deal with it both with our clients and across the market.
The principles or mantras I’ve discussed will apply to any situation. I used them when teaching my children to drive. “Aviate, navigate, communicate” I would say in the car. “If you’re in the car with your friends on a Friday night and you’re all excited, remember that if anything goes wrong, focus on driving the car, then pull over or turn down a side road, and then worry about your friends”.
It’s worth simulating or introducing a stressful situation to help learn. For her first lesson, I took my daughter on a two-hour drive on a Saturday morning down the busiest roads in Sydney. “What’s the worst that can happen?” I said to her. “If you’re feeling pressure, just slow down and drive the car – they’ll hoot at you, but who cares as long as you’re in control of the car?”
Being able to master emotions can help you focus on the necessary outcomes from any decision you may need to make. Being able to take control in a stressful situation can only help further, whether you’re struggling to land a damaged airplane or managing finances in a downturn.