Most people are likely to fail when they try to judge risk, according to John Kay.
The writer and economist, speaking at the Airmic conference yesterday used a simple example to illustrate his point.
"Imagine you are taking part in a television game show. You've given the right answers to your questions and you're through to the last round.
"Now all you have to do is choose one of three boxes in front of you. One box contains the keys to the gleaming car, the others contain booby prizes.
"You choose box two. The smiling host teases you by opening box three, showing you that it contains a booby prize.
"He then asks you if you want to change your mind and choose another box."
Kay said that even mathematicians have struggled with the right response, which is to change your choice.
"Our instincts and intuitions don't always help us," he said.
The solution, he said, was to unite intuition and reason to manage threats.
"Art and science together are the only ways to handle risk," he said.
John Kay writes a fortnightly column in the Financial Times and was a member of the task force that began the process of reviewing Lloyd's.
In 1997 he became the first professor of management to be elected a Fellow of the British Academy.
