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The Wordle Way of Risk Management

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The Wordle Way of Risk Management

Martin Pergler taps into Wordle to illustrate how to apply risk management thinking.

Friday’s Wordle (WATCH) provided a great example of applying risk management thinking, alongside strategy and adaptive decision-making. Helping institutions navigate the interplay of these topics is my bread and butter, so I enjoyed seeing it play out so clearly in a game.

Of course every Wordler’s path varies, but is seems many of us got most of the end of the word reasonably quickly, but with perilously many options for the first letter remaining. My journey looks at first glance looks a bit unusual:

My objective, as always, was to solve the puzzle, ideally in 3-4 guesses. My risk appetite is that I really don’t want to fail after 6 guesses. I sometimes meet my objective, sometimes not, making it a good stretch goal. I’ve never yet failed after 6.

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There’s various strategies for the first guess or two, depending on whether you prefer to simplify the solution space by maximizing a) orange and green vowels, b) orange and green frequent consonants, or c) grey (excluded) frequent letters as soon as possible. Critique it if you want, but starting with TINEA was strategy. ACTOR, following, continued implementing the strategy, adapted based on information gleaned. Then MATCH was more in the mode of responsive execution, high ideals of strategy fading to the background.

Meanwhile the risk management engine was whirring at the back of my mind. There’s never much for it to do in steps 1 or 2, beyond reminding myself “you have max 6 guesses, try not to be too dumb”. There’s just too much completely unknown at that stage to make detailed risk assessment useful. Maybe more risk-aware thinking should have kicked in before guess 3, but it definitely raised the alarm after it.

 

Key points include:

  • Pattern recognition
  • Recognizing and responding to risk levels
  • Quantitative sophistication¬†

 

Read the full article, A Wordle example of risk management, on LinkedIn.