The Junco's Risk Threshold
A framework for calibrating risk appetite based on current reserves relative to survival threshold.
A framework for calibrating risk appetite based on current reserves relative to survival threshold. Determines when to shift between risk-averse optimization and risk-seeking survival strategies, inspired by how juncos switch foraging behavior based on energy reserves.
When to Use The Junco's Risk Threshold
Use when making strategic bets, especially in startups or turnaround situations. Critical for determining whether conservative cash preservation or aggressive growth bets are appropriate.
How to Apply
Calculate Reserves
Current cash / Monthly burn = Runway (months)
Outputs
- Runway in months
Calculate Survival Threshold
Minimum runway to reach next milestone (funding, profitability, product launch)
Outputs
- Threshold in months
Determine Risk Posture
If reserves > threshold + 6 months: Be risk-averse (optimize for average outcome). If reserves < threshold + 3 months: Be risk-seeking (optimize for survival probability). If reserves between threshold + 3-6 months: Mixed strategy.
Outputs
- Risk posture: Averse, Seeking, or Mixed
Apply to Decisions
Risk-averse: Incremental testing, proven channels, safe customer acquisition. Risk-seeking: Big PR bets, aggressive launches, risky experiments.
Outputs
- Strategic decision framework