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Until a couple of years ago, the term "live cat" was relevant only to a conundrum set by a physicist called Schrodinger. Clearly not an animal lover, he wondered what would happen if he put a cat in a box and then introduced some radioactive material into the box. His question was: an hour later, would the box contain a live cat or a dead cat? The answer is both. Don't ask. Think outside the box.

But multidimensional pussycats are not our concern here. Of late, the term "live cat" means a live catastrophe, a term used to describe the life of a major Atlantic windstorm between the time it is declared a hurricane and the time it stops being one.

Such a bet is made against the meteorologists. Should the storm not follow the forecast track and therefore inflict less financial damage than expected, the gambler, er, the investor, is in the money. If the weather forecaster called it right, the bettor loses.

If you work for a living, this sounds like something Evel Knievel might do. In September, however, I made a major investment in a live cat. It paid off, or I might not be here to tell you about it.

Very early in its trans-Atlantic travels, Tropical Storm Florence had Bermuda written all over it. Having weathered more than a few of these monsters, I knew that this one would be knocking on our doors in about a week's time.

When Fabian tore through Bermuda three years ago, I stayed at home and lived to regret that decision. Not because of the storm, but because some colleagues, crazed by the experience, ran amok. I vowed then that the next time Bermuda was threatened by a hurricane, I'd make like a banana and split, before the trouble started.

Florence was due to arrive late on a Sunday night, a Category 2 storm. If the power and telephone lines were knocked out, I'd be unemployed for as long as repairs might take. I live in a remote corner of this island, and a few weeks in the dark would have been the likely outcome.

Facing a live cat, I bet against the weather experts and stayed. I watched the last flight depart before the airport was closed on the Saturday afternoon in a wistful mode, because even we risk junkies know that the only certainties in life are death and withholding taxes.

The storm duly arrived, only it was Category 1, its center 60 miles away. It was windy and rainy and all that, and then it was gone. I lost power for a day--a glorious day, as it turned out, because, unable to work or natter on the phone, I took my profit in time off.

When matters returned to normal, I felt rather good about myself. Hedge fund managers? Amateurs. They throw other people's money around and tell everyone they're cutting-edge risk-takers. Bah! I had risked life and limb, house and home. The bet is not worth making if you don't have some skin in the game. I had my actual skin in this game, fellow babies.

That smug feeling was short-lived. I really don't need danger. Life is one gigantic risk. I don't have a sidecar (i.e. a spouse) and, in fact, have no insurance other than health, which is mandated by law. Hell, I don't even lock my car or my front door. Enough risk, already.

Surviving and winning may be life-enhancing, but the truth is that not voluntarily placing yourself in the line of fire is the best risk containment strategy of all.

ROGER CROMBIE, the alternative risk columnist for Risk & Insurance®, lives in Bermuda.

November 1, 2006

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