Her superior, an ambitious trader named Nick Leeson, decides to hide the loss in an internal "error account" numbered 88888. Such accounts are typically used for minor discrepancies that are subsequently reconciled. But this time, nothing was reconciled, and no one at headquarters noticed a thing.

Leeson got the feeling he had things under control. He was convinced he could "trade his way out" of the loss. He began speculating on the growth of the Japanese Nikkei index. However, the market moved in the opposite direction. Instead of reducing the risk, he did what many people do when they are overconfident: he doubled down.

The losses grew from tens of thousands to millions, and later to tens of millions. When the market finally turned and the account briefly went into the black, Leeson celebrated. But almost immediately, another mistake occurred—and another loss, which he again hid in the same account, 88888.

A vicious cycle emerged:

• Mistake → Loss → Attempt to "win it back" → Even higher risk → Even greater loss.

And the whole thing was held together by one thing: overconfidence.

At a certain point, it was no longer about tens of thousands, nor millions. In today's prices, the hidden losses ended up around $2.8 billion. Barings Bank - one of the oldest and most respected banks in the world - collapsed. Leeson was only 28 years old at the time.

Overconfidence: The Most Dangerous Error in Our Thinking

Psychologists call this phenomenon overconfidence bias—the tendency to overestimate one's own abilities, knowledge, and judgment.

Research shows that:

• Most people think they are better-than-average drivers—which is mathematically impossible.

• When people say they are "90% sure," they are actually right only about 75% of the time—in some experiments, even less.

• Overconfidence also manifests in experts—economic forecasters, managers, investors, or engineers.

Overconfidence has been behind many major disasters—from the Titanic to nuclear power plant accidents or space mission failures. It is always a similar story: "We are sure, we’ve handled this many times before, it will be the same this time."

Why Our Brain Is Set to "I Know, Even If I Don't"

Our brains are overloaded with information. To manage functioning, we use shortcuts - heuristics. They usually work well, but occasionally they betray us:

1. We replace difficult questions with simpler ones. Instead of asking "How am I doing financially overall?", we subconsciously answer "How have I done in the last two months?".

2. We remember successes more than mistakes. This convinces us that "we are good at this," even if the reality is more complex.

3. We lack feedback. In chess, you learn the truth immediately - you either win or lose. In taxes or investments, the consequences might not be visible for years.

It’s not about us being "stupid" - it's rather about us being human. And humans systematically make similar mistakes.

When "We'll Manage Somehow" Costs Money

You might say: "Okay, but I don't do risky trades with derivatives. How does this concern me?"

Surprisingly, a lot. Overconfidence manifests in everyday life too:

• In investing ("this tip looks like a sure thing"),

• In contracts ("no need to involve a lawyer"),

• In business ("we'll set this up ourselves, at least we'll save money"),

• And very often in taxes.

Typical thoughts include:

• "I've done a tax return once, I know how to do it."

• "I Googled this topic, I’m at home in it."

• "VAT, flat rate, deductions... we'll set it up somehow, just make it quick."

But tax laws change; they are full of exceptions, details, and conditions. What "worked" last year could cost you today:

• Unnecessarily high taxes,

• A fine for an incorrectly filed return,

• Or loose controls that will come back to haunt you in two or three years when you don't even remember what you filled out.

Equally dangerous is the opposite form of overconfidence: "We are doing it perfectly, surely nothing is escaping us." Maybe your taxes are fine. But maybe you are leaving money on the table unnecessarily - you just don't know it.

How Not to Be Fooled by Your Own Certainty

Here are a few practical steps to "tame" overconfidence:

1. Ask yourself: "How exactly do I know I'm right?" Not "I feel sure," but what exactly does that certainty stem from?

2. Try to estimate your certainty in percentages. Instead of "I am sure," say: "I think I'm right with 60–70% probability." You will often find it is not 100% at all.

3. Seek an opposing opinion. Someone who disagrees with you is not an enemy - they are a source of correction. In taxes and accounting, this could be a professional.

4. Create space for feedback. Track where you have been wrong in the past - in business, investments, taxes. Do any patterns repeat?

What Do Taxes and Mandat Have in Common With This?

Nick Leeson's story is extreme - his overconfidence brought down a bank. Our daily reality is much less dramatic, but the principle is the same:

👉 The more certain we are, the more damage a single small mistake can cause.

In taxes and accounting, it often doesn't look like a "disaster," but rather a slow leak of money:

• You pay more than you have to,

• You don't utilize options the law allows you,

• Or you risk problems just because you were "sure" you had it right.

That is why it makes sense to have someone by your side who won't just reassure you that "it's cool," but will critically look at where overconfidence might be harming you.

If you feel like you are "handling" your taxes somehow, but want the certainty that nothing will surprise you in a year or two, it pays to get advice from experts—before the tax office decides for you.