Heat a large pot over medium-high to high heat. Add beef and brown 7-8 minutes. Add hot pepper, bell peppers, onions and garlic and season with salt and pepper. Cook to soften vegetables, 7-8 minutes more. Stir in chili powder, sweet paprika and oregano. Add tomato paste to pot and stir to combine, 1 minute. Add stock to pot and bring chili to a boil. Reduce heat to simmer and cook 15 minutes more.
In a separate pot, bring water or chicken stock and milk to a boil, whisk in polenta and cook 2-3 minutes until thickened. Stir in butter and cheese, season with salt and pepper.
Fill shallow bowls with polenta, make a well in the center. Fill well with ladles of chili and top with sour cream and herbs.