How to Prepare for Black Swan Risks?

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Black Swan Thinking (Anti-Fragility) > Best Practices > How to Prepare for Black Swan Risks?

How to Prepare for Black Swan Risks?
Jos Nieland, Netherlands, SIG Leader
According to , we can not prevent Black Swan risks (= rare events with a high impact) from happening now and then. But we CAN prepare for them. How? Taleb is giving the following ways to prepare for Black Swans (in fourth quadrant situations): 1. Avoid optimization - Forget economics and learn to love redundancy. Keep some buffers and slack. 2. Donít use statistics to try to predict complex, fourth quadrant payoffs. Statistics donít work here. Try not to be exposed to events in the fourth quadrant. 3. No bonus without malus - Beware of the moral hazard (agency) problem. People, banks and organizations should enjoy both the positive and negative consequences of their acts and decisions. 4. Be very careful with risk information - Donít trust scenario analysis and stress testing. There is always more randomness then we think. We just donít know. Be extremely careful with using and interpreting data and events from the past: the future is always less predictable and crazier than you t (...) Read more? Sign up for free
 

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Preparing for Black Swans: 5. Systems Thinking
Augusto Carreira, Partner, Portugal, Member
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Preparing for Black Swans: 6. Scenarios
Jim Burke, Manager, United States, Member
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7. Metaphors and 8. Stories
Jim Burke, Manager, United States, Member
(...)
 

 
Black Swan Preparation: 9. Keep an Eye on Wild Cards
Prakash Deshpande, Professor, India, Member
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Preparing for Black Swan: 10. Common Sense
Dilip Khanal, CEO, Nepal, Member
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12. Flexible Organization and 13. Lateral Thinking
Claudio Boffito, Professor, Italy, Member
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14. High Reliability Organization Thinking
Mike Olson, Consultant, United States, Member
(...)
 

 
15. Regulation and 16. Protection May Help
Jagdish B Acharya, Consultant, India, Premium Member
(...)
 

 
17. Diversification
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
(...)
 

   

 
Preparation Against the Impact of Black Swan Risk
Buba Bulus Ibrahim, Business Consultant, Nigeria, Member
(...)
 

         
Special Interest Group Leader
Jos Nieland
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Black Swan Thinking (Anti-Fragility)
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  • How to Prepare for Black Swan Risks?


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