CHALLENGE OF THE
RISK QUOTE: The world is getting to be such a dangerous place, a
man is lucky to get out of it alive.
—W.C. FIELDS, COMEDIAN AND MOVIE STAR
RISK QUOTE: A lie can run around the world six times while the
truth is still trying to put on its pants.
—MARK TWAIN, HUMORIST AND WRITER
Nassim Taleb, in his book The Black Swan (Random House, 2007), identifies a “black swan” as an event that meets three conditions. It is an outlier risk, a potential loss found outside the realm of normal expectations based on people’s understanding of the world. It has an extreme impact, presenting the possibility of great danger or change in its consequences to individuals, organizations, or societies. It is not predictable in advance but can be explained and then understood only after it occurs. It is a surprise that can be a disaster.
Nassim Taleb’s term “black swan” is based on the early and unassailable belief among Europeans and others that all swans were white. For millennia, that belief prevailed. What changed people’s view? The discovery of Australia by James Cook in 1770, or perhaps an earlier discovery going back to 1606. That continent has black swans.