Nassim Taleb’s book The Black Swan is a fascinating read. He writes about uncertainty and our limitations as human beings in taming this uncertainty. We base our world view on what we see, observe and read. We generalise and make predictions based on these observations and interpretations. And yet, one aberration shatters the foundations of our knowledge and we go back to the drawing board all over again.
Taleb was a finance professor, writer and former Wall Street trader. He outlines a black swan event as an outlier, which “lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility”. He argued that though black swan events are low frequency, they are high impact and almost impossible to predict. Because of their tremendous consequences, people must factor such events to occur in the future, and plan for them. The financial crisis of 2008 and the dot-com bubble of 2000 are examples. So how should we protect ourselves from their impact?
