Coping With Black Swan Events
The main idea in Taleb's book is not to attempt to predict black swan events, but to build robustness against negative ones that occur and be able to exploit positive ones. Taleb contends that banks and trading firms are very vulnerable to hazardous black swan events and are exposed to losses beyond those predicted by their defective models. On the subject of business in particular, Taleb is highly critical of the widespread use of the normal distribution model as the basis for calculating risk.
In the second edition of The Black Swan, Taleb provides "Ten Principles for a Black-Swan-Robust Society".
Taleb states that a black swan event depends on the observer. For example, what may be a black swan surprise for a turkey is not a black swan surprise to its butcher; hence the objective should be to "avoid being the turkey" by identifying areas of vulnerability in order to "turn the Black Swans white".
Read more about this topic: Black Swan Theory
Famous quotes containing the words coping with, coping, black, swan and/or events:
“Parents learn a lot from their children about coping with life.”
—Muriel Spark (20th century)
“Acknowledging separation feelings directly and sympathetically is the best way of coping with them. It is actually helpful to tell a toddler “I’ll miss you,” or “I will think of you during the day,” or “It is hard to say goodbye,” or “I can’t wait to see you at the end of the day.” These messages tell the child that he is important to the parent even when they are not together and that out of sight need not mean out of mind.”
—Alicia F. Lieberman (20th century)
“Richard. Give me a calendar.
Who saw the sun today?
Ratcliffe. Not I, my lord.
Richard. Then he disdains to shine, for by the book
He should have braved the east an hour ago.
A black day will it be to somebody.”
—William Shakespeare (1564–1616)
“And of the swan in death these dreamers tell
of its last flight and how it falls, a plummet,
pierced by the freezing bullet
and how three feathers, loosened by the shot,
descend like snow upon it.”
—Patricia K. Page (b. 1916)
“We have defined a story as a narrative of events arranged in their time-sequence. A plot is also a narrative of events, the emphasis falling on causality. “The king died and then the queen died” is a story. “The king died, and then the queen died of grief” is a plot. The time sequence is preserved, but the sense of causality overshadows it.”
—E.M. (Edward Morgan)