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)
“We lay long in the immense tide
Of shade and shadowy desire
And saw the dusk assail the wall,
The black surge, mounting, crash the stone!
Companion of this lust, we fall,
I said lest we should die alone.”
—Allen Tate (1899–1979)
“But all is changed, that high horse riderless,
Though mounted in that saddle Homer rode
Where the swan drifts upon a darkening flood.”
—William Butler Yeats (1865–1939)
“As I look at the human story I see two stories. They run parallel and never meet. One is of people who live, as they can or must, the events that arrive; the other is of people who live, as they intend, the events they create.”
—Margaret Anderson (1886–1973)