Tuesday, January 11, 2011

Anticipating "Black Swan" events

Nassim Nicholas Taleb's best-selling book, The Black Swan: The Impact of the High Improbable(now in its second edition) regards the anticipation of low-probability, high consequence possible events. Managers generally focus their attention on the crisis of the day and on likely near-future scenarios. There are so many low-probability possible scenarios that it may not be a productive investment of time and attention to give them much thought. It is difficult to plan for a radical change in circumstances. And an executive or manager is not likely to be faulted for failing to anticipate an event that was very improbable before its occurrence.

But medical insights are evolving rapidly. For example, the discovery of a cure for aging, resulting in radical life extension, would certainly have huge consequences to medical institutions and societies at large. It would probably result in a large increase in numbers of people with chronic medical conditions and would surely lead to substantial population growth, further taxing the limited resources of the earth. It could happen. Many unlikely things of high potential consequence are possible. Some of the work being done in theoretical physics would surely have dramatic consequences if radical new ideas could be implemented.

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