Risk Tips 0007: On Risk and Uncertainty

“We learn from repetition — at the expense of events that have not happened before. Events that are nonrepeatable are ignored before their occurrence, and overestimated after (for a while).” 

Nicholas Taleb, The Black Swan at 78 (2007).

Risk management is never a crystal ball. We tend to think what happened before will happen again. Then when something extraordinary happens, we overreact. Taleb’s The Black Swan provides a solid introduction to this concept.

Risk Tips is a periodic posting on the Risk Alternatives blog. Here, we share some of our favorite thinkers’ favorite thoughts (and a few of our own). Please buy the books we quote: we want you to build your library of risk management and process improvement gems. To find out more about risk management, start here.

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