Learning from Catastrophes

 
 

BOOK_CATSNassim Taleb’s “black swan theory” details how society has been shaped time and time again by incredibly rare events of extreme impact. Historic events from the assassination of Franz Ferdinand to September 11 and the rise of the internet to the fall of the Berlin Wall all fit the bill. But more than just being rare and transformative, the qualification that truly makes something a “black swan” is that is was entirely unpredictable. No one could see it coming. And while it is certainly a forgivable offense for society to fail to see something that was, by definition, unforeseeable, it is not forgivable for us to fail to learn from it.

This is the underlying message of the aptly titled Learning from Catastrophes, a collection of studies in risk management edited by Howard Kunreuther and Michael Useem, both of whom are professors at The Wharton School at the University of Pennsylvania. The book is a good blend of traditional risk management lessons and anecdotal evidence to reinforce these classic tenants. Scholarly enough for coursework but interesting enough for casual skimming, the work focuses on the disasters of the past decade and can be considered the first “history” of the catastrophes that dominated the globe in the past decade.

Throughout, the message is that unpreparedness remains dangerously high and that the entire world must strive to increase its ability to deal with disaster. Ultimately, I think even Kunreuther and Useem would admit that certain black swans will always catch the world by surprise.

But what about the other events? If we study the past, we should be able to see them coming. “If we know that we will predictably underpredict-and thus underanticipate the next catastrophe-we can do something about it in advance. Now is the time for all of us to appreciate the importance of recognizing risks and preparing for them before they result in another Katrina or credit tsunami. Above all, leaders need to remember that a low risk is not a no risk.”

 
Jared Wade

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About the Author

Jared Wade is a freelance writer and the former senior editor of Risk Management.

 
 
 

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