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Robustness and a Swan-Proof Fence

Topic: Black swans
by Moki, 2020 Cohort

Black swans are events with three traits: they are outliers, they are high-impact and they are normalised (rendered predictable) after the fact. The existence of these black swan events might invite some fatalism: why would I want to do anything if a black swan could take it all away in an instant? However, there’s no need to fret. In fact, there’s a way to prepare for them and soften the blow.

Black swans can’t be predicted, but they depend on the observer. Nassim Nicholas Taleb, who coined the term “black swan”, uses the metaphor of a turkey and butcher. The turkey’s death is a black swan for the turkey, but not for the butcher. From this, a recommendation is to avoid being a turkey. This can be done by staying informed about current events and possible trends, for example. This is what Taleb calls building robustness. Alternatively, saving up excess resources so they’re on hand in an emergency is a possible approach. This is prudent behaviour in everyday life, but optimisation is favoured instead in industry and government settings. In light of recent events, a more “clumsy” approach may be beneficial for the latter. A question that arises, however, is how best to allocate excess resources to cover as many eventualities as possible.

This seems like a lot of effort for weathering events that don’t happen often. Indeed, black swans are rare, despite the term being used liberally in media headlines. The recent COVID-19 pandemic has been labelled a black swan, but let’s look at each trait carefully.

  • Is it an outlier?- No. Infectious diseases have been the number one cause of death of humans throughout history. Even in recent years, warnings about the next pandemic have been coming from figures like Bill Gates and Barack Obama. Simulations of pandemics are used to train governments to deal with such issues efficiently. Given the course of history, this pandemic was should have been

  • Is it high-impact?- Yes. While the Spanish flu pandemic in 1918 caused over 50 million deaths compared to COVID-19’s 814 thousand (at the time of writing), we still don’t know what the final death toll will be. Additionally, there have been drastic effects on lifestyle and the economy that will probably last beyond the end of the

  • Has it been normalised after the fact?- This is a question that can only be answered after the end of the

It turns out that COVID-19 isn’t a black swan. Instead, it’s a white swan: a high-impact event that isn’t an outlier. But what was the point of this exercise?

It’s clear that knowing the risk isn’t enough. While it’s debatable that the possibility of a pandemic was properly prepared for by world authorities, there definitely needed to be quicker, more decisive action. The person who prevents a disaster is never remembered, so it is hard to gauge how much preparation is enough. But as the old saying goes, “an ounce of prevention is worth a pound of cure”.

Disclaimer#

This content has been contributed by a student as part of a learning activity.
If there are inaccuracies, or opportunities for significant improvement on this topic, feedback is welcome on how to improve the resource.
You can improve articles on this topic as a student in "Unravelling Complexity", or by including the amendments in an email to: Chris.Browne@anu.edu.au

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