Finding the Black Swan

StrategyDriven Risk Management Whitepaper | Finding the Black Swan

According to Nassim Nicholas Taleb, Black Swan events are rare, catastrophic, and unpredictable; though in hindsight, they appear as having been recognizable. It is to this last point, that we would add an additional caveat. StrategyDriven believes black swan events are not predictable by those who are involved in the event but are rather predictable by knowledgeable individuals outside of the affected organization. This is because those individuals have a differing perspective of the circumstances leading up to the event itself based on differences in personal knowledge, experience, and predisposition than those who are directly involved. Consequently, it might be said that black swan events are more likely foreseen by those outside of the organization which they affect.

For over twenty years, we’ve had the privilege of performing and assessing military and commercial nuclear plant operations. In that time, we’ve come to recognize patterns or warning flags signaling the increasing risk of significant, adverse events at asset intensive, high operational risk companies. In each case, hindsight reinforced the existence of these patterns and revealed them to be observable – that is measurable – thereby providing warning of an impending event. While identified within the nuclear industry itself, StrategyDriven believes the warning flags are applicable to all asset intensive, high operational risk industries including all electric power generation, oil and natural gas drilling and transportation, chemical refinement and storage, air and space travel, and mass food and medical supplies production just to name a very few.

Finding the Black Swan presents the fifteen warning flags of increasing Black Swan event risk and the observable indicators of their existence. We at StrategyDriven believe these warning flags represent an excellent starting point to evaluate your company’s risk for a catastrophic accident.

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