I’ve taken issue before with Nassim Nicholas Taleb’s black swan thesis, that high-impact, low-probability events are responsible for market crises and accidents. The more general implication is, as Taleb and Pilpel note:
What matters in life is the equation probability × consequence. This point might appear to be simple, but its consequences are not.
Suppose that you are deriving probabilities of future occurrences from the data, assuming that the past is representative of the future. An event can be an earthquake, a market crash, a spurt in inflation, hurricane damage in an area, a flood, crops destroyed by a disease, people affected in an epidemic, destruction caused by terrorism, etc. Note the following: the severity of the event, will be in almost all cases inversely proportional to its frequency: the ten-year flood will be more frequent than the 100 year flood – and the 100 year flood will be more devastating.
Now comes word that some number (actually up to 5 now) of undersea cables have been cut, knocking a wide area of the Middle East off the internet, particularly the route between Europe and Egypt, and from there to the rest of the Middle East.
But where is the 100 year flood? What appears to have happened is a connected series of accidents and snafus, including possibly the weather, an anchor dragging along the sea floor, or who knows what. Mysterious. What I would contend, drawing from org theory, is that what is more dangerous than a 100 year flood is a sequence of preventable, unforeseen errors. That is, it is the disruption of the routine more than a freakish activity that is most likely to create accidents and crises. The routine fire in a particularly bad location, a minor earthquake in an unexpected place, a sequence of coupled organizational routines that lead one-to-another into disaster. It’s not that you shouldn’t be looking for the next giant storm that’s inevitably coming down the pike, but more problematic are the breaks in the caulk around the tub that floods the electrical box, that shorts the grid. Or a failure in the bathrooms at the airport.
Read your Saul Alinsky, and get in the game.