{"id":1785,"date":"2010-06-25T14:18:38","date_gmt":"2010-06-25T21:18:38","guid":{"rendered":"tag:google.com,2005:reader\/item\/d01192fa622786af"},"modified":"2010-06-25T14:18:38","modified_gmt":"2010-06-25T21:18:38","slug":"financial-risk-nassim-nicholas-taleb","status":"publish","type":"post","link":"https:\/\/www.blackswanreport.com\/blog\/2010\/06\/financial-risk-nassim-nicholas-taleb\/","title":{"rendered":"Financial Risk | Nassim Nicholas Taleb"},"content":{"rendered":"
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Swans swim in Moscow’s zoo. Nassim Nicholas Taleb named his book on financial risk “The Black Swan” based on his theory on the role of high-impact, hard-to-predict events \u2014 like the discovery that not all swans are white. (Anton Denisov\/Reuters) \"Click<\/a><\/div>\n<\/p><\/div>\n

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\n\tGlobalization and global communications, and specifically the internet, have accelerated the process of fragilization. Taleb points out that scientists have long observed that islands tend to have more biological diversity than continents. The reason is that the unhindered access offered by a continent encourages winner-takes-all domination by a few species. The same thing is true in a globalized economy. How does a steel company in France compete with a gargantuan competitor in China?<\/p>\n

\n\tTaleb advises looking for niche markets where added value counts and the bigger competitors can\u2019t be bothered to interfere. \u201cGlobalization is based on specialization,\u201d Taleb warned,\u201dbut if the market for your specialization disappears, you are dead.\u201d<\/p>\n

\n\tThe bottom line to all this, Taleb says, is to reduce vulnerability where possible and to emphasize robustness, while always keeping a fall back plan handy. As Taleb sees it, small tends to be robust, while being large can often increase fragility. Taleb\u2019s advice: Put risk management at the center of your business, because what is fragile will ultimately break.<\/p>\n

\n\tFinally, Taleb suggests that the older generation also has something to offer. A herd of elephants, he notes, respects the older elephants in the group. \u201cThe older elephants don\u2019t teach,\u201d he said. \u201cThey are the ones who say, \u2018no.\u2019 You invest the elders with the power to say, \u2018no.\u2019 Negative advice can be vastly more powerful than positive advice. People often don\u2019t understand the value of survival. Simply not blowing up, can make you rich. Especially when others are becoming poor.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Swans swim in Moscow’s zoo. Nassim Nicholas Taleb named his book on financial risk “The Black Swan” based on his theory on the role of high-impact, hard-to-predict events \u2014 l…<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1785","post","type-post","status-publish","format-standard","hentry","category-feeds"],"_links":{"self":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/1785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/comments?post=1785"}],"version-history":[{"count":2,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/1785\/revisions"}],"predecessor-version":[{"id":1929,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/1785\/revisions\/1929"}],"wp:attachment":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/media?parent=1785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/categories?post=1785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/tags?post=1785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}