{"id":26,"date":"2009-10-30T23:40:33","date_gmt":"2009-10-31T07:40:33","guid":{"rendered":"tag:google.com,2005:reader\/item\/7d24eb0e1ca53b3b"},"modified":"2009-10-30T23:40:33","modified_gmt":"2009-10-31T07:40:33","slug":"the-six-mistakes-executives-make-in-risk-management-hbr-org","status":"publish","type":"post","link":"https:\/\/www.blackswanreport.com\/blog\/2009\/10\/the-six-mistakes-executives-make-in-risk-management-hbr-org\/","title":{"rendered":"The Six Mistakes Executives Make in Risk Management &#8211; HBR.org"},"content":{"rendered":"<blockquote><p>Shared by  JohnH<br \/>\n<br \/>\nThere&#8217;s a pay wall, or at least a login, but more than what I have here at the link above.<\/p><\/blockquote>\n<p>We don\u2019t live in the world for which conventional risk-management textbooks prepare us. No forecasting model predicted the impact of the current economic crisis, and its consequences continue to take establishment economists and business academics by surprise. Moreover, as we all know, the crisis has been compounded by the banks\u2019 so-called risk-management models, which increased their exposure to risk instead of limiting it and rendered the global economic system more fragile than ever.<\/p>\n<p>Low-probability, high-impact events that are almost impossible to forecast\u2014we call them Black Swan events\u2014are increasingly dominating the environment. Because of the internet and globalization, the world has become a complex system, made up of a tangled web of relationships and other interdependent factors. Complexity not only increases the incidence of Black Swan events but also makes forecasting even ordinary events impossible. All we can predict is that companies that ignore Black Swan events will go under.<\/p>\n<p>Instead of trying to anticipate low-probability, high-impact events, we should reduce our vulnerability to them. Risk management, we believe, should be about lessening the impact of what we don\u2019t understand\u2014not a futile attempt to develop sophisticated techniques and stories that perpetuate our illusions of being able to understand and predict the social and economic environment.<\/p>\n<p>To change the way we think about risk, we must avoid making six mistakes.<\/p>\n<h3>1. We think we can manage risk by predicting extreme events.<\/h3>\n","protected":false},"excerpt":{"rendered":"<p>Shared by  JohnH <\/p>\n<p>There&#8217;s a pay wall, or at least a login, but more than what I have here at the link above.<br \/>\nWe don\u2019t live in the world for which conventional risk-management textbooks prepare us. No forecasting model predicted the impact of the cur&#8230;<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-26","post","type-post","status-publish","format-standard","hentry","category-feeds"],"_links":{"self":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/26","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\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/comments?post=26"}],"version-history":[{"count":0,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/26\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/media?parent=26"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/categories?post=26"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/tags?post=26"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}