THE MAGAZINE

Lone Wolves and Black Swans

By Sherry L. Harowitz

Let's play a game. Make a list of the top ten threats to your organization. Now, I'm going to guess your greatest threat: It's number 11 (or 12 or 100). It's the one not yet on the radar screen – the next Katrina, the next Cho Seung-Hui, the next 9-11. Call these the Black Swans, says Nassim Nicholas Taleb, currently the Dean's Professor in the Sciences of Uncertainty at the University of Massachusetts at Amherst.

We tend to extrapolate too linearly from what we know and to think that the future is more predictable than it is, he says in his book The Black Swan: The Impact of the Highly Improbable. (He takes the name from the fact that people thought all swans were white until they discovered Australia, which had black swans.)

That's not to say you should give up trying to fathom risks but rather that you should acknowledge the limitations of risk assessments.

And don't think that you can solve the problem if only you can collect enough data. In fact, the exponential growth of available information makes predicting the future more difficult, Taleb says. To that point, former FBI agent Coleen Rowley recently noted that if before 9-11, information flow was likened to a fire hose, today it is like Niagara Falls.

One suggestion: Constantly recalibrate predictions – as events present themselves to us – compare what we see to what we expected to see," Taleb says.

Another: Be wary of ruling out information that doesn't fit your preconceived model of the current threat. These could be clues to the next Black Swan.

An example of where the government might be making that mistake could be in its reported dismissal of the threat posed by domestic white supremacist groups. Not only do they represent a terrorist threat of their own, but they may be making common cause with al Qaeda. But perhaps because they did not fit the Islamic threat model, when then FBI agent Michael German tried to raise this point internally based on transcripts of a meeting between the two groups in 2002, "the FBI failed to take any of this seriously," said Senator Chuck Grassley (D-IA) in a recent congressional hearing.

A third suggestion: Don't try to assess risk in a closed system where experts talk only to each other. Get input from many sources. This is called 'Wiki-style' knowledge, because Wikipedia has shown how well it works; it's also called the wisdom of the crowd.

Together, these strategies may help reduce the number of Black Swans, but nothing can eliminate them. "Alas, we are not able to predict 'transitions' into crises or contagions," Taleb says.

Rather than pretending that we can, we should simply factor uncertainty into our strategic thinking, stay nimble, and make sure that response plans can be adapted to handle whatever circumstances arise.

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