Professional Documents
Culture Documents
The Perils of Prediction
The Perils of Prediction
камені передбачення/
попереднього
прогнозування
churn out constantly produce 1)Економіка: випускати
потоком (продукцію)
2) Політика:
фабрикувати
3) Макарів: випускати
потоком (продукцію),
пекти як млинці (книги
тощо), штампувати
(виробляти щось швидко
і багато)
known unknowns A known unknown is in- відомі невідомості
formation whose existence
someone is aware of but
does not possess. Known
unknowns are what drives
many scientific experi-
ments, search engine and
database queries, business
intelligence (BI) and data
analytics, among other
channels of inquiry.
Known unknowns can also
represent potential risks.
They start talking about the “black swan” every time when some kind of global event
occurs in the world that no one expected. The concept was formulated by American
financial expert Nassim Taleb. He is an essayist, mathematician, trader of Lebanese
origin, who in his writings considers the problems of chance and probability.
The black swan theory is a metaphor that describes an event that initially seems rare
and difficult to predict, but after the fact often turns out to be quite logical, based on
the current situation.
Taleb's "black swan theory" deals only with unexpected events of great magnitude
and consequences and their dominant role in history. Such events, considered ex-
treme outliers, together play a much larger role than ordinary events.
In other words, such events fundamentally turn our picture of the world upside down,
proving that everything on which it is based is a rather unreliable and even illusory
construction.
This thesis gives rise to distrust of any expert assessments and forecasts based on
well-known principles and formulas. According to Taleb, investment forecasts can be
trusted no more than astrology. The very first “black swan” can bring down the mar-
ket or, conversely, lead to an explosive growth of certain assets, and no one can pre-
pare for this:
As confirmation of his theses, Taleb cites the events of September 11, 2001, in New
York. Then no one objectively assessed all the possible risks, simply because such a
development of events seemed the most incredible. An explosion in the heart of New
York is the most risky and difficult to accomplish. It was due to surprise that the ter-
rorist operation was a success.
In business, the COVID-19 pandemic in 2020 can be called the Black Swan. No one
was ready to conduct their business activities in complete isolation.
In his book, Taleb wrote that the best way to mitigate the impact of a black swan is
not to try to predict it. According to the author, instead, it is necessary to understand
its inevitability in advance and develop stable and sustainable plans that will help re-
duce the likelihood of such an event. Or mitigate its consequences.
For example, banks conduct stress tests - simulations that are designed to check
whether a financial institution will survive another crisis. This practice has become
commonplace for organizations just after 2008.
But, as Taleb noted, not only professional organizations, but also individuals can pre-
pare for catastrophic events.