Sponsored article: Why the COVID-19 pandemic isn’t a black swan event
Sponsored article: For risk managers tasked with ensuring business continuity, the COVID-19 pandemic can feel like a “black swan”—a catastrophic event that was impossible to predict or plan for.
Too often, risk managers focus on mitigating the probable risks in front of them, rather than the systemic threats lurking in the background, said Nassim Nicholas Taleb, author of 2007’s seminal book on risk, “The Black Swan,” in a recent interview with The New Yorker.
COVID-19 might feel like it, but it’s not a true “black swan” event, because the underlying systems that failed during the pandemic were in place long before the outbreak, and were obvious risks, Taleb says. COVID-19 happened to be the catalyst that exposed those pre-existing risks.
As an analogy, consider a house of cards sitting on a table in a busy hallway. There are myriad ways the house of cards could fall. In some ways, it’s less important to anticipate the ways the house of cards might fall, but rather that the house of cards exists and will certainly fall at some point.
Risk-resilient organisations are those that understand the macro factors they operate in, and build plans that allow them to adapt to changing circumstances, survive sudden shocks and recover to a desired equilibrium.
“A crucial lesson for leaders… is that resilience is most important when it comes to risks that are difficult to predict or, owing to a dearth of knowledge, manage effectively,” World Economic Forum Managing Director W. Lee Howell wrote in a recent article.
“The most important lesson is to avoid examining these risks in isolation. Instead, leaders should adopt the mindset of systems thinking, relying on a multi-layered process to determine risks.”
Risk management must move beyond simply mitigating the individual catalysts of risk, to proactively putting systems in place to weather a wide range of unexpected crises.
Read more by downloading the Dataminr eBook COVID-19: Business Resilience in the Face of the Unexpected