Nassim Taleb antifragile risk chart

 

While this blog is ostensibly about Embracing Failure and Leadership and Management, the underlying common thread is the notion of “risk”. Notions, approaches and even philosophy about “risk” (or “probability” or “stochastic” processes) is also underpins Nassim Taleb’s “Antifragile”…

 

  • “I used the image of the barbell to describe a dual attitude of playing it safe in some areas (robust to negative Black Swans) and taking a lot of small risks in others (open to positive Black Swans), hence achieving antifragility. This is extreme risk aversion on one side and extreme risk loving on the other, rather than just the ‘medium’ or the beastly ‘moderate’ risk attitude that in fact is a sucker game (because medium risks can be subject to huge measurement errors)…Antifragility is the combination of aggressiveness plus paranoia” [ed. in poker, “tight aggressive”]
  • “If you take risks and face your fate with dignity, there is a nothing you can do that makes you small; if you don’t take risks, there is nothing you can do that makes you grand, nothing.”
  • “Instead of having all members of the staff on an airplane be ‘cautiously optimistic,’ or something in the middle, I prefer the flight attendants to be maximally optimistic and the pilot to be maximally pessimistic or, better, paranoid.”
  • Never ask anyone for their opinion, forecast, or recommendation, just ask them what they have – or don’t have – in their portfolio…Never ask the doctor what you should do. Ask him what he would do if he were in your place. You would be surprised at the difference.”

 

 

The vehicle of ‘risk’ is often ‘optionality’. It is a concept that often seems like the domain of hedge fund rocket scientists, but people execute “options” every day. Perhaps the largest “option” in one’s life is home ownership. My wife Lori and I have always felt that the greatest riches we could bequeath on our children were “options” in life. So we exposed them to much and tried to nurture as broad an array of skills and insights. Taleb observes…

 

  • “The option is an agent of antifgragility.,,’the right but not the obligation’…Most interesting options are free, or at the worst, cheap…Freedom is the ultimate option.”
  • You will never get to know yourself – your real preferences – unless you face options and choices.”
  • Like Britain in the Industrial Revolution, America’s asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no shame in failing, starting again, and repeating failure. In modern Japan, by contrast, shame comes with failure, which causes people to hide risks under the rug, financial or nuclear, making small benefits while sitting on dynamite, an attitude that strangely contrasts with their traditional respect for fallen heroes and the so-called nobility of failure.”
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