Black Swans

Posted by on Oct 20, 2012 in Recent News | 0 comments

Black Swans

Our food security project examines the implications of climate change impacts for risk management and measures the preparedness of food industry leaders for riskier operating scenarios including, but not limited to, the highly improbable and unpredictable events with massive impacts, named elsewhere as the ‘Black Swans’ (Taleb 2010). The ‘Black Swan’ event has three features. First, it is an ‘outlier’ observation (or possibly a group of outliers) with no past record pointing to it being a possibility. Second, it is associated with an extreme impact which may be positive (e.g. mobile phones or a series of favourable climate years in a typically dry climate) or negative (e.g. global financial crisis or terrorist attack). Third, analysts, including statisticians, tend to ignore it until after the fact when it then becomes explainable and part of accepted wisdom. Is food security set to become the ‘Black Swan’ of the 21st century? The answer to that will depend on several factors including risk management expertise and capacity, the regulatory and investment climate and climate change.



[1] An outlier observation is described by Barnett and Lewis (1984) as ‘… an observation that appears to be inconsistent with the remainder of that set of data.’

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