As recent events have shown us again and again, he’s coming. You better be ready. This means you have to stop worrying about death by a thousand white swan-bites, because, having dealt with the flock day-in and day-out, you know how to deal with them. Their bites might hurt a bit, but you know that you’ve gotten quite good at sterilizing and bandaging the wound so that it heals fast, because you wouldn’t still be around had you not. However, you aren’t (as) familiar with the black swan yet. You are unaccustomed to the poison that accompanies his bite and, chances are, you aren’t stocking the antidote to treat it. This is problematic because the venom is fast acting, and if you don’t treat it in time, it can kill you.
Just because the appearance of the black swan is a fourth quadrant extreme event which cannot be statistically predicted, doesn’t mean that you can’t plan for it. That’s what real risk management is all about. True risk management is all about figuring out where the black swan could appear, what type of damage it could do, and how you will contain the damage and clean up the mess before it spreads beyond your control (and bankrupts your company).
It’s identifying those things that everyone thinks can’t go wrong, but that can, in actuality, go extremely wrong if an extreme event occurs. Like an unexpected market crash, an earthquake in a low-risk area destroying a factory, or an uprising closing a border. And then it’s having damage prevention or containment plans (with necessary equipment and resources ready to go) to deal with a sudden loss of supply, extreme market volatility in the preferred currency markets, or a lack of containment when an earthquake or explosion causes chemicals to start leaking rapidly. Because just like an overinflated balloon will eventually explode with the pressure, so will anything else we keep pumping money or resources into with expectations of a perpetual performance or growth. As nature has shown us, everything breaks down eventually. Even mountains crumble. And it doesn’t necessarily take a deluge to wash away your supply chain, and your company with it. So get ready for the black swan, and maybe you’ll be the one to survive his bite.