Coronavirus, Black Swans and Worst-Case Scenarios

blackswanThe concept of Black Swans was popularized by the author Nassim Taleb. According to his definition:

“What we call here a Black Swan (and capitalize it) is an event with the following three attributes.

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact’. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

I stop and summarize the triplet: rarity, extreme ‘impact’, and retrospective (though not prospective) predictability. A small number of Black Swans explains almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.”

It is clear that the current spread of the Coronavirus is an example of a Black Swan. It was completely unexpected, it has extreme consequences and is now being explained. In practice what it means is that our reality became much worse than any worst-case scenario.

Worst-Case Scenarios

When people make plans, a traditional way to develop a solid strategy is to consider several potential scenarios. Because we are dealing with the future, we cannot be absolutely sure about anything, so creating possible scenarios sounds like a good way to deal with the uncertainties. One of these scenarios is the worst-case scenario:

“A worst-case scenario is a concept in risk management wherein the planner, in planning for potential disasters, considers the most severe possible outcome that can reasonably be projected to occur in a given situation. Conceiving of worst-case scenarios is a common form of strategic planning, specifically scenario planning, to prepare for and minimize contingencies that could result in accidents, quality problems, or other issues.”

However, when there is a Black Swan, like the current Coronavirus pandemic, reality may become worse than the worst-case scenario. The Black Swan is by definition an event totally unexpected, and as such it could not have been part of our plans.

Goals, Plans and Attributes

The purpose of a plan is to reach some goal. But when there is a Black Swan, all the plans become irrelevant, because the goals themselves need to be changed. For example, instead of having the goal to grow their revenue or increase their sales, at this moment many companies are just trying to survive.

In order to face unexpected situations, we do not need plans, but we do need relevant attributes. In the case of software systems these are normally called “non-functional attributes”, because they are not directly related to the function performed by the system. These non-functional attributes are properties that all systems should ideally have. Examples are Robustness, Resilience and Fault-Tolerance.

Thus we do not need a predefined plan to handle the Coronavirus crisis, and it should not be taken in consideration as a potential worst-case scenario. What we do need is to develop the attribute of Robustness in order to survive this or any other Black Swan that we will never be able to predict.

About Hayim Makabee

Veteran software developer, enthusiastic programmer, author of a book on Object-Oriented Programming, co-founder and CEO at KashKlik, an innovative Influencer Marketing platform.
This entry was posted in Antifragility, Efficacy and tagged , . Bookmark the permalink.

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