Black Swans: How can we cope with rare but potentially disastrous events

Society & HLRS
Black Swans: How can we cope with rare but potentially disastrous events

Prof. Dr. Dr. h.c. Ortwin Renn

The talk will address three different types of black swans;  (1) the tail ends of a normal distribution (low probability or dependent probabilities);  (2) events linked to problems in knowledge and lack of transfer of knowledge (asymmetry of knowledge distribution) and (3) unique events for which there is no historical record for a re-occuring patterns. These three types of black swans demand different and tailored methods of assessment and management.  Tail ends phenomena need better assessment methods to characterize and evaluate rare events beyond the two or three standard deviation integral. Asymmetry of knowledge demands better methods to monitor knowledge, access new sources of knowledge and decrease communication hierarchies.  Finally, unique events cannot be calculated or assessed but systems may vary to the probability that they can get under stress from unique events. Geological formations may not be very vulnerable, stock markets are probably highly vulnerable.  The more vulnerable a system is the more important are management preparations to increase resilience.  Vulnerable systems need to be enhanced so that they can sustain their functionality even when they are stressed by unknown events. However, this requires a delicate   balance between resilience and efficiency.