Surviving the storm: managing risks in a world of 'black swans'

It’s at times like the present that a professional risk-management exercise becomes so valuable.

- Peter Hughes.

Do you remember the impossibly named volcano in Iceland, Eyjafjallajökull?

After slumbering peacefully for 200 years, it suddenly started disgorging vast clouds of smoke and ash in April 2010, and kept it up for over a month. Prevailing winds spread ash all over Europe, often reaching heights of 5km. It shut down Europe's air traffic. About 100 000 flights were cancelled, stranding some 10 million passengers.

This was a textbook example of what Nassim Nicholas Taleb, in The Black Swan: The Impact of the Highly Improbable, called a classic 'black swan' event.

Taleb defined it as an extremely rare event, completely outside our range of expectations, having a massive impact. The COVID-19 disaster was a vastly more impactful black swan.

Pandemics of course had been experienced before, but never in the history of humankind had a pandemic of the nature of COVID-19 taken place. It blindsided governments, markets and societies; caused millions of deaths, global lockdowns, and economic collapse of some sectors; and reshaped daily life for millions of people. COVID-19 was a black swan of unprecedented scale.

When caught up in an event of this type, it’s extremely difficult to process, and modulate rational, unemotional responses.