Black Swan Resources
Glen Alleman MSSM
Vetern, Applying Systems Engineering Principles, Processes & Practices to Increase the Probability of Program Success for Complex Systems in Aerospace & Defense, Enterprise IT, and Process and Safety Industries
A conjecture about project risk management
"every project in every domain CAN have 99.9% of its risks identified."
After some discussion, it was clear that the holder of the conjecture had no materials supporting this concept.
Black Swan History
Taleb states
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.
Decimus Junius Juvenalis, known in English as Juvenal, was a poet active from AD 110 to 130. He wrote sixteen satires on the vices, abuses, and follies of Imperial Rome and is regarded by many as one of the greatest satirists of the time. Juvenal was also the first person to describe an occurrence of extreme rarity as a ‘Black Swan’ when he referred to a good wife as a “rare bird, as strange to the earth as a black swan” (Juvenal, Britannica).
The Black Swan became a metaphor for the reality that just because something has not happened does not mean it cannot occur in the future. The metaphor is analogous to the fragility of any system of thought and a testament to the fallacy of assumption. A set of conclusions can be undone once its fundamentals are proven false. In this case, observing a single black swan negated the long-held presumption about the species. The discovery also invalidated any logic that followed the assumption that swans must be white.
The Black Swan term was popularized by writer and philosopher Nassim Nicholas Taleb in The BlackSwan, Second Edition: The Impact of the Highly Improbable, and was initially explored in financial markets to describe a highly unexpected and unpredictable event that will have a major impact. Taleb's notion of a Black Swan is that no number of White Swans disproves the existence of a Black Swan. This means you can never establish a final truth. You can work with the best explanation you have today. At any time, a Black Swan can disprove your theory.
Taleb describes a Black Swan as an Event having three attributes
Once such seemingly unpredictable events occur, they tend to get absorbed into the standard body of knowledge, so it is very rare that they repeat. This treats outliers as rare cases to be ignored in modeling. On the other hand, Black Swan logic suggests that these outliers need to be studied more closely.
I've labeled Terje Aven's paper since it is the foundation for moving from a domain-independent discussion to the project management domain. In the absence of a domain and a context in that domain, any discussion of any topic is simply an opinion.
Two tendencies cause humans to be particularly susceptible to black swan events. The first is creating narratives based on what is known of the past, and the second is the notion that the past is a reliable predictor of the future. Humans search for evidence-based on already-formed beliefs, creating a confirmation bias
Black Swans When Managing Projects
In Project Management, the Black Swan theory (not the original Black Swan theory in the finance domain) refers to the possibility of sudden and unplanned events that may affect the development plan. Black Swans in project management are rare, statistically improbable, and challenging to predict, but they are high-impact, disruptive occurrences. Examples of Black Swans include global economic crises, natural disasters, or sudden technological breakthroughs.
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This Black Swan theory is based on the idea that most events are predictable and can be controlled or managed somehow. However, some events are completely unpredictable and significantly impact the project. These events are Black Swans, including natural disasters, system failures, and/or serious human error.
In the project management domain, we must consider the possibility that Black Swans may occur, and the project's management processes must be prepared to deal with the outcomes of Black Swans effectively. This handling strategy
David Hillson tells us:
The Black Swan concept warns us to expect the unexpected, but when it comes managing risk we should be careful to use the term properly and not dilute it through misunderstanding. If we mistakenly think that risks with very low probability and high impact are Black Swans, then we remain unprepared and vulnerable to genuinely unknowable unknowns.
We must be careful to recognize the paradigm of the "Black Swan." The Black Swan is unknown to the observer at the time of the observation. This is an observer's view. It does not mean the Black Swan is un-observable. If a risk event is unobservable, it differs from "we haven't seen a Black Swan (the original English analogy), so it must not exist."
Much of the discussion (or failed discussion) around Black Swans fails to distinguish between what I haven't seen and what is not observable. This is the case in the financial crisis. Those betting against the market certainty saw the Black Swan coming, shorted the subprime CDOs, and made billions (literally).
So the popular "Black Swan" of Taleb's book by the same name was most undoubtedly observable, just not by those making the decision (and possibly Taleb himself). Very few things in the world are unobservable with enough time and money. The trade-off is how much time and money is needed to make them observable and whether that trade is worth the downside risk.
This is an example of a paradigm misused by the uninformed.
Black Swan Risk Have Three Attributes
Taleb tells us there are three attributes
Black Swan Resources
Here's a continually growing collection of papers on Black Swans in various domains. Taleb's book is The Black Swan: The Impact of the Highly Improbable.
Black Swan Linked In and Web Site Sources
Passionate technology evangelist, change agent, business builder and Microsoft alumni. Avid cyclist, traveler and hobby coffee roaster. Front End Of Innovation certified. AI Champion
10 个月Now I need to set aside as time to dive deeper into this goodness. Thanks for explanations and supporting material Glen.