How we can avoid air turbulence when the 'Black Swans' visit

© Zhenshan Zhou

In his book The Black Swan, which discusses the impact of unlikely events, Nassim Nicholas Taleb provides the following sound advice: “Never cross a river if it is, on average, four feet deep”.

What the author is telling us is that averages only provide value where outliers are not only rare but also insignificant, if or when they do occur. Far closer attention should be paid to instances where outliers could have a significant impact.

A good example of this is the ...