Coronavirus: A Black Swan? A risk? Or something else?

What does The Risk Doctor think about the coronavirus pandemic?

David Hillson answers some key questions: Is the pandemic a Black Swan? Is it even a risk? How can we take a risk-based perspective? What threats and opportunities might arise from the pandemic?

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[gottwavo]

David,

I only today discovered your valuable video about the corona pandemic, black swan, risk, and opportunities. In my mind the key learning from this situation should be how we can improve our attitude to risk.

The pandemic used to be a risk and is a problem now. In addition to your great definition of risk (an uncertainty that matters – I’ve used it in my lectures and seminars many times and always recommended to read your briefings) my favorite definition of risk is “A risk is a problem whose time has not come yet. If you derive the definition of a problem from this, you can say: A problem is a risk that we have overlooked.

In a way quoting from Ton Demarco’s book “Dancing with Bears” human beings show this behavior: People who solve problems rise in recognition and admiration. "Firefighters" get rewarded. People, on the other hand, who try to prevent problems or even crises, are seen as the grumblers and pessimists. As a result, measures that lead to the prevention of problems - which is risk management - or their reduction are not implemented. The normal excuse is, it’s too expensive and not needed now. And when the problem occurs, the whining is great: If only we had done something before.

In the case of the pandemic the German Robert Koch Institute (RKI) published a scenario of a pandemic in June 2012 which is almost identical to what happened this year. This scenario identified the risks and included a qualitative risk analysis. It has been presented to the German parliament (Bundestag) and the quickly disappeared from the agenda. Government and administration did not take appropriate action to cope with the risk.

The scenario of a corona pandemic is described in detail from page 55 onwards.)

And now Government gets rewarded for their great management of the crisis, current polls of the so called “Sunday question” (How would you vote if there were elections on Sunday) confirm a growing popularity of the German government.

In my article “The failure of risk management” published April 6, 2020 (unfortunately in German) I have discussed this issue in more detail. Find it here:

The dilemma of risk management is illustrated by the following facts:
- If you do not do what you have thought up to prevent a problem and the problem does not occur, you have saved money and time.
- If you do not do what you have thought up to prevent a problem and the problem occurs, it can cost much more money and time than a risk management measure.
- If you do what you thought up to prevent a problem and you succeed in preventing a problem from occurring, then you will have saved a lot of money and time if the remedy was cheaper than the damage that could have occurred.
- If you do what you thought up to prevent a problem and then the problem does not occur, then unfortunately you still do not know whether the problem did not occur because the risk management measure ensured that it did, or whether it would not have occurred even without this measure.

No one knows what will happen in the future, but it is good to be prepared for it. As risk experts we should do everything to change people’s attitude to risk from “risk management is too expensive” to “risk management can really prevent problems if done right”.

Again: Thanks for you great video.

Volker Gottwald

[Praizion]

Delighted to see this DOC! Long awaited video by the risk mastermind!

[najamansari]

Amazing analysis. We all have access to all these facts but never ponder. Thank you doctor.

[abhijitdutta]

A well rounded off observation with a lot of hindsight and foresight.

[jurgenoschadleus]

Hi, David - thanks for an intriguing perspective.

[EXcellentstuFF]

You have a wonderful channel David. Me being a risk professional have just discovered you and its super helpful to have your perspective and explanations on various topics. Kudos!

[sjanowski]

I needed some info on Black Swan for my PM paper.. thank you!!

[thomaswuttke]

Wonderful to hear from you and to see that you are doing fine. The black swan. I have a slightly different opinion. Even the 2008 crisis has been mentioned earlier by someone. 9/11? Well, there has been some people thinking the unthinkable a few years earlier. Sorry for not having the quote at hand. Even if tomorrow a bunch of extraterrestrial folks will land and destroy the capitals in each country. Not a black swan? Ask will smith.... in my opinion a black swan is something absolutely unthinkable in my „box“. For an ant a caterpillar is a black swan while destroying their home. For an average young family a black swan is the sudden death due to a heart attack of the young 35 year old father playing with his 2 yr old son. For the rescue team it is one of ten cases for this day. Is a black swan absolute? Is a black swan not an expression based on my point of view? For all the businesses here in the neighbourhood corona is a black swan. A giant one, coming out of the blue. What do you