Nassim Taleb gave a brief interview on risk and made some good points. I summarize them below.
Practice Risk-Taking, not Risk Management
The people who dominate the field of risk management are ‘empty suits’ who don’t understand the concept of risk. These people take many fat tail risks (that may ruin them) and not enough non-ruinous risks.
A ruinous risk is when you stand to lose too much. Instead, you should be taking many small risks. That is, you should not take the bad kind of fat tail risks, and you should take many risks that don’t have the power of destroying you completely.
Listen to your Grandmother
Big Data will be able to predict whether you a certain profile is likely to cheat on their taxes, but for fat tails – things that are not predictable, no amount of past data is useful.
Over half of psychology papers were unsuccessfully replicated (This is known as the replication crisis). Whereas you will be able to use 90 percent of your grandmother’s wisdom, today, and in the future. People are trying to get rid of paranoia, a quality your grandmother might have had, but that’s not very wise. Paranoia serves a useful function.
The problem with globalization is that it creates winner take all effects. Globalization concentrates wealth but makes things less fair. What will balance it out is speed. Companies take much less time to grow today, so we should be seeing wealth change hands more rapidly than in the past.