How to Tame Black Swans and Prevent the Next Global Catastrophe

As humans, we tend to do well with the typical, the ordinary, the expected. We rely on experience. This — quite naturally — makes it hard for society to anticipate, prepare for, and handle a pandemic like that seen with COVID-19. And — caught off guard — a crisis then demands our full attention: Failing adequate preparation, we desperately need “all hands on deck” to improve the prospects for controlling spread of the virus, helping the sick, developing a vaccine, and handling the crushing economic fallout of this pandemic.

Our current crisis arises in part because of the virus, but in part because we live in such a fast-paced, globally connected world. Given this rapid change, given this ever-increasing connectivity and complexity, we must presume that the risk of black swan events — in general, not just pandemics — will only increase in the future.

So, how do we look ahead? Now is a good time to consider the conditions that allow black swans to breed and to find new ways to reduce the risk for society.

Sneaker waves

When I think of black swan events, I often think of the dangerous “sneaker waves” that can appear along the California coast during winter storms. Almost everyone walking on the beach will be aware of some regular rhythm of the waves, noting the typical height and seeing how far the surf runs up the beach. This simple, regular pattern fits readily in the human mind. But these winter storms also bring some risk of “sneaker waves,” which are formed when several wave crests coalesce and travel as one. These gigantic waves can flood a section of beach that — moments ago — seemed like a safe place to play; they can toss tree trunks and boulders around with deadly force and can sweep people out to sea in the subsequent rip tide.

Like other “black swan events,” we know these sneaker waves will occur but the precise timing and location are hard to predict. Still, a beachgoer with a slightly more sophisticated “mental model” can stay safer than others. Long-time coastal residents know the risk, know to never turn their back on the ocean, and they know to always have some “escape route” in mind in case they need to make a dash for higher ground.

In a similar way, society will have a better chance of survival, a better way of protecting its citizenry, if it can develop an extended range of vision, if it can find some way to develop and maintain a more complex set of mental models. And it is here — with new patterns of thought — that we must work to prepare for the next black swan.

Tackling the challenge

The challenges posed by black swan events are manifold — cognitively, as the precise timing and details of any such event are impossible to predict, and economically, as money and effort must be invested upfront, before the crisis emerges. Starting with a checklist could help us develop a more effective response to these events:

#1) Foreseeing the risk: While details of black swan events are unpredictable, we can anticipate the categories of such events, such as a financial crisis, natural disaster, or pandemic — even if we couldn’t have predicted the Great Depression, Hurricane Katrina, or COVID-19. The specifics catch us off guard and can lead to catastrophe, like the global financial crisis of 2007–2009 and the current COVID-19 pandemic. Yet, as with sneaker waves during a winter storm — history has shown that financial crises (Reinhart, Carmen M. and Rogoff, Kenneth S. (2009) This Time is Different: Eight Centuries of Financial Folly) and pandemics (Barry, John M. (2004) The Great Influenza: The Epic Story of the Deadliest Plague in History) are a recurring risk for society, and such concerns clearly belong near the top of the list. Other risks — where changes in technology may allow for new types of black swan events — may be harder to foresee. Yet some such risks belong on this list, like solar storms strong enough to disable and paralyze all electronic communication in the U.S., biowarfare, and nuclear accidents. I am sure others can add more.

#2) Ranking cost-effective ways to reduce risk: Anticipating resource needs for black swan events, and having some “blueprint” for the expected, initial response as each crisis emerges, is even more daunting than coming up with categories of potential events. We need some way to steer a middle course between two extremes. On one hand, it would be prohibitively expensive to plan for all types of black swan events. Yet, on the other hand, some risks have such historic precedence, and have outcomes so damaging, that it’s worth an upfront effort to reduce the prospect of loss.

I propose developing a “composite score” for each type of risk that would then let us see which — and how many — such black swan events could be covered via some practical set of “action plans” that society might develop. We could begin generating this composite score by multiplying “the expected annual risk” times “the cost if a crisis occurs.” In principle, this would give an expected “average annual cost” for each type of black swan event. We’d then need an estimate of the annual “cost of mitigation” (the budget that would — for example — be needed each year to reduce the risk by 50% or perhaps by 90%). It would be most attractive to focus effort on areas where a relatively small “upfront” budget had prospects for a massive reduction in expected, average, annual downstream costs.

#3) Drafting a New Social Contract: The challenge of black swan events — and many related challenges of the Anthropocene — are complex enough that it becomes fundamentally impossible for citizens in a democratic system (and even government leaders themselves) to form some independent, reliable judgment about the wisdom of each step that must be taken. Therefore, a new, or renewed, kind of social contract is necessary: Without some new level of trust and humility, without some acknowledgment of our mutual “cognitive interdependence,” there is a risk that warnings will get issued but that no one in government will have the sense to “connect the dots” and then ensure that we are properly protected.

As Rousseau noted when he published The Social Contract in 1762, there’s a paradox, a tension, when the “sovereign” must act in ways that cannot meaningfully be examined by those who have surrendered their natural rights to form the state. And so, we are stuck in a bind. We need to find leaders (within every part of the government) who have exceptional judgment, intellect, wisdom, and compassion, but we — society as a whole — must proceed without the assumption that we somehow retain the right to — ourselves — critique and judge every individual decision that our leaders make. This requires an electorate informed enough to understand the full challenge of complexity in the modern age.

#4) Asking deeper questions: The approach outlined above tends to take our existing economic system — and the accelerating rate of change in society — as “givens” and then just asks: What possible response can be added to the system so as to reduce the risk of black swan events or to limit the damage when they occur? On the surface, this approach may appear to have an advantage: It avoids the need to challenge any conventional notion of “progress.” It doesn’t worry too much about who is playing with matches; it just tries to ensure that the requisite number of ambulances and fire trucks are ready in case of emergency. Yet, depending on the number of black swans seen in the census (stage #1 above), and on the potential damage from each and on expected cost of taming them (stage #2), we may need to re-examine how these black swans multiply amidst new realms of complexity — reconsidering regulatory structures, perhaps adding new guard rails for the financial system and for technological innovation.

The next action item

Only clear, decisive action can give us some prospect for addressing the risk of black swans, and for addressing the other challenges of the Anthropocene. Only action can change the world and reduce these risks.

Several groups have been examining the risks (including The Future of Life Institute, The Future of Humanity Institute, The Centre for the Study of Existential Risk, and the Berkeley Existential Risk Initiative); and my organization, Humanity 2050, has been developing new “tools for thought” that can help us navigate the current complexity crisis and develop effective plans of action. But, collectively, much more is needed from society.

COVID-19 is a tragic reminder of the need to act now before the next black swan event. We need more resources and attention turned toward mitigating future risk.

Some days I wonder: Can we, amidst the complexity of the modern world, actually afford to take all the steps needed to ensure our survival? Can we learn to watch the waves and plan an escape route before they roll in and overwhelm us? It will take rapid, decisive action to prepare, but I remain optimistic. The warning bell has rung: Banding together, we must forge a new path amidst this complexity of the modern age.

This essay was also published on Medium.