What about the people who are on the plane when the heavy turbulence hit and thought to themselves, “the odds are this plane won’t crash” and they happened to be in the one plane that did crash? Statistics be damned. Someone has to be ‘that person’. The one who gets hit be lightening. Who wins the lottery.

The only answer a rational individual can give is, “that’s life, it’s a weird, random jumble of atoms bumping into each other and sometimes the illusion that you call your self happens to be in the wrong place at the wrong time and has to experience the consequences.”

I would argue though that there seems to be something missing. With the infinite number of the possibilities that could happen, and the very limited number that actually do happen, one has to ask, where did all those other scenarios disappear too?

I would go so far as to say that I *fundamentally* disagree with Nassim Nicholas Taleb’s Black Swan theory when applied to recent economic events. For example, Chuck Prince, ex-CEO of Citigroup is often cited (by Fortune magazine among others) as being ‘one of the people who didn’t foresee the credit crisis’. However back as early as January 2007, he publically remarked that “As long as the music is playing, we have to keep dancing”.

To use the example of predicting the weather, lets say if you have a straight week of sunny days, would it be reasonable to say that umbrellas are no longer necessary? Chuck and quite a few other economists may not have foreseen the scale of the crisis, but they knew the credit boom was unsustainable and that a bust would surely follow the boom as sure as a thunderstorm follows a week of sunshine.

At the time though, there was little that they could do individually to persuade enough people to influence the outcome. When the outcome arrived of course, everyone ran for cover and said that it ‘was an unforeseeable black swan event’, and that throughout the entire week, no-one needed their umbrellas so they were all burned last Thursday and how could anyone have predicted rain this week and been taken seriously?

To top it off, after the crash happened some of the people ‘taken by surprise’ (and who may even have profited significantly from the bubble) even had the gall to say that those that did correctly predict the turn of events probably just ‘got lucky’, and it might just as well have not rained today, or tomorrow or the next day. In fact, it might never have rained again, perhaps. Perhaps.

This is not randomness at all, and its not about blame. It is about good old fashioned risk management — something that industries outside banking have been doing *for decades*. The problem is that when the regulator is invited to the party too, they’re not going to be thinking about a rainy day.