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Risk and uncertainty expert Nassim Taleb shares thoughts on volatility and the global economy

Tagged: All News, Life at Sauder

Bestselling author, statistician and risk analyst Nassim Nicholas Taleb came to Sauder this week to share with the Sauder community his thoughts on volatility, uncertainty and what’s wrong with the global economy.

Taleb, who has been named one of Bloomberg’s 50 Most Influential Thinkers, spent much of the time answering questions from the audience while drawing on ideas set out in his four books.

When asked whether the global economy is currently sustainable, he was quick to answer, “No, it’s not.”

For one thing, he said there’s too much debt, adding that for centuries, civilizations that avoided debt were the most successful. He also chalked it up to a general lack of “skin in the game,” as those in power make wide-reaching decisions without facing meaningful repercussions if their plans fail.

“The lack of skin in the game has never been bigger in the history of mankind,” he said, pointing to historical leaders who led their armies into battle instead of planning them from comfortable offices.

Taleb is known for his book The Black Swan: The Impact of the Highly Improbable, which predicted the 2008 financial crisis. He explained to the audience this week that the problem with the American financial system was that it was too stable, leaving it vulnerable to the unexpected.

“Everything that’s alive likes some variability,” he said, adding that it’s better to fail early – and moderately – than to fail late, and catastrophically. He stressed the distinction between risk and volatility, saying that a lack of volatility is risky as it means being unprepared for extreme events.

Given that the audience mostly consisted of students, Taleb also turned some of his ideas into useful career advice. He said a variable career with options and volatility is often better than a stable career that’s less adaptable. A steady office job with benefits can be risky as losing that job would mean losing all sources of income all at once, he said.

A former derivatives trader, Taleb is currently the Distinguished Professor of Risk Engineering at New York University’s Polytechnic School of Engineering, and he has advised the International Monetary Fund and written about a host of topics including risk, probability, ethics, decision-making and philosophy.

Taleb’s talk was a part of Sauder’s Canaccord Learning Commons Conversation Series.