30 Seconds with Nassim Taleb

Nassim Taleb

Nassim Taleb

What do you see as the biggest challenge for managing risk in the real world? 

We are principally practitioners, which entails a much much more rigorous approach to risk. Academic love theories, but science isn’t about risk and survival but about what can be proved using a certain set of methods. What cannot be proved is left out.

Put the science where it belongs and know the limits of science beforehand. There are many areas where we take decisions where science cannot help, so it is foolish and UNSCIENTIFIC to be scientific about these things rather than use precautionary heuristics.

So our job is to formalize a set of rules and heuristics with clearly defined things. Before SILENT RISK nobody tried Bourbaki-style to formalize risk management by making everything clearly and explicitly defined and stating what can and what cannot be captured by “models” and what a payoff means.

Risk is not science, it is not practice, it is not probability, it is not economics, it is not statistics. Risk is RISK, a disciple on its own, with its own rigor. As a discipline it is formalization, Urgently. So my project — both real-world and anti-anecdotal — is inspired of the many historical efforts and projects aimed to instil rigor in domains that grew organically in a confused way, by starting from the basics and expanding, Bourbaki-style, in a self-contained manner but aiming at maximal possible rigor. This would be a Bourbaki approach but completely aiming at putting the practical before the theoretical, a real-world rigor (as opposed to Bourbaki’s scorn of the practical and useful, justified in a theoretical field like mathematics).

[Note BOURBAKI was a group of French mathematicians who rebuilt mathematics on formal bases.]

Who do you most respect in the risk management community currently?

To be honest, only the decision makers who emphasize that we need to worry about ruin probabilities not just variations. The blowup risk needs to be zero, otherwise the system is not sustainable. In business the chairman of Goldman Sachs said that. Same with . Among practioners-mathematicians, Ed Thorp is the most sophisticated.

What are you reading at the moment?

Russian material in probability. Some classics, and I am scouring legal theory to see how historically the scholastics defined and dealt with risk: lawyers were very sophisticated, ahead of mathematicians.

Financial crises are as old as the pyramids- there is nothing we can do to stop them.  Do you agree?

Certainly. But we have known since Babylon what makes systems survive crises.

What are you most looking forward to about hosting the real world risk management workshop at RiskMinds?

The atmosphere and feeling that people want rigor.

You can hear more from Nassim Taleb this December at RiskMinds International, where he will be running a workshop on ‘Risk Management in the Real World’.  

Download the latest programme.

Chinese Shadow Banking: Understanding KRIs and risk scenarios

This paper is written by industry practitioners of the Hong Kong Chapter of the Institute of Operational Risk and the students from RMBISA of the Hong Kong University of Science and Technology. Executive Summary Shadow banking activities have grown rapidly in recent years, especially in China. With a view to gaining a greater understanding of financial…

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Major General Jonathan Shaw joined us at RiskMinds Americas to chat about about Cyber Security, a subject for everyone in the Digital Age, especially within the Risk Management industry. How should financial services be approaching Cyber security risks? You can hear more from Major General Jonathan Shaw this December at the 21st annual RiskMinds International…

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We hit the ground at RiskMinds Insurance 2014 to get an idea from some of the leaders of the industry about what some of the emerging risks are in 2014.

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Last year we had Professor Simon Ashby, Plymouth Business School, speak about Risk Culture, and it’s growing importance in banking and insurance companies. The topic raises numerous questions; can Risk Culture be measured?  How do you define, as a top management board, the type of Risk Culture you would like to see and observe in your…

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It is hard to believe that RiskMinds International has now been around for two decades!  In 2013, we celebrated the conference’s twentieth anniversary; two decades during which some of our speakers and attendees have been regular attendees. Phil Rivett, Chariman of Financial Services Leadership Team, PwC, attended the very first RiskMinds event back in 1994,…

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RiskMinds International 2013 – A Photo Essay

After a momentous 20th Anniversary RiskMinds International event last December in Amsterdam, we look back on the highlights of the leading Conference in Risk Management.  Were you at the event?  Did we get your picture?  Why not have a flick through and see! For more information on RiskMinds, visit the website, or check here to see…

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Alden Toevs joins us at RiskMinds 2013 in our 20th Anniversary event. Alden also spoke at the inaugural RiskMinds conference, and takes a look back at how the industry has changed over the last two decades.   You spoke at the very first RiskMinds conference 20 years ago- do you have any specific memories of the event and the topics…

Norman Loayza – What impact does the World Development Report 2014 have?

This December, Norman Loayza (Director, World Development Report 2014, The World Bank) joins us at RiskMinds 2013, where he will be speaking on Risk Management and its importance for development.  Ahead of the Norman’s talk, we find out more about the results that came from the World Development Report.   What’s keeping you busy at the moment? Preparing…

30 Seconds with Nassim Taleb

Nassim Taleb

Nassim Taleb

What do you see as the biggest challenge for managing risk in the real world? 

We are principally practitioners, which entails a much much more rigorous approach to risk. Academic love theories, but science isn’t about risk and survival but about what can be proved using a certain set of methods. What cannot be proved is left out.

Put the science where it belongs and know the limits of science beforehand. There are many areas where we take decisions where science cannot help, so it is foolish and UNSCIENTIFIC to be scientific about these things rather than use precautionary heuristics.

So our job is to formalize a set of rules and heuristics with clearly defined things. Before SILENT RISK nobody tried Bourbaki-style to formalize risk management by making everything clearly and explicitly defined and stating what can and what cannot be captured by “models” and what a payoff means.

Risk is not science, it is not practice, it is not probability, it is not economics, it is not statistics. Risk is RISK, a disciple on its own, with its own rigor. As a discipline it is formalization, Urgently. So my project — both real-world and anti-anecdotal — is inspired of the many historical efforts and projects aimed to instil rigor in domains that grew organically in a confused way, by starting from the basics and expanding, Bourbaki-style, in a self-contained manner but aiming at maximal possible rigor. This would be a Bourbaki approach but completely aiming at putting the practical before the theoretical, a real-world rigor (as opposed to Bourbaki’s scorn of the practical and useful, justified in a theoretical field like mathematics).

[Note BOURBAKI was a group of French mathematicians who rebuilt mathematics on formal bases.]

Who do you most respect in the risk management community currently?

To be honest, only the decision makers who emphasize that we need to worry about ruin probabilities not just variations. The blowup risk needs to be zero, otherwise the system is not sustainable. In business the chairman of Goldman Sachs said that. Same with . Among practioners-mathematicians, Ed Thorp is the most sophisticated.

What are you reading at the moment?

Russian material in probability. Some classics, and I am scouring legal theory to see how historically the scholastics defined and dealt with risk: lawyers were very sophisticated, ahead of mathematicians.

Financial crises are as old as the pyramids- there is nothing we can do to stop them.  Do you agree?

Certainly. But we have known since Babylon what makes systems survive crises.

What are you most looking forward to about hosting the real world risk management workshop at RiskMinds?

The atmosphere and feeling that people want rigor.

You can hear more from Nassim Taleb this December at RiskMinds International, where he will be running a workshop on ‘Risk Management in the Real World’.  

Download the latest programme.

Chinese Shadow Banking: Understanding KRIs and risk scenarios

This paper is written by industry practitioners of the Hong Kong Chapter of the Institute of Operational Risk and the students from RMBISA of the Hong Kong University of Science and Technology. Executive Summary Shadow banking activities have grown rapidly in recent years, especially in China. With a view to gaining a greater understanding of financial…

Approaching Cyber Security in Risk Management

Major General Jonathan Shaw joined us at RiskMinds Americas to chat about about Cyber Security, a subject for everyone in the Digital Age, especially within the Risk Management industry. How should financial services be approaching Cyber security risks? You can hear more from Major General Jonathan Shaw this December at the 21st annual RiskMinds International…

What are some emerging risks for the industry in 2014?

We hit the ground at RiskMinds Insurance 2014 to get an idea from some of the leaders of the industry about what some of the emerging risks are in 2014.

The Growing Importance of Risk Culture

Last year we had Professor Simon Ashby, Plymouth Business School, speak about Risk Culture, and it’s growing importance in banking and insurance companies. The topic raises numerous questions; can Risk Culture be measured?  How do you define, as a top management board, the type of Risk Culture you would like to see and observe in your…

Phil Rivett: Observations from 20 Years of Attending the RiskMinds International

It is hard to believe that RiskMinds International has now been around for two decades!  In 2013, we celebrated the conference’s twentieth anniversary; two decades during which some of our speakers and attendees have been regular attendees. Phil Rivett, Chariman of Financial Services Leadership Team, PwC, attended the very first RiskMinds event back in 1994,…

Alistair Milne – Central Counterparties, what are they?

Professor Alistair Milne expands on the debate he took part in at RiskMinds 2013 on Centre Counterparties, one of the main regulatory developments since the financial crisis.  Will Centre Counterparties help solve systemic risk?  Will it address all the things the regulators want it to do?  Watch our exclusive interview with Alistair Milne for some…

RiskMinds International 2013 – A Photo Essay

After a momentous 20th Anniversary RiskMinds International event last December in Amsterdam, we look back on the highlights of the leading Conference in Risk Management.  Were you at the event?  Did we get your picture?  Why not have a flick through and see! For more information on RiskMinds, visit the website, or check here to see…

Alden Toevs looks back on 20 Years of RiskMinds

Alden Toevs joins us at RiskMinds 2013 in our 20th Anniversary event. Alden also spoke at the inaugural RiskMinds conference, and takes a look back at how the industry has changed over the last two decades.   You spoke at the very first RiskMinds conference 20 years ago- do you have any specific memories of the event and the topics…

Norman Loayza – What impact does the World Development Report 2014 have?

This December, Norman Loayza (Director, World Development Report 2014, The World Bank) joins us at RiskMinds 2013, where he will be speaking on Risk Management and its importance for development.  Ahead of the Norman’s talk, we find out more about the results that came from the World Development Report.   What’s keeping you busy at the moment? Preparing…