By Patrick W. Watson
Some things are so horrible, you don’t want to think about them.
Institutional risk managers think about “tail risks”—scenarios with very low probability. But should they happen, the consequences would be so devastating that you must plan for them.
Often this involves questioning your assumptions. What if things you believe will always be true, suddenly aren’t?
In the mid-1980s, people in the Soviet Union thought their government was, if not ideal, at least secure. Ten years later, it was gone. Former Soviet republics like Ukraine became independent countries. Everything changed.