Earth in the Balance, Humankind on the Edge: Nathan Myhrvold
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June 22 (Bloomberg) -- Complacency is baked into ourspecies. We can’t resist thinking that recent experience definesthe future. Give us a run of good luck, and we are apt to turnthat into an implicit expectation that our luck will continue --even that we are entitled to it.
This kind of thinking was instrumental in the run-up to thefinancial crash of 2008. Too many private and publicinstitutions assumed that an extraordinary run in prosperity,particularly in the real estate market, was just normal. Itdidn’t occur to them that things could go so wrong. Even whentoken stress testing or risk assessment was done, it largelyexcluded the possibility of a bad shock or a protracted slump.Risk wasn’t systematically measured; it was ignored.