The big lesson of 2020: Pay more attention to tail risks
We need global coalitions to mitigate the risk of events that are very unlikely but devastating all the same
In June 2019, if someone had warned us about a global pandemic that would bring the world to a standstill for months, we would’ve dubbed him or her a scaremonger, and such a pandemic a highly improbable event. Having lived through one, it now seems inevitable. Oddly, both reactions are sensible. Until it occurs, we don’t take it seriously, because the covid pandemic is a low-probability event—what we statistically describe as a tail risk. But one important lesson of 2020 is that we should take tail risk mitigation more seriously.