Frontline
Beware of the Black Swans
N By Jane Lo Singapore Correspondent
assim Nicholas Taleb’s “The Black Swan: The Impact of the Highly Improbable” appeared in 2007, during the year when the Dow Jones Industrial Average index peaked at 14,164. Topping the New York Times bestseller list for weeks, Nassim Taleb’s argument that banks and trading firms were vulnerable to improbable events and exposed to losses beyond predictions modelled on standard scenarios, was however taken to be an academic one. That was, until the Global Financial Crisis imploded a year later. The collapse of Lehman Brothers, one of the oldest and largest investment banks on Wall Street; Merrill Lynch, another which verged on bankruptcy; and an incessant string of banking bail-out announcements by governments on both sides of the Atlantic sent global markets plummeting and into a period of extreme volatility. “Black Swan”, a term that describes impossibility, is derived from the presumption that 'all swans must be white', until the discovery of black swans in Australia. The Great Financial Crisis hit home the lesson that “Black Swan”- rare, unexpected but highly significant events - are much more common than we think.
36 | Asia Pacific Security Magazine
The Cyber-Physical attack on Prykarpattya Oblenergo power plant in Western Ukraine, the first cyber-physical attack since Stuxnet degraded Iran’s uranium processing capability in 2010, was an unexpected but highly significant event. At the Safety Case Symposium 2018 held in the Singapore Institute of Technology (14th March 2018, partnered with TÜV Rheinland, SITLEARN, Singapore Standards Council), with 200+ delegates from more than 10 countries, we sat down with Mike Bates (Principal Consultant, Risktec, TÜV Rheinland), to chat about risks and Black Swans in the critical infrastructure sectors. What were some major accidents in the past? There was the 2005 explosion at the third largest refinery in the US – the BP’s Texas City Refinery, triggered by the ignition of a hydrocarbon vapor cloud, killing 15 workers, injuring more than 180. In Singapore, there was the fire at Shell’s refinery off the mainland at Pulau Bukom in 2011, which began near pipelines carrying petroleum products, and took more than 100 firefighters 32 hours to extinguish. In the UK, the one that lead to the introduction of