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Nice recap of the HBR (paywall) article. From the Globe and Mail… Single comment is negative, uninformed and offensive.

With risk management under fire after the recent economic meltdown its adherents failed to prepare for, corporations are reassessing how to protect themselves in the days ahead. In Harvard Business Review, Nassim Taleb, author of the best seller The Black Swan: The Impact Of the Highly Improbable, and University of London’s Daniel Goldstein and Universa Investments’ Mark Spritznagel outline six mistakes that executives make in risk management:

TRYING TO PREDICT EXTREME EVENTS

We are inept at trying to predict unlikely events – the so-called “black swans” that Mr. Taleb highlighted – such as periodic financial crises or the Sept. 11, 2001, terrorist attacks. By focusing attention on extreme scenarios, we neglect more likely possibilities, leaving us vulnerable.

Instead, companies should concentrate on the consequences of extreme events, as nuclear plants have done by shifting from trying to predict when an accident might occur to preparing for such a crisis. If a small but unexpected fall in demand could set your company reeling, rather than trying to predict the likelihood or when it might occur, pay attention instead to how it could withstand the impact.

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Regulators are going after the wrong target by trying to impose stricter rules on hedge funds, according to Nassim Nicholas Taleb, high-profile author of credit crisis hit The Black Swan.

Taking a decidedly negative view of banks, Taleb told the Hedge 2009 conference in London today that a bank is essentially “a utility with a compensation scheme”, which the public has to bail out if it fails.

In contrast, “hedge funds are a good thing” (not a phrase that is heard very often).

With the possible exception of LTCM, taxpayers haven’t had to bail out hedge funds which,

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Nov. 3 (Bloomberg) — Nassim Taleb, author of “The BlackSwan,” said “fuzzy” regulations are better than clear-cutrules in preventing future financial crises.

“People game the system because they know the ropes,”Taleb told a group of hedge fund traders in London. “The moreregulations you have, the more you make lawyers and derivativestraders rich.”