The probability of experiencing a financial crisis within one…

The probability of experiencing a financial crisis within one year of entering the red zone is over 13%, compared to a 4% probability in the entire dataset. Remarkably, the probability of entering a financial crisis within three years of entering the business red zone is 45% and an astounding 69% in the rare instances when both the household and business red zones are breached.

— from Takeoff Into Chaos · Humble Investor: How to Find a Winning Edge in a Surprising World by Daniel Rasmussen

In the book

Keep a margin of safety wide enough to absorb roughly twice the worst case you can imagine; in any environment where a single rare event can sink you, the first rule is to limit the downside, not to chase the upside. We reliably underestimate both how possible and how severe the high-impact events are — and the data backs the caution, since the odds of catastrophe climb sharply once a system has drifted into its danger zone. Accept, too, that there is no clean escape, only trades: as Thomas Sowell said, there are no solutions, only tradeoffs. — Takeoff Into Chaos

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