When it comes to high-impact events, there is another…
When it comes to high-impact events, there is another force that could hurt us: it is also easy to underestimate the possibility and potential severity of high-stakes events. We may be aware of their importance, but we may believe they are less likely or less severe than they really are.
— from Takeoff Into Chaos · Practical Uncertainty: Useful Ideas in Decision-Making, Risk, Randomness, and AI by Hossei
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