One important thing to remember is that in a…
One important thing to remember is that in a heavy-tailed environment, it is crucial to limit the downside risk.
— from Takeoff Into Chaos · Practical Uncertainty: Useful Ideas in Decision-Making, Risk, Randomness, and AI by Hossei
In the book
The grown-up response is not blind optimism but intelligent humility about risk. 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. — Takeoff Into Chaos