Human cognition has evolved to detect patterns and assign causes, yet it fails when outcomes are driven by randomness. We often confuse outcome with skill, and the absence of consequence with the lack of danger. This cognitive blind spot shapes high-stakes decisions around money, health, investment, and safety, with costs that remain invisible until a Black Swan strikes.
The Dimensional Mismatch in Risk Assessment
Most of us observe outcomes in one dimension alone – success or failure, but those outcomes are determined by two independent forces – the effort invested in managing risk and the randomness actually encountered.
When randomness dominates a domain, survival can validate recklessness, while caution appears to be an overcorrection.
Consider two motorcyclists at a red light. One waits calmly, steady and upright. The other keeps revving the engine and looking for gaps. When the light turns green, the cautious rider hesitates for a moment, drawing impatient honks. The aggressive rider launches forward with confidence. Instinctively, as an observer, we assign labels to them – competence to one, clumsiness to the other. Even though nothing actually happened – no accident, no heavy consequence. Still, the mind treats mere survival as proof of skill and hesitation as evidence of incompetence.
This same faulty logic shapes consequential reasoning: “Why buy medical or life insurance? I don’t need them.” Meanwhile, being cautious and diligent may still face everyday challenges, leading to the conclusion that careful planning changes nothing.
The Survivorship Problem
The pattern is survivorship bias. We see only those who took risks and survived, the ones still here to tell their stories. Those who crashed – physically, financially, medically, or emotionally– become subtle evidence and are missing from our perspective. Our minds mistake the visible sample for the whole picture, forgetting that what we observe is the group that survived selection, not the population that faced it.
A friend once told me, “I never keep an emergency fund. Money should always be invested – cash sitting idle is a waste.” He lived that philosophy to the fullest: the latest gadgets, an expensive car, a big house. His real estate portfolio has grown. Every day proved that he was right. He felt smarter than those who held conservative views.
Then his father needed emergency surgery. As a stopgap, he took a personal loan at a high interest rate. Those who kept emergency funds didn’t grow wealth faster, but they avoided panic.
The Asymmetry of Attribution
Nassim Taleb identifies the pattern precisely: “Remember that nobody accepts randomness in his own success, only his failure.”
The person who speeds through traffic for years without incident is called a skillful driver. The investor who never faced a liquidity crunch builds a similar myth. Similarly, in the technology industry, leaders often equate a lack of outages and a narrow set of use cases with an illusion of architectural maturity. Real resilience only shows up when scale rises, threats hit, and deadlines compress – when new features must ship faster than architecture wants or can evolve.
The statistical distribution remains silent until a Black Swan hits. And by then, the lesson applies only to observers, not to the one who paid the price.
Why Preparation Matters Despite Randomness
A natural question arises in your mind: if randomness shapes outcomes, then why prepare at all, i.e., why save for emergencies, why drive cautiously, or why save for thinking long term? Why do the reckless so often walk away fine? The only plausible response is that preparation doesn’t cancel uncertainty. Instead, it increases the margin of safety between everyday life and irreversible disaster.
Life Insurance, Medical Insurance, Emergency Funds, Liquid savings, and safety margins don’t control chance; they create resilience against it. The reckless motorcyclist benefits from luck. The no-buffer investor benefits from continuously rising markets. But both live at the mercy of variance.
The Invisible Nature of Catastrophe Prevention
Modern systems, including markets, traffic, health, and finance, contain randomness so large that it can hide its own consequences. What we cannot naturally see are: the crashes that didn’t happen because of caution; the personal or corporate bankruptcies that never occurred because of buffers; and the emotional trauma that was prevented because liquidity existed.
Preparation makes catastrophes invisible, which is why it rarely earns applause. Taleb’s point is a reminder that the winners we see are often beneficiaries of randomness, not just brilliance. The real skill is staying in the game long enough that luck has fewer chances to ruin you.
The reckless motorcyclist may arrive first. The emotional investor may boast loudly; however, the disciplined investor arrives reliably and remains able to play the game in the future. Over a long enough duration, that distinction matters more than any single instance of apparent skill.