RiskPoint Analysis and Antifragile Riskpoints

July 3, 2015

 

"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better". 

 

 (Taken from Antifragile: Things That Gain From Disorder is a book by Nassim Nicholas Taleb published on November 27, 2012, by Random House in the United States and Penguin in the United Kingdom.)

 

RiskPoints are designated assets where related risk exists. The objective of a RiskPoint Analysis is to identify any RiskPoint that is fragile, and then implement EMT Solutions that will derisk them toward antifragility.  If a RiskPoint is fragile it means, when an unanticipated event occurs that could damage the asset values in a RiskPoint, those values will be damaged!  If a RiskPoint is antifragile and the same event occurs, the value of the assets will not only suffer very little damage, but in-fact may increase asset valuations. Antifragility increases asset valuation because those assets endure and may profit from black swan events. A black swan event is a major event that cannot be predicted.

 

RiskPoint Zone’s eRiskPoints technology provides rules for derisking from fragile toward antifragile, either by reducing fragility or by harnessing the antifragile. These rules provide sophisticated tests to determine where there may be more downside risk than upside opportunity.  These rules also allow an individual or business to determine objectives which may include the assumption of greater fragility for a RiskPoint riquired for more profitability. 

 

Antifragility does not require the ability to predict future events in order to achieve that state. This is very important because future events absolutely cannot be predicted! Today’s world economy is extremely fragile because of un-predictabilities caused by very complex and unstable systems.  Some of these are: 

  • Instability of governments

  • Currency volatility

  • Terrorism

  • Political extremes

  • Energy shortages

  • Climate change concerns

  • Extreme weather

  • Rapid changes in technology

Antifragility does not require that we understand how complex systems and events work, but rather how we can anticipate the results, both good and bad, and derisk to protect against or take advantage of the unanticipated events.  The antifragile not only survives but it thrives in volatility. Our proprietary RiskPoint Analysis conducted consistently will help do that.  Consistency is necessary to maintain antifragility.  Because the environment is volatile an initial RiskPoint Analysis should be reviewed and updated at least every six months.

 

What is the value of a RiskPoint Analysis that moves you from fragile to antifragile? A better question might be “What is the value of the survival and growth or your estate or business when unanticipated events occur?”

 

 

 

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