Scott Patterson's Chaos Kings, Part 2

In this podcast, Scott Patterson engages in a thought-provoking conversation with Nassim Nicholas Taleb, the author of *Chaos Kings*. They explore Taleb's unique perspective on risk management, highlighting how it differs from traditional approaches. Taleb argues for prioritizing robustness and "clipping the tails" of extreme events instead of attempting to predict them. He shares his disagreements with academics and complexity theorists who rely on predictive models. The discussion also covers Taleb's influences, including Mandelbrot and Kahneman, as well as his critiques of standard risk management practices in finance. He warns about the dangers of overlooking "fat tail" events, especially in the context of pandemics and the misuse of derivatives. Additionally, they examine the 2008 financial crisis as a key example of the shortcomings of predictive models and how Taleb's strategies, particularly through Universa, proved effective.