From the Editor

Do You Have Skin in the Game?

By: | August 8, 2018 • 2 min read
Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

The intellect of author Nassim Nicholas Taleb is so far beyond mine that we might as well be on different planets. Nonetheless, scabrous, ink-stained, hubristic journalist that I am, (Taleb nods grimly), I’d like to credit him for a couple of concepts, one of which provides this issue’s theme.

Taleb is the author of the book, “The Black Swan,” covering events that few could say they saw coming, but which could result in massive losses — insured and uninsured. We can thank him for the theme of our August 2018 issue.

Taleb is also the author of “Skin in the Game,” which I’m currently reading. The theme of this book, from what my limited powers can deduce, is that we should take the word of non-practitioners with a big grain of salt.


Myriads of people will offer opinions, advice even, on a given topic, but in many cases, they are not doers: They have nothing at stake to govern their verbiage; they have no skin in the game.
Insurers do have skin in the game, sometimes quite a lot of it, which is why the opinions of insurance executives can be so interesting.

Thinking about whether school teachers should carry guns? Insurers already cover school districts where they do, and they can tell you why. Debating the wisdom of a new oil pipeline? The underwriters providing the backstop for the project can cite statistics to you that will wash away political conjecture and hype and at least give you some actual facts.

Call insurers conservative; call them boring. But the one thing you can’t call insurers is unengaged. They are very much engaged and care about outcomes, because they write checks with lots of zeros in them.

So then, a nod to Nassim Taleb, who gave us the theme for this issue. A nod also to insurers, because as I think Taleb would have to agree, (although he might not) they have skin in the game. &

More from Risk & Insurance

More from Risk & Insurance

Black Swans

Black Swans: Yes, It Can Happen Here

In this year's Black Swan coverage, we focus on two events: An Atlantic mega-tsunami which would wipe out the East Coast and a killer global pandemic.
By: | July 30, 2018 • 2 min read

One of the most difficult phrases to digest without becoming frustrated or judgmental is the oft-repeated, “I never thought that could happen here.”


Most painfully, we hear it time and time again in the aftermath of the mass school shootings that terrorize this country. Shocked parents and neighbors, viewing the carnage, voice that they can’t believe this happened in their neighborhood.

Not to be mean, but why couldn’t it happen in your neighborhood?

So it is with Black Swans, a phrase describing unforeseen events, made famous by the former trader and acerbic critic of academia Nassim Nicholas Taleb.

We at Risk & Insurance® define these events in insurance terms by saying that they are highly infrequent, yet could cause massive damages. This year, for our annual Black Swan issue, we present two very different scenarios, both of which would leave mass devastation in their wake.

A Mega-Tsunami Is Coming; Can the East Coast Even Prepare?, written by staff writer Autumn Heisler, profiles an Atlantic mega-tsunami, which would wipe out lives and commerce along the East Coast.

On the topic of whether the volcanic island of La Palma, the most northwestern of the Canary Islands, could erupt, split and trigger an Atlantic mega-tsunami, scientists are divided.

Researchers Steven Ward, a geophysicist at UC Santa Cruz, and Simon Day of University College London, say such a thing could happen. Other scientists say Day and Ward are dead wrong; it’s an impossibility.

One of the counter-arguments is backed up by the statement that there has never been an Atlantic mega-tsunami. It’s never happened before and thus, could never happen here. See exhibit “A” above, re: mass school shootings.

Viral Fear: How a Global Pandemic Kills an Economy, written by associate editor Katie Dwyer, depicts a killer global pandemic the likes of which hasn’t been seen in a century.

Tens of millions of people died during the Spanish Flu outbreak of 1918.

Why it could happen again includes the fact that it’s happened before. The science on influenzas, which are constantly mutating, also supports just how dangerous a threat they pose to millions of people beyond the reach of antibiotics.

Should a mutating avian flu, for example, spread widely, we could see a 10 percent drop in GDP, mostly from non-physical business interruption.

As always here, the purpose is to do exactly what insurance modelers and underwriters do; no matter how massive the event, we create scenarios, quantify possible losses and discuss risk mitigation strategies. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]