Question
The concept of antifragility can be applied in traditional sectors like manufacturing or retail by building systems that gain from shocks, volatility, and uncertainty, rather than being harmed by them. This could involve diversifying product lines, sources of supply, and markets to spread risk. It could also involve investing in robust infrastructure and flexible processes that can adapt to changing circumstances. For example, a manufacturing company could use modular production methods that allow for quick changes in product design in response to market trends. A retail company could use data analytics to anticipate customer needs and adjust inventory levels accordingly.
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Fannie Mae was a giant government-sponsored lending facility that collapsed, sticking US taxpayers with hundreds of billions of dollars in losses. Back in 2003, a journalist showed me a secret report from a Fannie Mae employee that revealed how the corporation calculated risk: a move upward in an economic variable would lead to massive losses, while a move in the opposite direction would lead to small profits. Further upward moves meant even larger additional losses, while further downward moves meant ever-smaller increments of profit. This was a clear case of acceleration of harm, on a massive scale.
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