@article {Goldbergjsf.2020.1.108, author = {Martin J. Goldberg}, title = {Why We Tend to Be Unprepared for the Inevitable Next Disaster}, elocation-id = {jsf.2020.1.108}, year = {2020}, doi = {10.3905/jsf.2020.1.108}, publisher = {Institutional Investor Journals Umbrella}, abstract = {It is human nature to be unprepared for rare catastrophic events. Human nature includes inclinations towards optimism, optimizing for best performance if nothing changes, linear thinking, innumeracy, inertia, greed, a desire to fit in with the crowd, and myopia. Thus, being prepared for an unknown future disaster of an unknown type requires going against human nature.TOPICS: Risk management, legal/regulatory/public policy, behavioral financial theoryKey Findings{\textbullet} Human nature has not changed since modern humans evolved.{\textbullet} Myopic linear thinking, inertia, greed, and social pressure lead to optimizing for what would be the best results if conditions never changed.{\textbullet} Resiliency when conditions change requires actively preparing for events that may never happen, which is rarely part of human nature.}, issn = {1551-9783}, URL = {https://jsf.pm-research.com/content/early/2020/09/03/jsf.2020.1.108}, eprint = {https://jsf.pm-research.com/content/early/2020/09/03/jsf.2020.1.108.full.pdf}, journal = {The Journal of Structured Finance} }