Definition
Resilience is the capacity of a system to absorb shocks, adapt to stress, and maintain core functions during disruptions.
Why It Matters
It is essential for surviving unexpected tail-risk events and black swans.
Core Concepts
- Diversification as Safety: Catastrophes (pandemics, floods, wars) are usually localized. Global trade allows a society to draw on regions that are not currently affected by a crisis.
- Friend-Shoring Trap: Trading only with “friends” (close geopolitical partners) is risky because geographical proximity often means they are hit by the same shocks at the same time.