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Fires, floods and financial meltdowns: black swan events and property asset management

David M. Higgins (School of Property Construction and Project Management, RMIT University, Melbourne, Australia)

Property Management

ISSN: 0263-7472

Article publication date: 10 June 2014

835

Abstract

Purpose

In these ever challenging times, conventional property decision theory appears inadequate to deal with black swan events: those unforseen, rare and extreme natural and man-made disasters. The paper aims to discuss these issues.

Design/methodology/approach

This research maps, characterises and assesses these threats into: Known Knowns, Known Unknowns and Unknown Unknowns categories. Whereas, Known Knowns events can be managed and Unknown Unknowns events are difficult to even identify, those black swan Known Unknowns events that impact on a location, can be modelled based on available past and comparable evidence.

Findings

As a starting point, black swan management tools can utilise available prediction-based scale indices to highlight the possibility of these extreme events occurring in locations, and so form an important consideration for property asset managers in their decision-making process.

Originality/value

For property asset managers, this black swan management research attempts to identify, record and include those outlier events that directly impact on their property decision-making process. This can be undertaken by providing predictions as to the future occurrence of Known Unknown black swan events. These extreme events need to form an important part of a property asset manager's decision-making process. If overlooked, black swan events can have disastrous consequences for the valued client – building owner.

Keywords

Citation

M. Higgins, D. (2014), "Fires, floods and financial meltdowns: black swan events and property asset management", Property Management, Vol. 32 No. 3, pp. 241-255. https://doi.org/10.1108/PM-08-2013-0042

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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