The Fourth Quadrant: A Map of the Limits of Statistics

"In some situations, you can be extremely wrong and be fine, in others you can be slightly wrong and explode. If you are leveraged, errors blow you up; if you are not, you can enjoy life." In this view, knowledge of which decision is best may not be the most important thing, but rather the ability to determine the range of possible events and their magnitudes (or acknowledging that you do not know)

Taleb says statistics fails us in situations where the magnitude of a decision matters and exceptions have long tails. Market forecasting does not work because even if you correctly predict an event will occur, you will not able to predict its magnitude. Correctly predicting "A war" is meaningless: you need to estimate its damage—and no damage is typical. Many predicted that the First War would occur—but nobody predicted its magnitude.

Taleb finishes with a few rules about how to act wisely in these types of situations.