No. 62 · Risk · Systems
Margin of Safety
Build in a buffer, so that being wrong is not a catastrophe.
In the Almanac
“The Brooklyn Bridge”, 1883 · “Fukushima Daiichi”, 2011
Both stories in full, three ways to use it and where it misleads.
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Questions
What is Margin of Safety?
A margin of safety is extra capacity built in because forecasts, materials and people are imperfect. The Brooklyn Bridge's cables were designed roughly six times stronger than needed and survived faulty wire. Fukushima's defences were too low for the tsunami that came.
How do you use Margin of Safety?
To use it, keep an emergency fund, pad your deadlines, and leave slack in your schedule. Size the buffer to the stakes, and ask not just what's likely but what's possible.
When does Margin of Safety matter?
Margin of Safety is one of the 32 mental models for risk, the situations where you ask: What could go wrong, and what will I do if it does? Within that, it belongs to “Protecting yourself”, alongside Antifragility, De-Risking and Moral Hazard.
What is an example of Margin of Safety?
Two stories show it at work: The Brooklyn Bridge (1883) and Fukushima Daiichi (2011). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Margin of Safety?
Antifragility, Mr Market and Hofstadter’s Law. Margin of Safety itself comes from systems.