What natural and economic disasters have in common

From McKinsey quarterly:

Scientists, sometimes in cooperation with economists, are taking the
lead in a young field that applies complexity theory to economic
research, rejecting the traditional view of the economy as a fully
transparent, rational system striving toward equilibrium.

Many other scientists in the field of complexity theory argue that
earthquakes, forest fires, power blackouts, and the like are extremely
difficult or even impossible to foresee because they are the products
of many interdependent “agents” and cascades of events in inherently
unstable systems that generate large variations.

See the image below for the eerie correlation between banking crisis and earthquakes in So. Cal.

These examples indicate that power law patterns, with their small,
frequent outcomes mixed with rare, hard-to-predict extreme ones, exist
in many aspects of the economy. This suggests that the economy, like
other complex systems characterized by power law behavior, is
inherently unstable and prone to occasional huge failures.

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