Margin of Safety
Margin of Safety is a risk management principle originating in civil engineering and popularized in investing by Benjamin Graham that involves building a buffer between your assumptions and the point at which those assumptions failing would cause harm. In investing, it means buying assets at a significant discount to their estimated intrinsic value. In engineering, it means designing structures to withstand loads far greater than expected. The core insight: because our estimates are always uncertain, the buffer between our estimate and the failure point determines how wrong we can be and still survive.