Black Swan Event

A black swan event is an unpredictable or unexpected event that has a major impact. Black swan events are often catastrophic and can have a significant negative effect on businesses, economies, and societies.

The term ‘black swan’ was popularized by Nassim Nicholas Taleb in his 2007 book The Black Swan: The Impact of the Highly Improbable. Taleb defines a black swan event as an event that is ‘unpredictable, rare, and has a massive impact.’

Black swan events have three characteristics: they are unpredictable, they have a low probability of occurrence, and they have a high impact. Black swan events are often associated with negative outcomes, but they can also have positive impacts. For example, the 9/11 terrorist attacks were a black swan event that had a devastating impact on the United States. However, the election of Donald Trump as president of the United States was also a black swan event that had unforeseen consequences.

Black swan events can occur in any area of life, but they are particularly relevant to businesses and investors. Businesses must be prepared for black swan events because they can cause disruptions to supply chains, damage to property, and loss of life. Investors must be aware of black swan events because they can cause sudden and drastic changes in asset prices.