What is a Black Swan event?

A “Black Swan” event refers to an unexpected, rare, and highly impactful occurrence. The term was popularized by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader, in his 2007 book “The Black Swan.” The key characteristics of a Black Swan event include:

  1. Unpredictability: These events are typically unexpected and come as a surprise to most people.
  2. Massive Impact: They have a significant and widespread effect, often causing major disruptions.
  3. Rationalization in Hindsight: After the event occurs, people tend to rationalize it, asserting it could have been predicted or expected.

The term is derived from the historical belief that all swans were white, a notion that was proven false when black swans were discovered in Australia. This discovery challenged established beliefs, much like a Black Swan event challenges our understanding of the world.

Examples of Black Swan events in history include the 2008 global financial crisis, the September 11 attacks, and the sudden emergence of the COVID-19 pandemic. These events had profound effects on the world and were generally not anticipated by experts or the general public.

This page was last updated on November 21, 2023.

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