Black Swan Event

The term was popularised by writer and former trader Nassim Nicholas Taleb in his 2007 book The Black Swan. It comes from the old European belief that all swans were white, which was overturned when black swans were discovered in Australia, showing how a single observation can disprove a widely held assumption.

Taleb described black swan events as having three features: they are outliers, beyond what normal expectations would suggest; they have an extreme impact; and after they occur, people create explanations that make them seem predictable.

Events often described as black swans include the September 11 attacks and the 2008 financial crisis, although Taleb and others have debated whether some of these were truly unforeseeable, since some people had warned of the risks beforehand.

The concept highlights the limits of risk models that rely on past data and assume normal distributions. Rather than trying to predict black swans, Taleb argued that individuals and organisations should build resilience, avoiding excessive debt, maintaining buffers and making sure they can survive unexpected shocks, and even position themselves to benefit from them.