Overview
Black swan theory, popularised by Nassim Nicholas Taleb (2007), takes its name from Europeans’ belief that all swans were white until black swans were found in Australia. A black swan is (1) rare and outside experience, (2) of extreme impact, and (3) explained in hindsight as if predictable. The 2008 financial crisis is often cited; whether an event qualifies depends on the observer. Unlike a gray rhino (Wucker, 2016) — an obvious threat ignored — black swans call for robustness: diversification, buffers and avoiding excessive leverage.
Frequently asked questions
- Can black swans be predicted?
- By definition, hardly — so build resilience instead.
References
- Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House.
- Taleb, N. N. (2001). Fooled by Randomness. Texere.
- Wucker, M. (2016). The Gray Rhino. St. Martin’s Press.