A black swan event is one that comes as a surprise and has a major effect on humanity. Here are 5 examples of what a black swan can look like.
With a high sea wall, backup generators and extensive emergency planning, the Fukushima nuclear plant seemed ready for anything. It wasn’t. On March 11, 2011 a massive tsunami struck, resulting in the partial meltdowns of three reactors
The term “black swan” was originally coined in 1697, when William de Vlamingh discovered a real one in Australia. In 2007 essayist Nassim Nicholas Taleb popularized the term when he theorized how humans try to make sense of unexpected events.
The World Trade Center
Nobody imagined that multiple commercial jet liners could be hijacked and effectively turned into missiles. But in 2011 they were, with catastrophic effect.
Defining a black swan event can be fraught with controversy. The Society for Actuaries wrote a paper on the topic, which you can download here (pdf). In essence, if you can predict it, it’s probably not a black swan.
The Collapse Of The Soviet Union
Low probability and high impact are the hallmarks of black swans. In addition, the event becomes rationalized in hindsight, as if it could have been expected.
The Sinking Of The Titanic
Using mathematical equations or relying on events of the past to predict unlikely future events is called the ludic fallacy, according to Taleb. Such methods do not work.
Spanish Conquistadors And The Aztecs
The Spanish confounded and conquered the Aztecs between 1519 and 1521 . The Aztecs were confronted with things they had never imagined, including men riding horses, men in armor, and perhaps most devastatingly, smallpox.
The Aztecs had a tradition of trying to divine future events. But like all black swans, the conquistador threat was unimaginable to the Aztecs.
More About Black Swan Theory
Check out Nassim Nicholas Taleb’s home page for more about black swans and risk theory.
Cover image: cropped reproduction of “Chaos” by George Frederick Watts, 1875 via Google cultural institute