Black Swan Event meaning in its simplest form is an event that comes as a surprise and has a significant effect.
The Black Swan Theory - or the Theory of Black Swan Events - originated in the 2nd-century, and is thought to have been said by Roman poet Juvenal, when he would characterise somETHing as: “rara avis in terris nigroque simillima cygno”. This is directly translated to “a rare bird in the lands and very much like a black swan”. In this context, it is often thought that black swans do not exist.
The Black Swan theory was further developed by statistician and trader Nassim Nicholas Taleb. In 2007, he published a book entitled The Black Swan: The Impact of Highly Improbable, which explained and formalized the Black Swan theory.
According to Taleb, Black Swan events typically have these three characteristics:
Firstly, it is an outlier. Regular expectations are not able to predict these events happening. Secondly, it carries a huge and long-lasting impact. Lastly, despite being unpredictable at first, a Black Swan Event will always have a rational explanation concocted after its first occurrence, making such events explainable and predictable.
Some examples of previous Black Swan events are the rise of the internet, the personal computer, the dissolution of the Soviet Union, and the September 11, 2001 attacks.
