An Overview of Black Swan Events

By Hans Overturf

IntroductionHans Overturf, a private investor with OFS based out of Tiburon,

California, enjoys reading in his free time. Hans Overturf is especialy fond of the works of Nicholas Taleb, author of The Black Swan.

Nassim Nicholas Taleb is a statistician and risk analyst who has authored a number of popular essays and books, most notably The Black Swan. Published in 2007, the titular theory can be defined as a surprising event that leaves a large and lasting impact. Due to the unexpected nature of a specific event, individuals and groups often attempt to make sense of a black swan years and even decades later. The black swan theory can be utilized in virtually all realms of life, ranging from business to history, while drawing on pre-established tenets of philosophy and statistics such as problems of induction and outliers.

Black Swan EventsTo be considered a black swan, an event must meet

three criteria. The event must come as a surprise, at least from the point of view of the observer. The impact of the event must be widespread and far-reaching. Finally, and most importantly, the event must later be rationalized through hindsight. In other words, observers speak of the event as if it were not a surprise and that all evidence available indicated the event was possible, but was simply overlooked. Some examples of black swan events include story of the Maginot Line prior to World War II and the sudden rise of the Internet.