Need to be ready to prevent any ‘black swan’ event, says FM

Need to be ready to prevent any ‘black swan’ event, says FM

Subject : Economy

Context:

The FM recently referred to the future of finance as VUCA-volatile, uncertain, complex and totally ambiguous, she also said that one has to think within the available parameters and “be ready to prevent any black swan event”.

Concept:

Black Swan event?

Nassim Nicholas Taleb, a former Wall Street trader, in his book ‘The Black Swan: The Impact of the Highly Improbable’ formulated the black swan theory.

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.

Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.

• Is so rare that even the possibility that it might occur is unknown
• Has a catastrophic impact when it does occur.
• Is explained in hindsight as if it were actually predictable

There are no limitations in the way a Black Swan event can manifest itself. It could be anything from a natural disaster to a war, a financial crash or the outbreak of a virus.