What is a black swan event?
6th Jul, 2022
A study by the Reserve Bank of India (RBI) has spoken about the possibility of capital outflows of about $100 billion from India in case of a major global risk scenario called as “black swan” event.
- The black swan theory was put forward by author and investor Nassim Nicholas Taleb in 2001.
- The term originated in lieu of sighting a rare black swan in Australia. Earlier to which Europeans believe that only white swans exists in the world.
- Thus this event is named so, as a remark of an unprecedented event.
- The First time it had noticed in 2008 as global financial crisis– a black swan event triggered by a sudden crash in the booming housing market in the US.
- The fall of the Soviet Union,the terrorist attack in the US on September 11, 2001, also is considered as a Black swan event.
About Black swan event
- A black swan is a rare, unpredictable event that comes as a surprise and has a significant impact on society or the world.
- These events are said to have three distinguishing characteristics – they are extremely rare and outside the realm of regular expectations.
- They have a severe impact after they hit and they seem probable in hindsight when plausible explanations appear.
Criteria to call an event as a ‘Black swan’
- Unpredictability of the event
- Loss at global level or a regional level at a whole
- Its effects can be seen