The meaning of the "black swan" phenomenon in finance

The term “black swan” was introduced by thinker Nassim Nicholas Taleb in his famous work to describe extremely rare and unpredictable events. In the book, Taleb emphasizes that traditional statistical models and risk assessments often fail to accurately capture these extreme occurrences. The reason is that they are based on past data, while “black swan” events have never occurred before, making them unpredictable.

Taleb emphasizes that past experiences do not guarantee safety for the future. He warns that when faced with the unknown and uncertainty, people often make logical errors and tend to create their own assumptions and interpretations. This leads them to believe that they can understand and control the situation. However, Taleb points out that “in the real world, most changes are nonlinear and do not occur smoothly.”

The Origin of the Term “Black Swan”

The term “black swan” has long been used to refer to events that seem impossible to occur. This belief originated from the long-standing conviction among Europeans that all swans are white, and thus they assumed that black swans did not exist. However, the discovery of black swans in Australia overturned these expectations as well as the prevailing theories, becoming a classic example of unpredictable events.

Moreover, the very image of a “black swan” carries significant visual power. It easily evokes in people's minds rare, unexpected, and unpredictable events. This aligns perfectly with the concept that Taleb wants to convey in his book, which is why this term has become so popular and memorable.