What is a black swan event?

The term comes from the old European assumption that all swans were white, which was shattered when black swans were discovered in Australia. Nassim Nicholas Taleb used the metaphor in his 2007 book “The Black Swan” to describe events that are outside normal expectations, carry extreme consequences and are explained away after the fact as if they should have been predicted. Examples include the 2008 financial crisis, the September 11 attacks and the COVID-19 pandemic. Taleb argues that our models and forecasts are dangerously overconfident because they underestimate the likelihood and impact of such outlier events.