BLACK SWAN EVENT
Context: A study by the Reserve Bank of India (RBI) has spoken about the possibility of capital outflows to the tune of $100billion (7,80,000 crores) from India in case of a major global risk scenario or black swan event
What is a black swan event?
A black swan is a rare, unpredictable event that comes as a surprise and has a significant impact on society and the world
These events are said to have three distinguishing characteristics-
- They are extremely rare
- Outside the realm of regular expectations
- They will have a severe impact when they hit
Origin of Black Swan theory
The term itself is linked to the discovery of black swans. Europeans believed all swans to be white until 1697
The metaphor of 'black swan event' is derived from this unprecedented spotting from the 17th century. the black swan theory was put forward by the author and investor Nassim Nicholas Taleb in 2001 and later popularised in his book; Black Swan: The impact of the Highly Improbable
Previous events
- A black swan event triggered by a sudden crash in the blooming house market in the US
- Fall of Soviet Union
- Terrorist Attack in the US
