Handling a Black Swan


A black swan. Have you ever seen one?

First of all, I am not here to discuss anything about fowls ladies and gentleman, but I am here to share with you a theory which I hope you will find informative and useful.

The Black Swan Theory was developed by Nassim Nicholas Taleb, a Lebanese American essayist and scholar whose work focuses on problems of randomness, probability and uncertainty. The theory explains the occurrence of rare, hard to predict and high impact events – ranging from history, big scientific discoveries, world wars, artistic accomplishments, and economics, hence “black swans” – undirected and unpredicted.

If you’re wondering why it is called a black swan, well, it was reported centuries ago that swans have white feathers, so the existence of a black swan is impossible. It was only when an expedition in Western Australia was made in 1697 that a black swan was seen and recorded. In that context then, there is a possibility that conceived impossibilities do exist. Hence, black swan events.

Now, how do we spot a Black Swan? Coming straight from Mr. Taleb himself in a news article in The New York Times,

What we call here a Black Swan (and capitalize it) is an event with the following three attributes.

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives.

Well, it is safe to say then that black swan events are those occurrences that catch us off-guard. To relate this to our lives, these black swans are events that shake and break us, leaving us shattered. This maybe a heartbreak, separation from a loved one, an unexpected death, or winning the half a billion lottery prize only to find out that one number was incorrectly declared therefore, forfeiting your win! You get the picture.

Ah sweet life, how to cope? Well, Mr. Taleb said that we should build robustness against an event’s negative side and exploit the positives of it. Let’s be prepared and optimistic. Everything in this world changes, it’s the only constant thing. We cannot stop these things from happening but we can be prepared for the blow. After the blow, what do we do? Be optimistic. We should look into the bright side, for it is the side that is worth looking at, and the only side that will work against misery. It’s so weird for me to be speaking about this coping thing, because truth be told, I am on the pessimist shade. But that is what we have to do, cope and exploit the positives. There always is a positive side. Negative and positive work together, like in a battery. It will work if you know how to make them work.

(If you want to know more about Mr. Taleb’s theory and work, here are some pages you may want to check out. 🙂

Time Magazine interview by Tim Morrison

Nassim Nicholas Taleb’s Homepage

Youtube

(The beautiful black swan photo is from Mr. Peter Riley, available in his website, Vida Luminosa.

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3 thoughts on “Handling a Black Swan

  1. I like the sound of this a lot. I think we are so used to the positives that when something negative happens we become unsure of how to deal with it. My take on negative events as mentioned above is to see the positive side and the element of personal development that they provide. It makes us stronger and more adaptable so that we keep moving and growing in life.
    Thank you very much for this

    • Very wise! Thanks for sharing your thoughts, Aisha, I completely agree with you. Thanks for visiting my blog and please continue to do so. 🙂 Have a good day! 🙂

  2. Vida Luminosa says:

    A very interesting article. We live in a world of optimism and positivism … it is said this is a form of self hypnosis where the reality of life is often completely denied. Perhaps it is too painful for humanity to pay attention to those events in our (collective) lives that proceed contrary to the magical thinking so many of us worship.

    By the way, in Chile, the swans are half black and and half white! An event that could only happen there in that wonderful country 😉

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