What is a black swan event?

A black swan event is unexpected and therefore difficult to prepare for but is often rationalized with the benefit of hindsight as having been unavoidable. The earliest known reference to the term black swan occurs in the Roman poet Juvenal ’s poem Satire VI, in which he describes potential qualities of a woman worthy of marriage.

What is black swan theory?

Taleb's "black swan theory" refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences.

Why are humans prone to black swan events?

Two tendencies cause humans to be particularly susceptible to black swan events. The first is creating narratives based on what is known of the past, and the second is the notion that the past is a reliable predictor of the future. Humans tend to search for evidence based on already-formed beliefs, a fallacy called confirmation bias.

Could a 'black swan' event lead to a $100 billion capital outflow?

A study by the Reserve Bank of India (RBI) has spoken about the possibility of capital outflows to the tune of $100 billion (around Rs 7,80,000 crore) from India in case of a major global risk scenario or a “black swan” event. What is a ‘black swan’ event?