Black swan: Difference between revisions
imported>Doug Williamson (Link with new Guide to risk management page & remove link to old Risk management page.) |
imported>Doug Williamson (Link with MCT page.) |
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== See also == | == See also == | ||
* [[Guide to risk management]] | * [[Guide to risk management]] | ||
* [[MCT]] | |||
* [[Probability]] | * [[Probability]] | ||
Revision as of 16:11, 22 November 2014
Risk management.
An apparently unusual event of very high impact, particularly one which - before it happened - was believed in error to be highly improbable or even impossible.
The use of the term in finance derives from the widespread historical (and erroneous) belief in the Northern hemisphere that black swans did not exist, in the period before the common occurrence of black swans in the Southern hemisphere had been reported in the North.
The concept was popularised in a 2007 book by Nassim Nicholas Taleb - "The Black Swan" - where he summarises the problem in risk management as "the confusion of absence of evidence of Black Swans (or something else) for evidence of absence of Black Swans (or something else)".
In other words, that the existence of financial "black swans" tends to lead to the systematic under-assessment and understatement of financial risk.
