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Writer's pictureArk Wingrove

Covid-19: Why a black swan is in the eye of the beholder.

Updated: May 4, 2020

Until recently the concept of black swan events was largely restricted to a few specialist communities; economists, statisticians, financial traders, risk practitioners and resilience specialists. Now it seems everyone is referring to black swans, mostly as a shorthand means of discussing preparedness and resilience (or lack of) in the light of Covid-19.

That discussion has got to be a good thing….Right?

As a trainer I always manage to sneak in a reference to Black Swan Theory when discussing High Impact Low Probability (HILP) risks so that those in the group so inclined can go and find out more (to read Talab’s book or listen to one of the useful podcasts).


Significantly I also find that any training on Black Swan Theory isn’t just a case of stating the case and moving on. It almost always requires deeper understanding and application. Groups seldom see the whole concept immediately and normally have to ‘chew over’ the theory a bit – and actually the best and brightest normally more so!

The best way to get through this is often a ‘black swan or not’ discussion (it can’t really be a test as the Black Swan is itself defined through the eyes of the observer).

Taleb’s tests* for potential black swans are very useful here;

  1. It is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.

  2. It carries an extreme 'impact'.

  3. In spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable

He summarises this as the triplet of “rarity, extreme 'impact', and retrospective (though not prospective) predictability”*

Its worth applying these tests to the current pandemic. Taleb himself maintains that Covid-19 isn’t a black swan on the grounds of failing test #1 above - in fact he says it was a near certainty. Due to subjectivity, i.e. the ‘observer test’ I would respectfully submit that for a lot of people it is. But that is the very nature of the theory and highlights some of the risks of using such a handy two-word tag;

  • Are we short-cutting a complex subject into a simple label and if so what are the implications?

  • Related to this - How many people using the term actually understand the theory?

  • And for the future - What does the apparent rise in black swan events do to our background perception and processing of risk?

Interestingly Taleb followed up the black swan in his next book; Antifragile which is a call for constant review and continuous improvement of our approaches to risk and resilience, in effect to recognise more black swan events in advance and to neutralise them. Somewhat frustratingly this is not getting as much airplay. Yet.


In closing, let me try a thought experiment to take us back to the original question; If you were/are a resident of the Democratic Republic of the Congo who live with the risk of Ebola, is Covid-19 likely to be a black swan for you?

Further Reading/Listening


Contact Ark Wingrove for Infrastructure, Asset- and Risk Management courses.


Photo by Wang Binghua on Unsplash

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