What is a Black Swan?

TL;DR

Black Swan events are unexpected, impactful occurrences that can only be explained after they happen, and project managers should stay vigilant to detect early signs of these events.

Transcript

in this video I want to answer the question what is a Black Swan no not that one this one nasi Nicholas Talib's concept of a Black Swan and its relationship with risk on projects there's a very simple very powerful classification of risks on projects there are known unknowns gaps in our knowledge things that we know we don't know and there are know... Read More

Key Insights

• 📽️ Risks on projects can be categorized as known unknowns, known knowns, hidden knowledge, and unknown unknowns (Black Swans).
• 🖤 Black Swan events are outliers with extreme consequences that can only be understood with hindsight.
• 🖤 The term "Black Swan" originated from the discovery of black swans in Australia, surprising ancient Europeans.
• 🤘 Constant horizon scanning is necessary to detect the early signs of Black Swan events on projects.
• 🕵️ Rapid reaction and preparation are crucial once a Black Swan event is detected.
• 🤍 The 2020 COVID-19 pandemic was not considered a Black Swan event, but a white swan event with predicted probability and significant impacts.
• 📽️ Project managers should stay vigilant and constantly research the project's environment to anticipate and respond to potential risks.

Questions & Answers

Q: What are the four classifications of risks on projects?

The classifications are known unknowns, known knowns, hidden knowledge, and unknown unknowns (Black Swans). Known unknowns are gaps in our knowledge, while known knowns are risks we understand with a defined probability.

Q: What are the criteria for a Black Swan event?

Black Swan events are outliers, have extreme consequences, and are only explainable after they happen with the benefit of hindsight.

Q: Where does the term "Black Swan" come from?

The term comes from the discovery of black swans in Australia, which was unexpected to ancient Europeans who believed all swans were white.

Q: Was the 2020 COVID-19 pandemic considered a Black Swan event?

No, Nassim Nicholas Taleb considers it a white swan event as it was predicted with a small but finite probability. Bill Gates also predicted a global pandemic with a coronavirus and estimated a cost of trillions of dollars.

Summary & Key Takeaways

• Risks on projects can be classified as known unknowns, known knowns, hidden knowledge, and unknown unknowns (Black Swans).

• Black Swan events are outliers with extreme consequences that can only be understood after they occur.

• The term "Black Swan" comes from the discovery of black swans in Australia, which ancient Europeans could not have predicted.