Black swan

Definition: A black swan is a highly improbable event that is difficult to predict and has a massive impact that changes people’s worldviews. After the event, with hindsight, people easily make sense of it, even though the event is a rare outlier. Popularised by author and risk analyst Nassim Nicholas Taleb, the term comes from an old Western belief that all swans are white, until the first sighting of a black swan challenged the idea that no swans of other colours existed.

Similar to: An “unknown unknown”, issues or problems that we are not aware we don’t know.

Examples: The September 11 attack; the emergence of Bitcoin. On the outcome of the 2016 US presidential elections, Taleb says an event that is “50-50”, or a two-horse race, cannot be a black swan.

Dirty white swan

Definition: This is an event that is surprising only because of cognitive and human biases, such as ignoring warning signs and dismissing historical events. The impact of such events can be estimated and prepared for. INSEAD professor Claudia Zeisberger and investment expert David Munro used the term to challenge the idea of the 2007 global financial crisis being an unexpected black swan event.

Similar to: Black turkey, coined by author Laurence B. Siegel, who also used it to describe the global financial crisis. A black turkey is an event that is entirely consistent with past data but no one thought would happen. 

Examples: The 1997 Asian financial crisis; the 2005 floods in New Orleans.

Red swan

Definition: A red swan is a probable event that could create a significant impact, but eventually does not happen. The term was invented by Gordon Woo, a “catastrophist” at Risk Management Solutions and the author of Calculating Catastrophe.

Examples: The Y2K Millennium bug; Mad Cow disease fatalities.

Black elephant

Definition: Mr Peter Ho, Senior Advisor to Singapore’s Centre for Strategic Futures, describes a black elephant as “a cross between a black swan and the proverbial elephant in the room” that goes ignored. The black elephant is a significant threat, risk or issue that is obvious to everyone (or the experts who give warnings), but no one wants to address or deal with it. When it becomes a full-blown problem with a high impact, people are surprised and act as if it were an unpredictable black swan event.

Similar to: Grey rhino, coined by Michele Wucker, author of The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore. She defines it as a big, dangerous event that is highly probable, “charging straight at us”, but is ignored. (The name comes from the notion of all rhinos being grey, even those that are formally named white or black.)

Examples: Post-Brexit UK, which had made few provisions for the possibility that Brexit would pass; the decline of companies such as Kodak and Blackberry with the rise of their competitors.

Boiling frog

Definition: A problem that happens or builds up so slowly that it is noticed only after it is too late. 

Examples: Climate change (e.g., the weather getting warmer or drier every year); businesses not being alert to disruptive innovation from competitors; rifts in society, such as hostility towards people of different races, religions, etc.