What is a black swan event?

A black swan event refers to a rare and unpredictable occurrence that has significant and wide-ranging consequences. The concept, popularized by Nassim Nicholas Taleb, highlights events that lie outside the realm of normal expectations and have a profound impact on economies, societies, or markets.

The defining characteristics include their extreme rarity and the fact that, upon occurrence, they are often rationalized in hindsight, leading people to believe they could have been expected. This underscores the idea that these events are beyond regular forecasts and can lead to major disruptions or shifts, particularly in financial markets.

In this context, the other choices do not align with the established definition of a black swan. Minor consequences do not define the nature of these unpredictable events, nor are they common occurrences; if they were, they wouldn’t be categorized as "black swan" at all. Additionally, the impact of such events extends beyond local markets, often affecting global systems or economies, further solidifying the distinction of black swan events as significant anomalies rather than localized incidents.