Dragons, black swans and decisions

Since Nassim Taleb coined black swan as an event that occurred as a complete surprise for everybody, the metaphor of the black swan has been applied to a much wider variety of events. Black swan events now comprise events that are a surprise for some but not for others, events that have a low likelihood, events that were not believed to be possible but still proved to be possible, events that were dismissed as being too improbable to worry about but happened anyway. For a decision maker the black swan problem is choosing where to put effort to prevent, or mitigate events for which there are warnings, or for which the possibility has been put forward. Does the fact that there are thousands of books written about fire breathing dragons warrant the development of an Anti-Dragon Defense Shield? The black swan may have been a surprise for Willem de Vlamingh in 1697, it was not a surprise for the inhabitants of Australia, for which the appearance of tall white humans was their “black swan event”. In this paper we explore the options available to decision makers when confronted with the various sorts of swan (or dragon) events.