Strategies for Managing the Consequences of Black Swan Events

Abstract

The metaphor of Black Swan refers to unpredictable events, such as September 11, 2001, that happen from time to time and have enormous consequences. The phrase originated in medieval Europe during philosophical discourses, but has become widely known subsequent to the recent publication of Nassim Nicholas Taleb’s eponymous bestseller, The Black Swan: The Impact of the Highly Improbable. Currently, civil engineers deal with the impact of extreme natural and man-made (accidental or malevolent intentional) hazards for critical facilities through a risk-based approach, where risk is a function of the likelihood of event occurrence and the resulting consequences. However, Black Swan events are not foreseeable by the usual statistics of correlation, regression, standard deviation or return periods. Expert opinions are also of minimal use since their experiences are tainted by biases and constrained by finite human life span. This inability to estimate the likelihood of occurrence for Black Swan events precludes...