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Black swans defeat standardized approaches to risk management

Use Black Swan theory to adjust your company's responses to rare events


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Black Swan theory

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In this white paper, Deloitte analysts explain why modern risk management strategies failed to significantly mitigate damage from financial crises, including the 1987 stock market crash, the 1999 US dollar-to-yen crash, and the most recent financial crisis. In a nutshell, it can be explained by the phenomenon of Black Swan events. What are Black Swan events? They are those rare and extreme events that seem unimaginable before they happen, but appear perfectly understandable after the fact. Black Swan events tend to trigger all the risk models at the same time. The result is an amplified response that may be more damaging than the original risk. Learn how organizations can adjust their risk strategies to recognize and respond more appropriately to these events.

Author: Jean-Francois Haeck

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