Black Swan Events Are the New Normal: How Founders and Investors Can Prepare

What is a black swan event?

A black swan is a rare, highly impactful and unpredictable event, a term popularised by Nassim Nicholas Taleb in The Black Swan. They range from natural disasters to geopolitical shocks to technological breakthroughs. Two traits define them: very low probability and very high impact. Common examples include 9/11, the 2008 financial crisis and COVID-19.

Why do they seem to happen more often?

• More interconnection. An event in one region can spread to others fast, so seemingly isolated shocks have far-reaching consequences.
• Faster change. Technology and shifting economics make once-unlikely events more plausible.
• More complexity. More interdependent systems make consequences harder to predict and manage.

Strictly speaking, not every event below is a textbook black swan — some were more foreseeable than they felt. But the lesson is the same: shocks arrive faster than forecasts. (Written in February 2023.)

Recent shocks in the economy

• The COVID-19 pandemic: global downturns and widespread job losses.
• The 2008 collapse of Lehman Brothers: a catalyst for the global financial crisis.
• The 2016 Brexit vote: new uncertainty for UK businesses and investors.
• The US–China trade war: disrupted supply chains.
• The 2014 oil price crash: oversupply and falling demand.
• The March 2021 Suez Canal blockage: a single stuck ship delayed global trade and raised costs.

Why are risky markets like crypto even more exposed?

Crypto prices are volatile and driven by regulation, security threats and speculation. Investors also face fraud, from Ponzi schemes to phishing and fake ICOs. Recent shocks include:

• Bitcoin’s surge to nearly $20,000 in 2017 and crash to around $3,000 within months.
• The 2014 Mt. Gox hack, among other exchange breaches.
• The 2017 ICO bubble, when many projects failed for lack of oversight.
• China’s 2019 ban on crypto trading.
• The 2020 rise and fall of DeFi.
• FTX’s collapse in November 2022, which pushed the market below a $1 trillion valuation.

How can founders and business owners prepare?

• Build a strong foundation: solid finances, diversified revenue, good relationships with suppliers and customers.
• Write a contingency plan: what you do if demand drops suddenly or supply chains break.
• Stay informed about events and market trends to spot threats and opportunities.
• Stay flexible and willing to pivot.

How can individual investors prepare?

• Diversify across stocks, bonds and real estate.
• Stay informed about the economy and markets.
• Keep a long-term perspective; shocks are often short-term disruptions, so avoid impulsive decisions.
• Hold an emergency fund so you never have to sell investments at a loss.

You can’t predict a black swan. You can be the kind of business or investor that survives one — and sees the opportunity afterwards.