Black Swan: Definition

I have always been curious about the Black Swan concept. Then it dawned upon me that when you look at yourself and the strange events that follow nothing in the past can convincingly point to its possibility. It becomes a unique total internal reflection. I think this concept should have practical applications in the colored stone and diamond industry. Black Swan is a one hundred carat statement + it's priceless.

Business World spoke to Nassim Taleb. Excerpts from the interview:

What is a Black Swan?
Medieval Europeans had only ever seen white swans. In fact, any impossible event was termed a ‘black swan’. So, when the first settlers reached Australia, they were shocked to find black swans all over! Taleb's black swans are those events that were once thought impossible, but when they occur, hit hard. In this extract, he writes about how we create narratives after ‘black swan’ events; making them seem predictable after they occur.

Why are black swans important?
People say “Taleb wants us to worry about meteorites hitting Earth.” I want to help people navigate in a world where we don’t have a clear understanding of reality. Black Swan is essentially a map of how to deal with such a reality. The book distinguished between [two imaginary places] Mediocristan and Extremistan. In Mediocristan, variations in any sample do not result in large deviations from the average. The question, then, is which domains or areas have highly consequential variables? These places are Extremistan.…What are some of the classic examples of black swan events? A classic black swan event is the First War (World War I). It was not as predictable as people believe it was. Then you have all this technology — computers, lasers. Their future uses could never be predicted when they were invented.

Wired also interviews Nassim Taleb:

With better models and more computational power, won't we get better at predicting Black Swans?
We know from chaos theory that even if you had a perfect model of the world, you'd need infinite precision in order to predict future events. With sociopolitical or economic phenomena, we don't have anything like that. And things are getting worse, not better, because the growing complexity of the world dwarfs any improvement in sophistication or computational power.

So what do we do? If we can't forecast the really important things, how do we act?
You need to ask, "If the Black Swan hits me, will it help me or hurt me?" You cannot figure out the probability of a Black Swan hitting. But if you're in a business that's prone to negative Black Swans, like catastrophe insurance, I advise you not to take your forecasting seriously — and to think about getting into a different business. You don't want to be a sucker. What you want are situations where you can have as much of the good uncertainty as possible, where nothing too bad can happen to you, and where you have what I call free options. All of technology, really, is about maximizing free options. It's like venture capital: Most of the money you make is from things you weren't looking for. But you find them only if you search.

Wikipedia has more on Nassim Taleb.