Definition:
Unpredictable, high-impact events that deviate from normal expectations and significantly disrupt projects.
Key Components:
- Rare Occurrence: Not typically anticipated based on historical data.
- Significant Impact: Can cause severe cost overruns and delays.
- Difficult to Predict: Traditional risk analysis methods may fail to foresee them.
Use Cases/Industries:
- Energy Sector: Sudden geopolitical crises impacting fuel supply chains.
- Construction: Unforeseen regulatory shutdowns halting projects.
- Finance: Economic crashes affecting project funding availability.
Advantages:
- Raises Awareness of Extreme Risks: Encourages long-term resilience planning.
- Encourages Flexibility: Helps organizations prepare for uncertainty.
Challenges:
- Difficult to Model: No historical precedent to use for probability estimates.
- Can Lead to Overreaction: Excessive planning for unlikely events can increase costs.
Related Terms:
Extreme Risk Management, Crisis Planning, Low Probability High Impact Events
Example:
The COVID-19 pandemic was a black swan event that severely disrupted global construction projects by causing material shortages and workforce restrictions.
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Synonyms:
Extreme Risk Events, Unforeseen Catastrophes, High-Impact Uncertainties
