What characterizes a "black swan event"?

A "black swan event" is characterized by its unpredictability and the significant financial impact it can have. The term, popularized by Nassim Nicholas Taleb, refers to rare and unforeseen events that are beyond the realm of normal expectations in financial markets and can lead to severe consequences. These events are often rationalized in hindsight, making them appear less random than they truly are.

In this context, the correct description emphasizes how these events cannot be anticipated based on historical data, yet when they occur, they have far-reaching effects. Events such as the 2008 financial crisis or the COVID-19 pandemic are examples of black swan events that caught most stakeholders by surprise, leading to significant changes in economic and financial landscapes.

Other options describe aspects that do not align with the nature of black swan events. Predictable and manageable risks imply a level of control and foresight which contradicts the very essence of what a black swan represents. Similarly, suggesting a small financial impact does not capture the reality of the massive repercussions that such events typically bring, while commonly occurring market fluctuations are far too regular and expected to fit the definition of a black swan event.