This article is written by Josip Matesic, Policy Officer at the Department of Infrastructure, Transport, Regional Development and Communications. The opinions in this article reflect those of the author solely and not any affiliated organisation.

Financial crises, environmental disasters, terrorist attacks, even pandemics.

All of these events seem impossible until they happen. Then, in hindsight, they seem utterly predictable. Their impact can reshape society in profound ways. These are so-called ‘black swans’.

Many public servants are beginning to look beyond the disruption and chaos of 2020 to ask: how do we rebuild our services for a new society? In doing this, we must think about ‘black swan events’. How they impact different areas of society and what we can do to make ourselves more resilient.

Houses built on sand

The term ‘black swan events’ has been popularised in recent years by the mathematician Nassim Nicholas Taleb to describe events that have three properties.

First, the event is a surprise. Second, it has a significant impact. And third, with the benefit of hindsight, the event is rationalised as having been predictable to some extent. Another way to state this is that a statistical outlier occurs and its impact is so great that it changes society in some way. Once it has happened, we think of ways that we could have predicted it. These events have the frustrating quality of being completely unforeseeable, yet so predictable when we look back.

The effects of the coronavirus show that we need to be thinking of outlier risks, even for events that have happened but not for a long time

While the term ‘black swan’ in reference to an impossible or highly unlikely event has origins in Roman times, it was popular in Europe in the middle ages, as a black swan was unthinkable due to all known swans being white. However, the discovery of a single black swan in Australia unravelled that entire belief system. Taleb uses the term to show how one event can collapse an entire structure of thought due to a single, unforeseeable piece of evidence proving a critical assumption to be incorrect.

The important point here is that we cannot rule something out just because we haven’t seen it yet. And this is the way that we should think about policy. Black swan events are important because even if there is a low probability of the event occurring, if it does happen, the consequences are tremendous. In the worst case scenario, there could be rapid and chaotic change.

Taleb does not believe that Covid-19 is a black swan event because pandemics have happened before with some regularity. Nevertheless, we can use it as a case study to think through some of the key issues.

Thinking the unthinkable

We can say that a pandemic is predictable but not, perhaps, all of its consequences.

Take employment policy, for example. At the beginning of the year, it would have taken a black swan event to cause the complex and widespread employment issues we face now. From top athletes and musicians to low-wage service workers, virtually everyone’s employment has been affected, including lower pay and new patterns of working (which have their own spill-over effects for communities and social wellbeing). Which employment policy specialist was seriously thinking about issues of this scale and breadth just nine months ago? The likely answer is no one was as such a confluence of events was so unlikely.

The key take-away from black swan events is that, as public servants, we need to think about what we would do if the unexpected were to happen

The effects of the coronavirus show that we need to be thinking of outlier risks, even for events that have happened but not for a long time. As public servants, we need to dedicate appropriate time and resources to think about potential black swan events on the horizon and their impact on the communities we serve.

If you’re an environmental officer, what impacts do border restrictions have on food supply and what are your contingency plans? Health specialists, are your services thinking about the long-term after-effects of Covid-19 on your community? Transport officials, how resilient is your fuel supply in the face of natural disaster or war? What are the longer-term consequences of large-scale infrastructure programs, both positive and negative in case they are under-utilised or the necessary demographic changes don’t eventuate?

Be ready for anything

The key take-away from black swan events is that, as public servants, we need to think about what we would do if the unexpected were to happen.

Because outlier events do happen – we just don’t know when, where or how. We need to think about how our services are designed in order to cope with significant unexpected events.

Could any middle-ranking service manager in Beirut predict that their port would explode with 3,000 tonnes of discarded ammonium nitrate? Probably not. The idea that there would be such devastating destruction to the city due to such negligence was unimaginable. Yet, it happened.

Our job is to ensure that black swan events do not have as much of a disastrous impact as they have the potential to do. And, just as importantly, to learn from them when they do happen, in order to build more resilient societies for the future.  — Josip Matesic

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