A black swan is a high-impact, hard-to-predict and rare event that is beyond the realm of normal expectations in history, science, finance and technology.

• Define your strategic assumptions. These assumptions are management’s ‘view of the world’ for the duration of the strategic planning horizon. They pertain to such attributes as the enterprise’s capabilities, competitor capabilities and actions, customer preferences, technological trends, capital availability, availability of reasonably priced raw materials, sustained business operations, and regulatory trends, among other things.

In effect, strategic assumptions are management’s ‘white swans’ because they reflect management's view of the environment in which the enterprise will operate during the planning horizon.

For example, as we look at the strategy typical of some financial institutions that had difficulty as a result of the financial crisis, we might sum it up as a strategy of leveraging cheap money to achieve volume and speed in lending to the low-income housing sector. Assumptions underlying that strategy included increasing or stable housing prices, continued availability of cheap money and continued economic growth, among other things.

• Develop contrarian statements. These statements negate the strategic assumptions. If the strategic assumptions are management’s ‘white swans,’ the related contrarian statements are potential ‘black swans.’ They frame the impact that could seriously damage the company’s ability to execute its strategy.

• Recognize that not all contrarian statements are black swans. Look for the statements that are likely to have the greatest impact on the company if they were to transpire. These statements should reflect situations that would likely arise from events about which the organization currently lacks sufficient information and that management would likely rationalize after the fact as: “Why didn’t we see it coming?”