In the last 100 odd days, the microscopic organism, SARS-CoV-2, has sent the world running for cover. On an economic scale, COVID-19 is estimated to shave off 0.15-0.35% of Indian GDP and 0.1-0.4% of global GDP. Governments, global organisations, large industries, and central banks are frantically working on face-saving solutions, including fiscal stimuli, loan moratoriums, and forbearance of asset qualification norms.
The world is currently witnessing multiple “black swan” events, most prominent among these being the COVID-19 pandemic, which wasn’t even taken seriously a few months ago. Such black swan events are unpredictable, yet may have catastrophic consequences. The average risk practitioner uses historical frameworks and data for decision-making. In this context, black swan events pose a significant challenge, as they are neither have any historical reference frame nor are utterly benign.