lowprobabilityhighimpact
Low-probability high-impact (LPHI) events are events with a small probability of occurring but consequences that are disproportionately large relative to the likelihood. The term is used in risk management, finance, engineering, and policy analysis to describe tail risks that are not well captured by standard models. In some literature they overlap with the idea of black swan events, though black swans are sometimes defined as unpredictable and beyond historical experience. The term lowprobabilityhighimpact is used in some writings as a compact label for this concept.
Because such events lie in the tails of probability distributions, they can dominate risk assessments even
Historical examples include major financial crises, large-scale natural disasters, or geopolitical shocks that were unlikely but
Management responses include diversification, redundancy, fail-safes, insurance, and investment in monitoring and early warning. Governance approaches