For July 2020 only, the Kindle/ebook edition of THE GRAY RHINO is on sale for $2.99 across all digital platforms. Don’t miss this chance to get your copy of the #1 best seller in financial risk management –and even better, gift it to friends and colleagues!
If the nobody-could-have-seen-it-coming black swan metaphor was the narrative of the 2008 market meltdown, author and strategist Michele Wucker’s highly probable, obvious “gray rhino” metaphor tells the story of the crisis we are in today.
Amid the double calamities of the COVID-19 pandemic and market meltdown, both of which followed repeated public warnings that went ignored, the gray rhino has struck a chord and generated a flood of headlines around the world.
Crisis Response Journal recently called the gray rhino “A metaphor for our times.” The UK financial magazine, New Model Advisor, made the gray rhino the cover story of its new issue, relegating the black swan to a sidebar.
Nassim Taleb, who coined the term “black swan” for highly improbable and unforeseeable events, has declared on twitter and in multiple interviews, including on Bloomberg News, that the combined pandemic and financial crisis was and is not a black swan. It was neither unforeseeable nor even improbable.
Michele coined the term “gray rhino” to draw attention to the obvious risks that are neglected despite – indeed, often because of– their size and likelihood. The gray rhino metaphor has moved markets, shaped financial policies, and made headlines around the world. She introduced it at the World Economic Forum Annual Meeting in Davos in 2013, and developed a five-stage analytical framework in her 2016 book, THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore, which has sold hundreds of thousands of copies around the world and influenced China’s financial risk strategy.
Michele’s recent Washington Post op-ed challenged the tired black swan trope that has given portfolio managers and policy makers a convenient “nobody saw it coming” cop-out when they ignore obvious dangers: “Let’s trade the black swan for the gray rhino: a mind-set that holds ourselves and our government accountable for heeding warnings and acting when we still have a chance to change the course of events for the better instead of waiting for a crisis to act.” The Wall Street Journal quoted her Washington Post article, offering the gray rhino as an alternative to the black swan.
Axios, Fast Company, and The Economist’s The World Ahead podcast have adopted the gray metaphor to describe this crisis. The term also has made pandemic and financial collapse related headlines in Australia, China and Taiwan (too many articles to link), Japan, South Korea, Cambodia, Pakistan, Sri Lanka, Thailand, the Middle East, South Africa, Belgium, Denmark, France, Germany, Italy, Spain, Greece, the Czech Republic, Chile, Venezuela, Canada, and Mexico.
The black swan has been misused to normalize complacency. By contrast, the gray rhino provides an alternative that challenges decision makers to be held accountable for failing to prepare for and head off clear and present dangers.
It provides not only a new way to think about the twin pandemic and financial crises, but also a framework for how we can do a better job holding decision makers accountable when they fail to keep threats from turning into catastrophes. As Crisis Response Journal put it, the gray rhino is indeed a metaphor for our times.
The author of “IN THE TIME OF THE BUTTERFLIES” and other beloved novels recommends WHY THE COCKS FIGHT: Dominicans, Haitians, and the Struggle for Hispaniola, alongside other classic works on the Dominican Republic and Haiti, in The New York Times‘ “By the Books” column April 11, 2019:
What books would you recommend to somebody who wants to learn more about the Dominican Republic?
I always find novels a great way to understand the character, not just the content, of a culture. Dominican-American novelists who write about the island, not just the immigration experience: Junot Díaz, Nelly Rosario, Angie Cruz. Mario Vargas Llosa’s “The Feast of the Goat” owes much to the riveting nonfiction account by Bernard Diederich, “Trujillo: The Death of the Goat.” Crassweller’s “Trujillo: The Life and Times of a Caribbean Dictator.” But how can we write about the Dominican Republic and not include Haiti? We are one island, after all, sharing a history of occupation, appropriation, slavery, dictatorship and more. Michele Wucker’s “Why the Cocks Fight” is a compact history of both countries and their relationship. I also admire Madison Smartt Bell’s “Haitian Revolution” trilogy, and “The Farming of Bones,” by one of my favorite writers, the Haitian-American Edwidge Danticat. Ditto for how can we write about Hispaniola and not include most of the southern American hemisphere, and for that, the incomparable Eduardo Galeano’s books, most saliently “Open Veins of Latin America: Five Centuries of the Pillage of a Continent,” in which Haiti and the Dominican Republic figure frequently.
Wishing you all a very Happy New Year and peaceful and prosperous 2019!
Wrapping up 2018, I’m reflecting on the books I’ve read over the past year that have made the biggest impressions. They reflect a range of interests, from ruminations on the nature of risk and uncertainty, to how we classify personalities and attitudes, to a memoir of celiac disease, to a wide-ranging list of fiction.
Before he died on New Year’s Day 2015, Ulrich Beck was as close to a cult figure as a German academic sociologist could get. In the first five years after its publication, his classic book Risk Society sold more than 60,000 copies. Yes, with four zeroes. He’s not an easy read, but amid the dense academic prose in Risk Society and the later World at Risk are flashes of brilliance.
In similar tone and style, Zygmunt Bauman’s Liquid Times: Living in an Age of Uncertainty reflects on “a society impotent, as never before, to decide its own course with any degree of certainty, and to protect the chosen itinerary once it has been selected.”
Merve Emre tells the story of the mother-daughter team who invented the ubiquitous Myers-Briggs personality test, leading to the $500 million psychometric testing industry and the controversies that surround it, in The Personality Brokers: The Strange History of Myers-Briggs and the Birth of Personality Testing
In Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World, Michele Gelfand explores the cultural context of just what the title says: how wedded groups of people are to the rules they’ve set up to shape their society, and how willing they are to take risks in breaking those rules.
After she saw me put our waiter through the Celiac Inquisition as we caught up over brunch, a mutual friend of author Paul Graham recommended his memoir of learning to live with celiac disease, In Memory of Bread. His account of how he ended up in the hospital and was diagnosed is epic: an orgy of traditional bread baking (and eating) and craft beer brewing (and drinking). His baking tips are helpful. But what I really loved was how he put into words the worst part of celiac disease: the angst it causes in social meal situations. I gave it to a friend who also cannot eat wheat or other gluten products, and she loved it as much as I did before passing it on to her (also gluten-free) daughter.
When Scott Turow spoke at a recent Authors Guild event here in Chicago, I picked up a copy of his recent international legal drama, Testimony, involving the atrocities of the collapse of the now-former Yugoslavia. I’m enjoying it as much as his earlier books, which gave me a glimpse of Chicago many years before I moved here.
Two of the year’s most celebrated novels fully deserve the praise heaped on them.
Madeline Miller’s Circe, a #1 New York Times bestseller, tells the story of the witch who turned Odysseus’ men into pigs. Since my dad has a master’s in classics and I grew up on Greek and Roman mythology, I particularly loved this fresh take on the Odyssey and related myths.
The family of “Marsh Girl” Kya, the protagonist of Delia Owens’ Where the Crawdads Sing, abandons her in their home in a swamp when she is seven years old. She raises herself, furtively interacting with the townspeople until their stories intertwine. Both a mystery and coming of age story, the book benefits from Owens’ own expertise as a naturalist.
Most of the other fiction I’ve read over the past year comes from around the world.
I cannot say enough how much I loved Turkish best-selling author Elif Safak’s The Architect’s Apprentice, the story of a boy turned elephant caregiver, architect, and man, and his interactions with royalty and ruffians in Ottoman-era Istanbul. Amazing detail, characters, and plot.
Two Chinese contemporary authors explore the nature of uncertainty through the (mis) adventures of two protagonists making their way through contemporary Beijing.
Orange Prize Finalist Xiaolu Guo’s semi-autobiographical Twenty Fragments of a Ravenous Youth is the story of a plucky would-be actress who leaves her country home for a career in Beijing.
The narrator of Xu Zechen’s Running Through Beijing has just been released from prison, and has to figure out how to make a life out of air permeated by the fine yellow dust that so often descends on Beijing. He hawks pirated DVDs and tries to make sense of old and new relationships.
After my trip to South Korea late last year (with a day trip to the DMZ), I discovered several wonderful authors. Min Jin Lee’s Pachinko, a National Book Award finalist, is an epic family saga set in the wake of the Korean War, which drives the protagonists to a complicated new life in Japan.
I picked up Han Kang’s Human Acts in Seoul on the recommendation of a Korean friend who said that it was even better than her Man Booker Prize winning novel, The Vegetarian. She tells the story of the violent student uprisings that took the lives of some of her characters, exploring people’s motivations in taking extreme risks on behalf of family members, friends, and their society.
My friend also recommended Gong Ji-Young’s Our Happy Time, perhaps an odd title for a book about a suicidal young woman and a death row inmate. But it works. The subject interested me in part because I’d heard about Korea’s high suicide rate, but what made the book work was the portrayal of the struggles of the main characters.
And from Japan, Keiko Furukura, the title character of Sayaka Murata’s Convenience Store Woman, is a singular personality, probably somewhere on the spectrum. An unlikely but welcome heroine, she breaks with social expectations and makes her own way through life in Tokyo.
I’ll be continuing my literary tour of the world in 2019 and am looking for books to add to my list. What books have moved you recently?
This article is part of my new weekly series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections.
Click the blue button on the top right hand of this page to subscribe to “Around My Mind” and get notifications of new posts. Please don’t be shy about sharing, leaving comments or dropping me a private note with your own reactions.
Subscribe to my new weekly LinkedIn series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections. I’ll show how the topics I ponder connect in sometimes surprising ways. Many of my musings will relate to gray rhinos –the obvious yet neglected risks we face but often ignore not just despite but because they are so obvious. I’ll also spend a lot of time considering markets and the global economy; the Fourth Industrial Revolution and the future of work; immigration and demographic change; policy ideas big and small; cultural attitudes toward risk; and how the human mind works –and how these play out in both day to day life and in business and around the globe. SUBSCRIBE HERE.
How do we get from Point A to Point B? Not just a particular A to B, but in general. Do you think of yourself of taking a linear or meandering path?
The answer might not be as, well, direct as you might think.
As a journalist and policy analyst, I long thought of myself as taking the rational, direct approach. Yet there have been many times when this strategy led me only to butt my head against a brick wall. By necessity, I had to learn to go around, particularly when working across cultures. For someone with a Midwestern background that prioritizes order and frowns on uncertainty, it was an acquired skill, to put it kindly.
As I’ve spent more and more time in Asia, particularly since China has incorporated into its financial risk strategy the gray rhino metaphor I coined for obvious but neglected dangers, I’ve realized two important things. First, my approach to problems is very different from most Americans. Second the Western ideal of rationality is not as rational as we’d like to think; it’s more of an illusion.
My gray rhino metaphor makes the simple point that we need a fresh look at the obvious because humans tend to tune out ever-present risks and thus are surprisingly vulnerable.
Gray rhino theory thus directly contradicts Western ideals of rationality and agency: if something is obvious, so the thinking goes, of course we’re dealing with it –so if something goes wrong, it must be because it was beyond our ability to foresee and predict. This is not direct, clear thinking: it is circuitous rationalization.
Many Asians, by contrast, intuitively understand what I mean, and apply gray rhino thinking to everything from financial risk to urban safety to personal lives.
What explains this difference? The answer lies partly in how different cultures process information –in systems or silos, in close or broad focus– and in how members see themselves and their ways of thinking.
The Chinese designer Yang Liu, who grew up in both China and Germany, expressed the differences between Asian and Western thinking in her 2015 book of infographics, East Meets West. The image that I’ve included above this post involves the difference between Asian and Western views of connections and contacts; Westerners see a greater number of bilateral relationships, while Asians see a much more complicated web of connections.
Another drawing in Liu’s book represents a Western approach to problem solving as footsteps marching straight through the middle of a dot, contrasting with the Asian approach of walking right around the edge. And yet another shows Western self-representation as a straight line between two dots, compared to a circuitous line between two dots for Asians.
After looking at Liu’s images, I was startled to realize that I identified much more closely with the Asian views than the Western ones. I grew up in the Midwest and Texas, made my first trip abroad to Germany and Belgium, and worked in Latin America early in my career, this came as something of a surprise.
Liu’s book goes to show that not every Asian or Westerner is like every other, so it’s important not to let stereotypes constrain how we see other people.
Her images also show the importance of complex systems thinking –something I will explore over the course of this series. Great power comes from embracing serendipity, and from stepping back and take a big-picture look at the connections between our ideas and experiences.
My friend Jerry Michalski maps his brain using The Brain app that shows not just what he’s been thinking about, but how those thoughts and ideas connect to each other. He’s amassed hundreds of thousands of entries.
Since I’ve been writing and speaking a lot about risk lately, the first thing I looked for was what Jerry had thought about risk.
Jerry’s been working on trust building lately, so naturally he included an article connecting risk, trust, and impact. The piece’s premise was a familiar theme for me –that promoting innovation means supporting “good” risk—but it added some welcome nuance, particularly that you can’t support risk without building trust.
The authors cited a survey of philanthropy by the Open Road Alliance that found donors and grantees rarely had frank and open conversations about risk and unexpected obstacles. The result is that foundations generally fail to provide enough support for grantees should events take an unforeseen turn.
One of the Open Road Alliance’s recommendations, thus, was that grantmakers open a conversation about risk throughout the application process, signal an acceptance of the presence of risk, and formally exploring partners’ risk appetites.
I could not agree more. In fact, I’ve been spending much of my time lately having exactly this sort of discussion with people of all kinds of risk sensitivities and preferences, and exploring how people manage differences within relationships and teams. Part of that involves understanding how we came to our attitudes about the risks and opportunities in our lives, and that those paths are not as linear as we might think.
This column is about many things, but above all about the connections among many parts that both make up the backbones of systems and connect to other systems. I’ve called it “Around My Mind” to reflect the wide range of ideas and connections among them, as opposed to a more traditional and linear “On My Mind.” I’d love for you to join me on this journey.
I’ll be writing more about these issues in this weekly “Around My Mind” series. You can subscribe by clicking the blue button on the top right hand of this page. If you like it, I invite you to subscribe and share with others. Please don’t be shy about leaving comments or dropping me a private note with your own reactions.
Pointing to the existence of a gray rhino -a highly probable, high impact danger that nevertheless is being neglected, downplayed, or outright ignored- is a way to create a sense of urgency toward addressing it before panic sets in. Senior Chinese officials have used the term extensively for exactly this purpose for issues from financial risk to US tax policy to urban fire safety, earning it a spot on the “Top Ten New Terms of the 2017 Chinese Media” list compiled by China’s National Center for Language Resource Monitoring and Research in December 2017.
China’s President Xi Jinping keeps a copy of the Chinese edition of THE GRAY RHINO on his bookshelf, where media commentators noticed it during his 2018 New Year’s Day Speech, and has discussed the gray rhino with senior economic policy makers.
A reference to the gray rhino on the front page of People’s Daily in July 2017 following the National Financial Work Conference sent the prices of risky stocks down more than 5 percent in a day. The concept influenced Chinese policies on heavily indebted companies (covered on the front page of The New York Times) whose aggressive overseas expansions the government reined in.
In a much-commented-upon essay posted on the central bank’s website in November 2017, People’s Bank of China Governor Zhou Xiaochuan warned that China faced many gray rhinos, three in particular: macro-level financial high leverage and liquidity risk; credit risk including non-performing loans and increasing bond market credit defaults; and finally, shadow banking and criminal risk.
Cai Qi, secretary of the Beijing Municipal Communist Party Committee, referred to urban safety as a gray rhino after the tragic Daxing apartment fire in November 2017.
Senior Chinese officials told The Wall Street Journal in December 2017 that the US tax reform was a gray rhino threat to China, and raised interest rates in response to it.
China Banking Regulatory Commission director Guo Shuqing told People’s Daily in January 2018 that gray rhinos and black swans threaten China’s financial stability.
At Davos in January 2018, Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), the nation’s stock market regulator, warned that China’s debt was a gray rhino, again generating headlines worldwide.
Shortly afterward, Fan Hengshan, vice secretary general of the National Development and Reform Commission (NDRC), the country’s top economic planning agency, warned in a commentary in the state-controlled Beijing Daily that the year to come faced many gray rhinos.
Baidu Baike, China’s largest online encyclopedia, explains the gray rhino and its evolution in China.
Read more below for additional detail on recent gray rhino coverage from China.
Close to retiring, China’s central-bank chief warns of financial risk. The Economist. November 9, 2017.
China’s Central Bank Governor Warns About Financial Risks — Again. The Diplomat, November 9, 2017.
Chinese Banks Enjoy Few Bad Loans But Central Bank Warns Of Risks Forbes, November 11, 2017.
Hidden Debts Accumulate at Local Levels. Caixin Global. December 27, 2017.
Beating Targets: China’s Economy Grew 6.9 Percent in 2017. The Diplomat, January 18, 2018.
China eyes black swans, gray rhinos as 2018 growth seen slowing to 6.5-6.8 percent: media. Reuters, January 29, 2018.
Use your browser to translate the following links from Chinese.
Zhou Xiaochuan: China must be vigilant “black swan” and “gray rhinoceros.” Gold Network. November 5, 2017.
Exchange currency “gray rhinoceros” annual inventory. Gold Network. November 24, 2017
Ren Guanqing. The Greatest “Gray Rhinoceros”: an interview with Michele Wucker author of the Gray Rhinoceros Phoenix New Media, November 30, 2017.
Yearender: China moves to tame its “gray rhinos.” Xinhuanet. December 17, 2017
After Chinese President Xi Jinping’s annual New Year’s address, it has become an annual tradition for Chinese media to scour his bookshelf for new titles. In 2018, the new books include The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore, which was released in China in February 2017.
Other new economics books include textbooks on ecological economics, W.W. Rostow’s 1960 classic The Stages of Economic Growth: A Non-Communist Manifesto, and Money Changes Everything by William N Goetzmann. The bookshelf also included texts on understanding artificial intelligence, augmented reality, and machine learning, including The Master Algorithm by Pedro Domingos and Augmented by Brett King. Very good company!
The launch of my latest book, THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore (St Martin’s Press), kept me very busy in 2016, with appearances in New York, Washington DC, Chicago, Milwaukee, San Francisco, Phoenix, London, Luxembourg, and Oslo.
I’ve also been working on turning the concept and framework introduced in the book into keynote speeches, workshops, and practical tools for companies, policy makers, and individuals to use in making better decisions that will help them avoid preventable but too often overlooked “gray rhino” problems.
It’s very, very exciting to formally launch Gray Rhino & Company through its very own brand new website, thegrayrhino.com. The site includes blogs about geopolitical gray rhinos as well as behavioral tools to help with gray rhinos at work or home. Along with my own thoughts, the site hosts guest commentary. It also has multimedia resources, including video, audio, slides, and e-books.
Please visit the site, take a look around, and let me know what you love (or hate!). I’m open to suggestions, to guest posts, and collaboration opportunities.
You’re also invited to sign up for my newsletter, the Gray Rhino Tracker. Every month, I’ll share insights and tips designed to help you to make sure you’re not about to get run over by a gray rhino. Plus you’ll get special offers, links to articles, and recommendations of work by people I respect.
But wait, there’s more! (I always wanted to say that…) Gray Rhino Tracker subscribers also get a FREE e-book companion, What’s Your Gray Rhino? 5 Questions to Keep You from Getting Trampled, with a simple set of questions to help you keep track of your organization’s -or your own- gray rhinos. Sign up for the Gray Rhino Tracker to get a download link.
I’ll still post content here regularly, including things related to Why the Cocks Fight and Lockout, but you can take a much deeper dive into gray rhino thinking on the new site. Thanks for taking a look!