You Are What You Risk China Edition

The Chinese edition of YOU ARE WHAT YOU RISK: The New Art and Science of Navigating an Uncertain World (Pegasus Books, April 2021), translated by Feng Yi and Zhang Liying, as “Gray Rhino 2: How individuals and Organizations Dance with Risk,” was published in September 2021 by CITIC Press Group to high praise.

The book is part of the Rhino Books imprint featuring high-profile business books by international authors, which was created in 2017 around THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore (translated as The Gray Rhino: How to Deal with High Probability Crisis).

Cover of white book cover with red simplified Chinese characters for "GRAY RHINO 2" and image of fingerprint superimposed on a rhino

From the publisher:
“The popularity of the author and the popularity of the previous book. “Grey Rhino: How to Deal with High Probability Crisis” has become a well-known, hotly discussed and widely used phenomenon-level vocabulary since it was published by CITIC Publishing House in 2017. “Gray Rhino: How Individuals and Organizations Dance with Risk” is not only an extension and supplement to the concept of “gray rhino”, but also a deeper and more microscopic exploration of the essence of “risk”. We cannot ignore the constructive significance of this book for every reader, enterprise, government, and country in the future. “Gray Rhino 2: How Individuals and Organizations Dance with Risks” will once again become a work of the era with great influence with its acumen, foresight and professional depth of content.”

Praise for the China edition of YOU ARE WHAT YOU RISK/Gray Rhino 2:

SINA FINANCE Book recommendation: “This book is Michele Wucker’s new masterpiece.”

Wucker’s “Grey Rhino: How to Deal with a High Probability Crisis” allows us to improve our awareness and trade-offs in the face of political and commercial risks. Her new book reveals to us that individuals at risk, their risk personality, organization, and society’s dynamic feedback loop will affect citizens, organizations, and the government’s different perceptions, reactions, and response results to risks. Building a good risk ecosystem, establishing healthy risk relationships, and fairly distributing risks-related gains and losses, so that as many people as possible can live a better life, should be our principles and pursuit of understanding and weighing risks. 
— Wu Xiaoling (Executive Vice President of China Finance Society)             

??There are various gray rhino risks in the current society. Personal risks, policy risks, professional risks, economic risks, organizational risks and global risks are intertwined to shape our lives, work and the world. Wucker’s new book, based on the tremendous changes that have taken place in the world in recent years, deeply explores how we make our own choices based on our unique risk fingerprints, and how risk choices shape the relationship between individuals, organizations, and society, and help us inspire us. Work together to build a benign risk ecosystem to support the sustainable development of the economy and society.?
— Xiao Gang (Member of the National Committee of the Chinese People’s Political Consultative Conference)  

??The great changes unseen in a century and the superposition of super-epidemics mean that this era is one of frequent occurrences of “black swan” and “gray rhino” events. To gain insight into the new laws of this era, we should peruse this new book by Wucker. This book is not only an extension and supplement to the concept of “gray rhino,” but also a deeper and more micro-systematic exploration of “risk,” which has constructive significance for individuals, enterprises and governments.
–Liu Yuanchun (Vice President of Renmin University of China, Economist)    ?

??We have entered an era of comprehensive, full-time, and global risk. Whether it is an individual or an organization, how to accompany risks and build a constructive relationship with them will determine their future. Wucker’s new book provides guidance and an operating system for this.
-Qin Shuo (China Commercial Civilization Research Center, initiator of Qin Shuo Moments of Friends)  

??Risk has become the norm in this era. The theme of Wucker’s new book is how to deal with the endless risks. There is no uniform standard answer, and people of different cultures, generations, and personalities have different views on risk. You need to understand your “risk fingerprint” first, and then exercise your “risk muscles.” This book is a survival guide everyone needs to read in the age of risk.
–He Fan (Professor of Economics at Shanghai Jiaotong University, author of “Variables“) 

??The big change that has not been seen in a century is also a big opportunity that has not been seen in a century. “Danger” and “opportunity” are always dialectical and mutually transforming. Embrace change, promote change with a positive attitude, shape a good risk personality, and dance with risk. This is the law of nature and the wisdom for us to get along better with the world. Wucker’s new book has strong enlightening value for us to refresh our risk awareness and prevent and resolve risk events.
— Ren Zeping (Economist)  

The Economist the World in 2021

The Economist invited Michele Wucker to contribute to its annual The World Ahead/The World in 2021 issue. The resulting article, Was the pandemic a gray rhino or a black swan?, was published November 17, 2020.

“Facing the daunting challenges ahead will require long-term thinking, a greater emphasis on the real economy rather than stockmarket performance and, above all, a commitment to hold ourselves and our leaders accountable,” she wrote. The article puts into context the gray rhinos ahead of us in 2021: climate change, financial fragilities, and inequality that has made the rich even richer while front-line essential workers struggle.

Read the full article HERE.

Washington Post: No, the coronavirus pandemic wasn’t an ‘unforeseen problem’

The Washington Post published an op-ed by Michele Wucker, “No, the coronavirus pandemic wasn’t an ‘unforeseen problem’,” published on March 17, 2020.

“An obsession with the “unforeseeable” black swan metaphor has promoted a mentality that led us straight into the mess we’re in now: a sense of helplessness in the face of daunting threats and a sucker’s mentality that encourages people to keep throwing good money after bad. And the facile willingness to see crises as black swans has provided policymakers cover for failing to act in the face of clear and present dangers from climate change to health care to economic insecurity. This accountability vacuum has pervaded U.S. policy on financial risk and on the pandemic,” she wrote, calling for readers to use the coronavirus crisis as a catalyst for adopting a more pro-active response to the obvious risks we tend to ignore. “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,” she wrote. Read the full article HERE.

Ben Zimmer of The Wall Street Journal quoted the Washington Post piece in an article published March 19, 2020 online and in print in the Weekend edition: ‘Black Swan’: A Rare Disaster, Not as Rare as Once Believed [paywall], noting her challenge to the black swan trope –for unknowable, unforeseeable events– which became popular during the last financial crisis.

FT Beyond Brics: China’s Biggest Financial Risk Is the US

Washington’s devil-may-care attitude has become Beijing’s top priority

Michele Wucker published this op-ed on the Financial Times beyondbrics blog November 13, 2018.

In its new annual financial stability report, China’s central bank has again sounded the alarm that “grey rhino” risks — clear and present dangers that are often neglected — continue to threaten the economy.

The report focused on China’s real estate market and high levels of local government, household and corporate debt, consistent with the concerns of Chinese and international observers.

Indeed, a popular narrative among western analysts is that China’s debt is a likely trigger for the next financial crisis. But the finger on that trigger is US complacency about risk.

President Xi Jinping has made containing financial risk a top priority and top officials have been vocal and active in addressing the danger areas they have identified.

By contrast, you could be forgiven for thinking that US officials had forgotten about the financial crisis that exploded a decade ago, not to mention the global dangers posed by 10 years of extremely loose monetary policy.

Washington’s approach appears to be to ignore warning signs and count on being able to frame the inevitable crash as a surprise “black swan” that “nobody saw coming”.

Yet many smart people do see trouble coming and are sounding urgent warnings for the US and the global economy. The International Monetary Fund warned in April that global debt had hit a new record high of $164tn, or 225 per cent of GDP. The US, it noted, is the only advanced economy where debt is outpacing economic growth.

Albert Edwards of SocGen forecast that financial winter is on the way, George F Will wrote of the giant sucking sound of a debt spiral, and Bridgewater’s Ray Dalio predicted a looming new debt crisis. Dozens of other smart analysts are sounding the alarm.

Well aware of the looming challenges, by contrast, China has been trying to gradually let the air out of credit bubbles without bursting them and to guide the economy to “quality growth” that may be slower but is more evenly distributed and less volatile.

Neither feat would be easy, even without having to wrangle external shocks caused by the US administration either not knowing or not caring about the global impact of its policies. China’s officials have been open about the real risks facing its economy, and made no secret of their intentions to cool off overheated sectors.

Using a combination of regulations, increased enforcement and liquidity controls, China has targeted the grey rhino risks that senior officials raised in a key five-year policy-setting meeting in July 2017: high corporate debt, excessive liquidity, shadow banking, capital market vulnerabilities, real estate bubbles, and emerging online financial products and services.

Regulators have cracked down on wealth management products marketed as “less risky” while promising higher yields. With corporate bond defaults up 40 per cent in the first half of 2018 and thousands of peer-to-peer lending platforms allowed to fail, China’s government has sent a message that people cannot count on it to fix every problem.

By contrast, Trump and senior officials have trumpeted US economic strength and downplayed risks and weaknesses.

Until the market volatility of the past few weeks, Trump had repeatedly bragged about how US shares were hitting record after record high, while China’s market indices were down more than 20 per cent for the year.

But a recent Council on Foreign Relations analysis shows how Chinese shares closely track a slowdown in credit growth over the past year or so. This suggests that much of the drop was the direct result of China’s efforts to let the air out of asset bubbles.

The Trump administration’s cavalier approach to financial risk increasingly suggests that its economic policies will not end well.

As the US Congress was preparing to pass a massive tax cut in December 2017, senior Chinese officials called the US tax plan a grey rhino, citing its potential impact on capital flows and financial stability. Responding quickly, Beijing developed a contingency plan involving higher interest rates, tighter capital controls and more active currency intervention.

The new Trump-supported tax cuts are widening the budget deficit while pushing up the cost of interest on the deficit. Even as financial risks increase, Washington has been chipping away at safeguards and emergency powers that could help contain the next crisis.

To be sure, the US Federal Reserve has been gradually increasing interest rates and shrinking its balance sheet, in a delayed attempt at normalising monetary policy. But this has created new global instabilities as money rushes out of emerging markets.

In contrast to China’s more surgical approach to specific vulnerabilities, the US relying mainly on interest rates as a broad-brush economic lever threatens to bring all boats down with it.

China is so concerned about this devil-may-care approach to financial risk that its politburo recently announced that dealing with US-generated economic shocks was an even higher priority than de-risking.

Paradoxically, current US-China policy threatens to slow down reforms that investors would like to see, such as reducing overcapacity at state-owned enterprises and intervening less in currency markets.

Trump’s bellicose rhetoric has ignored that China has been gradually opening its economy: easing foreign investment rules on 15 industries, particularly financial services, and evidence of some progress on intellectual property issues. Both of these are in China’s interest: it sees the benefit of increasing equity financing compared with debt, and it wants to encourage homegrown technological advances.

To counter the economic drag that trade war-related fears were creating, China has loosened its monetary policy in recent months. Its earlier belt-tightening gave it some wriggle room to do so.

But were China to completely abandon its de-risking strategy, it would resume heading towards a feared “Minsky moment” when the country’s ability to support debt collapses.

If the US paid as much attention as China does to the dangers lurking in the global economy and markets, it wouldn’t let itself appear to be so intent on throwing a monkey wrench into China’s sensible efforts to reduce financial risk.

Recall that demand from China for western goods, combined with China’s aggressive fiscal policy, played a big part in getting the world out of the 2008 crisis.

At one point, hopes that China would bail out Europe were dashed when Chinese officials rightly chided western governments for irresponsible economic policies.

Smart US policy would be to pay as much attention as China to heading off the grey rhino risks facing the global economy, and the role each country can play. An agreement ending the trade war would be a start. But unless the US takes financial risk more seriously, the threat to the global economy will remain — and China won’t be the main culprit.

Emerging markets guest forum beyondbrics is a forum on emerging markets for contributors from the worlds of business, finance, politics, academia and the third sector. 

Read this article at FT.com.

Leadership Lessons of the Tango

Strategy + business, August 28, 2018

By Michele Wucker

Everything I learned about management and leadership I learned at…the dance studio?

Well, yes. As a beginner student of the Argentine tango two decades ago, I used to come home reflecting on how much of what I learned from the micro interactions in class applied to everyday life. Those lessons in communication, adaptability, and teamwork stayed with me for many years, and resonate anew now that I’ve taken up the dance again.

Tango dancers, business leaders, and rising stars tend to demonstrate drive, persistence, concentration, and commitment. They also are ambitious, competitive, and impatient. These Type A personality qualities are often the ingredients for success in business and in life. But they also can lead to problems if not managed well. This is especially so for teams in which — just as in the tango — both leaders and followers share these high-performance traits.

READ THE FULL ARTICLE at strategy+business

The Gray Rhino Norwegian Edition

The Gray Rhino is now available in Norwegian via Hegnar Media

Grå neshorn

Michele Wucker

Hvordan gjenkjenne og gjøre noe med de innlysende faresignalene som vi aller helst bare vil ignorere.

Et «grått neshorn» er en høyst sannsynlig trussel med store konse­kvenser som likevel blir oversett – beslektet med både elefanten i rommet og en uforutsigbar sort svane. Grå neshorn er ikke tilfeldige overraskelser, men dukker opp etter en rekke advarsler og tydelige tegn. Boligboblen som sprakk i 2008, de omfattende ødeleggelsene etter orkanen Katrina og andre naturkatastrofer, de nye digitale teknologiene som snudde medieverdenen opp ned, Sovjetunionens sammenbrudd … alt var mulig å forutsi.

Hvorfor klarer ledere og beslutningstagere fremdeles ikke å forholde seg til åpenbare trusler før disse ikke lenger lar seg kontrollere? I Grå neshorn benytter Michele Wucker seg av sin omfattende bakgrunn innen kriseledelse og utforming av politikk og av dyptgående intervjuer med ledere fra hele verden, og viser hvordan man identifiserer og imøtegår strategisk kommende trusler som har store konsekvenser. Grå neshorn er full av overbevisende historier, eksempler fra virkelighetens verden og praktiske råd, og er nødvendig lesning for ledere, investorer, planleggere, strateger og enhver som ønsker å forstå hvordan man kan tjene på å unngå å bli trampet ned.

Medlemspris: 351,-

Spar: 118,- (veil. pris 469,-)

ISBN:9788271463472

Forfatter:Michele Wucker

Forlag:Hegnar Media

Språk:Norsk

Utgivelseår:2018

 

THE GRAY RHINO Taiwan edition

THE GRAY RHINO is now available in Taiwan via Commonwealth Books.

Zhang Bo Song reviewed the book on Inside: “One of the hottest topics of the year is the Grey Rhino. If you don’t understand what the gray rhino is and what’s the difference with a black swan, be sure to take a look at this book. Because you don’t want to wait until the grey rhino is charging at you: you want to act.”

Economic Daily: Don’t Turn a Blind Eye to a Gray Rhinoceros Crisis April 17, 2017

Tai Zhong, DWNews Taiwan  “Gray Rhinoceros Phenomenon and Taiwan government” April 26, 2017 “In April 2017, the financial book “The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore” caused the attention of Taiwan’s people, Then “gray rhinoceros” following the “black swan,” became a common word on the media.”

Korea and China editions of THE GRAY RHINO

 

THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore is now available in China via Citic Publishing Group and Korea via Business Books and Co.

Read more at these links (you may need to use your browser’s translate option.)

Review in Korea Economic Daily
Maeil Business Newspaper -Cover Story
Rednet coverage of THE GRAY RHINO

THE GRAY RHINO was published in Hungary in Fall 2016 via Athenaeum, and Taiwan and Norway editions are in production.