Many thanks to ANIMA Asset Management, ROI Edizioni, and Salone del Risparmio for a wonderful launch of the Italian edition of The Gray Rhino in Milan May 17, 2023.
Il rinoceronte grigio: Come prevedere e affrontare i pericoli ovvi che spesso ignoriamo
Michele’s latest book, YOU ARE WHAT YOU RISK, is now available in Taiwan in traditional/complex Chinese characters as “Find the Gray Rhino in Your Life: Knowing Your Risk Fingerprints and turning a Crisis into Opportunity,” published by Commonwealth (Tianxia/World Culture imprint).
Use your browser translator (if needed) to read this profile in Global Views Monthly Magazine published on occasion of the book launch.
Watch video highlights (in English with traditional Chinese character subtitles) below:
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 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.
China must be on guard against highly improbable, unimaginable “black swan” events while also fending off highly probable but often neglected “gray rhino” risks, Chinese President Xi Jinping told senior Communist Party officials at the opening ceremony of a study session at the Party School of the CPC Central Committee January 21st.
Xi spoke shortly after newly released economic data showed that in 2018 China’s economy had slowed to the lowest rate in 28 years.
“In the face of a turbulent international situation, a complex and sensitive environment, and the arduous task of reform … We must be highly vigilant against ‘black swan’ and ‘grey rhinoceros’ incidents,” he said. Xinhua News Agency issued a full statement on his talk.
Xi cited areas in which China faces major risks: politics, ideology, economy, science and technology, society, the external environment, and party building.
His comments generated worldwide news coverage, from Australia to Indonesia to Argentina, and helped send U.S. stocks down over concerns about the effect of a slowing Chinese economy on global growth.
Columnist Ana Fuentes of Spain’s El Pais newspaper wrote, “More than black swans, it appears that 2019 will be the year of gray rhinos, threats that we have identified but have not been able to or known how to stop.” Top on her list was the crisis of governability in the West.
THE GRAY RHINO: How to Recognize and Act on the Obvious Dangers We Ignore, was released in China by CITIC Press in February 2017 and has become an influential best-seller.
The Gray Rhino is now available in Norwegian via Hegnar Media
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
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.
Debt, shadow banking, capital market volatility, “gray rhinoceros” are moving toward China? qq, November 10, 2017
Zhong Wei: Considering Grey Rhino, China Should Balance Overall Gradual Reforms and Partial Radical Reforms. qq. November 16, 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!
Read the whole list here in Shanghaiist or, if your Chinese (or your browser translator) is good, a longer article on qq.