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 21, 2019. 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.
Marketwatch reporter Anneken Tappe interviewed Gray Rhino & Company CEO Michele Wucker about the origins and use of the term “gray rhino,” after Chinese President Xi Jinping’s reference to gray rhinos helped to push down US stocks by hundreds of points. Read the article here: 5 Questions with the Woman Who Coined the Term “Gray Rhino.”
Michele Wucker wrote in strategy+business about why it’s important to take with a big grain of salt all of those headlines that declare the millennial generation to be “risk averse.” “When we look behind the headlines, it is clear that millennials, rather than being risk-averse, are risk-savvy and risk-aware. By some measures, such as their investments or social decisions, millennials take fewer risks than the generations that came before. But by others — say, speaking up at work or career decisions — millennials likely set older generations’ alarm bells ringing. Seven in 10 millennials aspire to be CEOs, and more than nine in 10 seek more broadly defined leadership roles — none of this is for the faint of heart. The reality is that their methodical, information-fueled approach to assessing what to do with their money, free time, and careers may lead millennials to decisions that strike their parents and elders as risk-averse — but that also have a compelling logic. And their attitudes and actions challenge the way we all might think about risk itself.” Read the full story HERE
Understanding people’s tolerance for and approach to risk can help companies build teams and improve decision making, Gray Rhino & Company CEO Michele Wucker writes in her latest strategy+business column, “The new behavioral science of risk taking in business,” published October 9, 2019. There’s something of a bull market in understanding attitudes toward risk. Last decade’s financial crisis spawned a slew of platforms — Riskalyze, FinaMetrica, Tolerisk, and a rapidly growing list of competitors — that seek to understand people’s tolerance for financial risk. It is now common for financial advisors to ask clients a set of questions about how much money they’re willing to lose in exchange for the chance to make more. The advisors then use the answers to assign clients a risk number and match them to appropriate portfolios. The practice represents an important step in the evolution of thinking about risk. In the wealth management industry, it’s become a given that it is not enough to analyze just risks themselves, but also how different people respond to them. Now there are signs that all kinds of companies are delving more deeply into peoples’ attitudes toward risk as a way to improve operations and build more effective teams. Firms are using increasingly sophisticated behavioral science and personality profiling tools to better understand how their people think and feel about risk, so that they can tap into employees’ strengths and improve teamwork and decision making. By taking this more comprehensive approach, companies can reduce the risk that the threats they face on a daily basis might spiral into crises. READ THE FULL ARTICLE HERE
Boards are paying more attention to risky business outside the office, Gray Rhino & Company CEO Michele Wucker writes in her strategy+business column November 21, 2019: “Why your CEO’s personal risk taking matters.” The recent ousters of prominent CEOs over personal missteps, whether over a questionable relationship or reckless behavior, are drawing newfound attention to a connection that boards have long overlooked: the link between social risk-seeking behaviors and the risk decisions CEOs make on the job. Obviously, companies don’t like reputational risk. But that’s not the only reason to be wary of CEOs with messy personal lives. Such lives may predict bad risk decisions when it comes to finance, strategy, or other operational issues. READ THE FULL ARTICLE HERE
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