Do "Gray Rhinos" Pose a Greater Threat Than Black Swans?

CFA Institute Magazine
October 2017 | Vol. 28 | No. 3
Source: CFA Institute
Nathan Jaye, CFA



Unlike the metaphor of a black swan (highly unlikely events with potentially severe consequences that are difficult to predict), the "gray rhino" is a highly likely yet ignored threat. "We don't pay enough attention to the big obvious problems that are in front of us," says Michele Wucker, the author who coined the term gray rhino. "By regularly doing a gray rhino reality check, you can be way ahead of your competitors and your peers." Investors should learn to identify four kinds of gray rhinos: charging, recurring, meta, and unidentified. Each type can require different solutions.

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