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Story telling wins hands down: ‘Storied’ past must keep building on new ‘stories’ to keep winning!

April 8, 2020

The Black Swan really stirred every imagination with the 9/11 and the GFC 2008 in the backdrop. However, once strongly entrenched – it became an unmovable goalpost and a stereotype frame of reference for every risk manager. Despite its merit, it ended up as a cliché for a lazy user. Mind you, we all have our own fascinating and unique layers and layers of stories, fables, myths and what have you. Further juxtaposed by piles of fantasy and reality – a spectrum ranging from muddied to crystal clear. Then there are times when the fantasy gets jolted by a reality check. If not, it could remain cob-webbed or make you fantasize and interpret the reality in shades and colours that are unreal.

Mind you, we all have our own fascinating and unique layers and layers of stories, fables, myths and what have you. Further juxtaposed by piles of fantasy and reality – a spectrum ranging from muddied to crystal clear. Then there are times when the fantasy gets jolted by a reality check.

In my menagerie sit many – earliest ones go back to Aesop’s Fables, Panchatantra, host of nursery rhyme influenced including black sheep. Cry wolf is one that oscillates from reality to the fake to reality and reminds you of the changing dynamics. Disney is full of them. But despite the diversity of such sign-posts – we tend to be dominantly conditioned by the once upon a time game changing jolter. That results in the time warp of our storied past. Such a risk can only be mitigated by seeking a fresh signal notwithstanding the attendant noise. Michele Wucker’s Gray Rhino is one such profound wakeup call. Whether you are looking at financial, climate or pandemic risks.

Michele Wucker’s Gray Rhino is one such profound wakeup call. Whether you are looking at financial, climate or pandemic risks.

There is nothing like a face to face interaction with an author. This was, however, a long-distance hookup with a cohort, courtesy Preventable Surprises. In the quiet of my Mumbai home, while the country is under a corona virus lockdown, I did manage to get on to the call. Listening to her build on the premise and answering a slew of amazing questions – my mind focused on some of the words that came along. But before that, this is how Michele demolishes the entrenched misplaced narrative; “Given what we know about pandemics and their increasing likelihood, outbreaks are highly probable and high impact. I coined the term “gray rhino” for exactly such events: obvious, visible, coming right at you, with large potential impact and highly probable consequences.” Interestingly, in a recent interview on ‘Bloomberg Markets’ Taleb has himself said that the coronavirus pandemic was preventable. It is not a black swan but a white swan.

Interestingly, in a recent interview on ‘Bloomberg Markets’ Taleb has himself said that the coronavirus pandemic was preventable. It is not a black swan but a white swan.

Metaphors first! Black Swans fly long distance – should they thereby allow you an opportunity to anticipate them, provided you have the right tools? A Gray Rhino will charge at you, like a sprinter it will be a short burst. You need to decide quickly as to whether flight or fight! Michele highlights how the societal mindset and diversity determines your response mechanism. The challenge in the USA is about the white male mindset and the American individualism. Some call it coronavirus maximalist versus coronavirus minimalist. On the other hand, the Chinese society is dependent on the state. The top leadership gets involved in preempting the gray rhino. The risk management process, therefore, flows top down.

At this point it is also meaningful to checkout the looking glass of the risk function – a profession charged with anticipating and mitigating risk. It needs to keep an eye on both – the rear view and the front. History shows serious lapses on its part. So, what holds it back. Is there something inherent that creates blind spots? Individualism might fester dissent. But that is good for generating diverse viewpoints. How far does it come in the way of execution? The discussion the other day did suggest it does. Could there be other reasons?

At this point it is also meaningful to checkout the looking glass of the risk function – a profession charged with anticipating and mitigating risk.

Many months ago, I was in a conversation with the Chairperson of a global risk committee. In response to how should the function be revisited – I said it is too risky to leave the risk function to ‘bean-counters’ alone. As a part of the mix you also need people with liberal arts background. That fosters diversity of the right and the left-brain. Somewhere Taleb has said it is very easy to say retrospectively that one could see something coming. But prospectively it is very difficult. Liberal arts bring along the much-desired imagination.

it is too risky to leave the risk function to ‘bean-counters’ alone. As a part of the mix you also need people with liberal arts background. That fosters diversity of the right and the left-brain.

Global businesses homogenizing risk functions – run the risk of replicating the home country’s ‘tried and tested best practices’ far and wide. In the process they create a systemic risk of their own making. That is ‘anti diversity’. You not only impose a protocol lacking diversity, but you also snuff out the opportunity to imbibe the genius of a location. This need not always be a West to East issue. Toyota’s was a case the other way around.

At this juncture neither the global leaders nor the risk managers are effectively connecting the dotted lines between Climate Change and the Pandemic. What holds them from the obvious link? A recent paper suggests that Pentagon might have been aware of the potential outbreak of the Corona virus. Ahead of the 9/11 the CIA had enough signals but as always was besieged with excessive noise. Why do banks, asset managers and insurers continue to invest in fossil fuel? Why aren’t their risk managers rebelling? Should we allow this Gray Rhino to rampage and then wait for the next one to repeat? Here is an opportunity to catch the rhino by the horn. Does not matter whether he or she has two!

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