Have you been able to put a finger on this behaviour? Investors are aware of Gray Rhinos, but in practice such risks are mostly overlooked. They also hurt small investors who do not have full information or the power to move markets, and who must rely on institutional fund managers to invest for them. Uncertainty and volatility hurt people who have to run the businesses that provide jobs and keep the economy humming. Volatility favours traders and experienced portfolio investors who are in the markets all of the time, who have access to real-time information, and who have cash on hand to swoop in during a crash and pick up distressed shares and companies on the cheap. 'The virus not only intensified many existing gray rhinos like inequality and financial fragilities, but also exposed badly lacking health systems and social safety nets around the world.' And what better way to encourage volatility than to discourage policy makers and small investors from thinking ahead and reducing the severity of the swings between boom and bust? What better way for money managers to excuse bad decisions than to be able to say, “Oh, that was a Black Swan that nobody could have seen coming, so it’s not my fault I steered you wrong.' What better reasoning for policy makers to use when they say “Nobody could have seen that anything bad could come of subsidizing stock market casinos through tax policy, extremely loose monetary policy, and turning a blind eye to risky behaviour.” Trading operations make money off of market volatility. If you look at how much trading revenue was up this spring -more than 70% year-on-year at some of the biggest US investment banks- the answer is clear. Majority of the investors-mainly money managers- seem to identify more with Black Swan rather than Gray Rhino.

So the real gray rhino is the mindset that has gotten in the way of solving them. It’s hard to talk about the next gray rhino because we’re still in the middle of all of these. It has raised awareness about environment and the climate crisis, whose neglect has increased the rise of zoonotic viruses and compromised respiratory systems. The virus not only intensified many existing gray rhinos like inequality and financial fragilities, but also exposed badly lacking health systems and social safety nets around the world. What is the next big Gray Rhino for the world? In an interview with ET ahead of the CFA Society India Wealth Management Conference, Wucker discusses the relevance of the concept.Ĭovid-19 has unleashed its own set of Gray Rhinos in the economy, financial markets and the society.

As investors increasingly look to understand the risks to their investment theories, the concept of Gray Rhino is gaining popularity. Gray Rhino was a term coined by American author and policy analyst Michele Wuckerafter the Greek credit crisis in 2012. After Black Swan, the concept of Gray Rhino has caught the attention of market participants.

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