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In this week’s bulletin, Charlie looks at the concept of a ‘Grey Rhino’ and how organisations should deal with them.
 
 

Over the Christmas period, I like to spend my time reading and writing, amongst all the other festivities. A couple of years ago I used the time to get the majority of my book on Business Continuity Exercises written. This Christmas holiday I took the time to do some reading. One book was for pleasure, on the St Nazaire Raid in WW2, and the second was “The Grey Rhino” by Michele Wucker. I had the book for a year or so and found it quite a difficult read. I hadn’t read more than a chapter before, so this time I was determined to read it, and then share what I had read with readers of the bulletin.

The basic concept of a Grey Rhino is that they are high probability and high impact risks which we see coming, and for various reasons outlined in the book, we do nothing about until the risk (The Rhino), is upon us. We either jump aside and the Rhino misses us, or we get trampled to death by it. I think two very good examples of Grey Rhinos are Covid and the war in Ukraine.

I remember presenting a BCI seminar in late February about three weeks before the Covid lockdown, and although the subject was not Covid, there was a reasonable amount of discussion about it over coffee. I was approached by a Business Continuity Manager asking how to get his senior managers to take the oncoming threat of Covid seriously, so his organisation could prepare for it. Three weeks later, we were all locked down. I was the same, unprepared – I saw the threat and even talked about some of the preparations and plans I had been involved in for the H1N1 pandemic in 2009, but did very little until Covid. The Grey Rhino was onto us..

In the same way, the Ukraine war, and the impact of the war on the price of fuel and Russian sanctions, was another Grey Rhino. We were warned for weeks by Western intelligence that a Russian invasion was imminent and the exercise they were conducting at the same time was a cover. We even got the details that the field hospitals deployed on exercises had bloodstocks that you don’t deploy unless you are going to war. Even with all the warnings, the invasion on the 24th February 2022 was a shock.

 So, what are the characteristics of Grey Rhinos and what can we do in response to them?

  • They are highly probable, high impact threats. By virtue of their size, we ought to see them coming, or if we don’t see them coming, we do little or nothing to prepare for them. It is not that the signals were too weak we just choose to ignore them
  • Often, we see the danger of the charging rhino but we find excuses or reasons why we don’t do anything about them.They often go on the ‘too difficult’ pile, or there is no easy solution, so we do nothing. This winter has been one of the worst for the NHS, with hospitals overflowing and emergency ambulance response times the worse they have ever been. This was entirely predicted by lots of people in and outside the NHS, but as there was no easy solution. The government hasn’t done anything to mitigate the issues, so the Grey Rhino is upon us and they are scrambling around trying to do something, “too little too late”.
  • Like all risks, the longer we take to deal with them and the closer they get to maturing, then the bigger the impact and the more costly it is to come up with a solution. The earlier we mitigate the effects of the Grey Rhino, the less impact they will have. 
  • When a rhino is charging at you, doing nothing is seldom the right option! The impulse to freeze is hard to overcome and sometimes the grip of denial is so strong that we do nothing at all: or even worse, do more of the same which was dangerous in the first place!
  • “Perverse incentives and calculated self-interest can turbocharge our natural impulse for denial”. The status quo can suit individuals or organisations and so change does not suit them, so they ignore the change coming towards them before it is too late.
  • If we think of every threat as a Grey Rhino we will be exhausted and in a constant state of worry. We have to differentiate the small and less impactful risks, from the Grey Rhinos.
  • With Grey Rhinos, those who will be affected can become complacent in their preparation and mitigation measures and when the event occurs, they find out that their mitigation measures or preparation is inadequate. A few months prior to Hurricane Katrina, New Orleans had carried out an exercise on the exact scenario of Katrina. This gave the leaders and the organisations false confidence that they were ready and they delayed implementing the recommendations, and they were not in place when Katrina hit.
  • With Grey Rhinos there is little doubt if the threat will materialise, but the timing is far from certain, and so this can again give us an excuse to do nothing as we still have time to do something later.
  • Being an early mover in response to a Grey Rhino can be an advantage but it can also have its downsides. The changes brought about by the internet are huge and it has disrupted most businesses. Many of the early adapters to the internet have fallen by the wayside such as AOL or Yahoo, as their business models were not right for the circumstances.
  • Grey Rhinos, like all incidents, create opportunities as well as having a downside, so if we recognise them early, we can then take advantage of the opportunity offered.

The first chapter of the book describes what a Grey Rhino is; the later chapters give us a five-stage model of how people and organisations respond to Grey Rhinos.

Stage 1 – Denial. We recognise the risk but we deny to ourselves or others that it is actually a threat to us.

Stage 2 – Muddling. We find ways of pushing the problem into the future as we, for various reasons, don’t want to deal with it at the moment. 

Stage 3 – Squabbling. We recognise the threat and we know we need to do something about it , but we can decide what needs to be done.

Stage 4 – Panic. We know we need to take action but we have left it very late, and due to the imminence of the risk materialising, we have limited options or as we are panicking, we may not be thinking straight.

Stage 5 – Action (before or after you get trampled). You take action to avoid the Rhino, or you are impacted by it and have to manage your way out of the incident.

I think like all good theories and models, there is nothing conceptually new in Grey Rhinos, but it is well-packed and linked together. The book is reasonably well written and contains a lot of discussion of the 2008 financial crash with the premise being “What if quite a lot of people saw the crash coming and if others should have seen it coming, why did it occur?”. Many of the case studies concern aspects of the finances around this time which I didn’t find all that interesting . I do like the way the concept has been visualised. It is much easier to understand the impact of a Grey Rhino charging towards you and the impact if it hits you rather than talking about a high-impact risk materialising. I have only got 2/3 of the way through when I ran out of steam and slightly felt I have got most of what I can get out of it. So, in conclusion, I like the concept and the image of a Grey Rhino – it is a good way of thinking about risk, but once you know the concept, unless you are very keen, I perhaps wouldn’t need to read the book.

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