Events with a low probability of occurrence that cause serious or even catastrophic consequences are often referred to as “black swans.” They have an enormous impact on the economy and society, but before they happen, few people are able to anticipate them. One example that illustrates this concept, coined by Nassim Nicholas Taleb, is the September 11, 2001 terrorist attacks in New York.
While the notion of a black swan evokes fear and concern in the business community, the fact is that many events fall within the realm of the foreseeable and can therefore be more accurately described as “grey swans.” These phenomena still have significant potential to disrupt business operations, but unlike black swans, they have identifiable precedents.
The COVID-19 pandemic would fall into this category, since before it emerged, different regions of the world had already faced other infectious respiratory diseases, such as SARS, H1N1 influenza, and MERS. These precedents could undoubtedly have helped organizations prepare for a new health crisis. So why do decision-makers underestimate and overlook the risks posed by grey swans?
One plausible explanation is that incidents that could have resulted in catastrophic consequences are not properly recorded, are overlooked, or are treated as if they had never happened. Cognitive biases in the interpretation of organizational risks can also play an important role, but the outcome is the same: organizations end up reacting rather than anticipating.
This is the main topic of the research article “What if the swans wreaking havoc in supply chains are grey not black?” (International Journal of Production Research, 2026), coauthored with Tony N. K. Lynch (Pennsylvania State University) and Joo Y. Jung (University of Texas Rio Grande Valley).
Risks that can become grey swans
Supply chains are one area of business that is particularly exposed to these types of risks. Their global, complex, and cross-border nature, involving cultural, regulatory, and market differences across countries, reveals the fragility of a system in which a local disruption at one company can trigger difficulties for organizations in other parts of the world.
Without considering natural phenomena that can occur suddenly with potentially destructive effects—such as a major earthquake or extreme flooding—there are human-induced disruptions that can become grey swans and that can be anticipated. These include:
- Labor disputes, such as strikes that, due to miscalculations by executives, drag on and disrupt global supply chains. One example is the 2015 labor dispute between the Pacific Maritime Association and a union that led to the closure of 29 ports on the U.S. West Coast.
- Political instability, resulting from changes in power or wars, as in the case of Ukraine, where the conflict affected the partnership between Ford and Russian automaker Sollers, causing significant financial losses for the U.S. automaker.
- Supplier insolvency, which can disrupt suppliers’ operations and prevent the flow of materials or components to supply chain partners. One example is Clark-Cutter-McDermott, a General Motors supplier that attempted to file for bankruptcy without the automaker having anticipated its financial difficulties.
- Trade disputes, which are increasingly common around the world, such as the imposition of tariffs or other non-tariff barriers, harming companies that import goods or even entire industries.
Training for risk mitigation
To address supply chain risks, executives can adopt a proactive strategy based on assessing, mitigating, and managing risks. The alternative is to take a reactive approach, encouraged by arrogance (“it can’t happen here”), institutional inertia (“it has never happened to us”), managerial myopia (“there is no reason to look for alternatives”), or organizational culture (“we always solve problems when they arise”). In response to these risks, the research proposes a framework that considers the following components:
- Structure: risk strategies and contingency plans, the creation of a network of alternative suppliers, stronger governance, and risk sharing with suppliers.
- Culture: proactive risk management, heightened vigilance in supply chain monitoring, and planning exercises for different scenarios.
- Assessment: analysis of hypothetical scenarios, internal and external stress testing of processes and procedures, and assessment of other risks.
In recent years, companies across different industries have adopted various strategies to address grey swans. In the automotive industry, modular manufacturing makes it possible to use common parts across several models, which can facilitate the substitution of components or suppliers without redesigning the entire vehicle. In aerospace, Airbus has used postponement as a strategy to deal with potential disruptions, delaying the final stages of manufacturing until there is greater clarity about demand or market conditions. Finally, the maquiladora industry along the U.S.-Mexico border has diversified the ports it uses to avoid customs congestion and delays in the transit of goods imported from Asia.
Unlike black swans, grey swans have yet to receive the attention they deserve from decision-makers. Their consequences can be equally devastating, but the good news is that precedents exist that make it possible to recognize potential threats and develop risk mitigation and management strategies. It is easier to prepare for what has already happened, but executives need to look outward and learn to see beyond the walls of their own
companies.
A general strike, the insolvency of a supplier, or political instability can lead to unpredictable consequences. However, the warning signs are there and should not be ignored if companies want to avoid paying the price of major supply chain disruptions.
