Preparing For Grey Swan Events

The risk management profession measures success by the extent to which it can best help forecast, evaluate and protect organizations against financial and reputational risk.

Grey swan events—long-tail risks, known but believed to be highly unlikely—complicate this mission.

Often, organizations are convinced that these events are unlikely to happen, so they avoid allocating resources toward their prevention.

The Aon and Pentland Analytics reputational risk report Respecting the Grey Swan highlights the indelible impact grey swan crises have on reputation and shareholder value.

The report analyzes 300 corporate reputational crises, representing all major industry sectors. In over 10% of the crises analyzed over four decades, more than 50% of shareholder value is destroyed within one year of a grey swan event.