(Scenario Planning cont. 1)

Importance of Grey Swans Events

Grey swan events are highly likely to happen, but no one knows when. These differ from black swan events which are completely unexpected events or unknown unknowns.

Examples of grey swan events include pandemics, conflicts, climate change, natural disasters like earthquakes, tsunamis, hurricanes, volcanic eruptions etc.

Organisations need to prepare for these events and scenario planning is an appropriate way.

"...studies have shown that vigilant organisations are about twice as profitable as their vulnerable counterparts. There is a huge advantage in seeing sooner..."
George Day as quoted by Patrick Durkin, 2022b

Other characteristics of the vigilant organisation include

- their leadership teams are collectively curious

- effective networking occurs including outside their industry

- diversity of thought is encouraged.An example of grey swan event and lessons learnt is Toyota after the 2011 Fukushima earthquake and resulting tsunami. This disrupted supply chains of critical elements like chipsets that power the on-board computers in Toyota vehicles. As a result difficult disruption, suppliers now have to hold a buffer of these chips equivalent to 6 months of production plus practise parallel sourcing. As a result of the grey swan event, Toyota has several suppliers of this critical component.