Michele Wucker is the best-selling author of The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore and a new book, You Are What You Risk: The New Art and Science of Navigating an Uncertain World. I’ve been recommending The Gray Rhino to pretty much everybody since I read it shortly after it was published in 2021, recommended You Are What You Risk to a mentee in Singapore as recently as last week, and had the privilege of sitting down with Wucker for 90 minutes to discuss the implications and ramifications.
The two podcast episodes that resulted are now live on your favorite platform or by clicking on the links below.
So what’s a gray rhino? Gray rhinos are big, looming dangers and risks that are highly probable, but we ignore because of the ways our brains are wired, or the indeterminacy of when impacts will be felt, or the belief that other people will feel the impacts, or simply because some celebrity gossip is more salient to us.
Climate change was a gray rhino, and that was a major part of our conversation, as I wrote about at the time. Now it’s spinning off impacts including Central American climate refugees trying to cross the southern US border, monsoons that put a third of Bangladesh under water, wildfires that cloak Sydney, Australia, and the cities of North America’s west coast in reeking palls of wildfire smoke, European heat waves that kill tens of thousands of people, and hurricanes which dump vastly more water and cause damage over much broader areas than historically. We didn’t do nearly enough about the gray rhino, to the world’s, its people’s, and our economies’ detriment.
Wucker lives in Chicago and that city’s waterfront experienced massive 23-foot waves in the overflowing Lake Michigan, part of the Great Lakes which are fed by significantly increased eastern continental precipitation. I live in Vancouver, BC, and the Seawall built less than 30 years ago near me is now regularly underwater. Climate impacts are happening now, and they are visible to everyone with eyes willing to see.
But gray rhinos aren’t the only animal-themed risk metaphor that’s extant. Nassim Taleb’s black swans are also in the lexicon. As Wucker and I discussed, black swans both dominate western discussions and were misappropriated to provide air cover for financiers and regulators who allowed the sub-prime mortgage debacle to destabilize the world economy.
I was privileged to also have the opportunity to speak with Professor Bent Flyvbjerg, global megaprojects expert, about gray rhinos and black swans at around the same time, before his new book with Dan Gardner, How Big Things Get Done, went so viral that every major media outlet in the world was begging for his time. (My material on the natural experiment of wind, solar, and nuclear scalability is included in the final chapter of the book, as it aptly demonstrates a key theme of his derisking strategies for major initiatives.)
Gray rhinos, in my opinion, are useful in enabling us to understand what we should be focusing on. Black swans, or as Flyvbjerg often refers to them, fat-tailed risks, are useful in both enabling us to understand better what solutions are more likely to deliver intended benefits on time and on schedule, and to derisk solutions that we undertake. I wrote more about that at the time as well, as I was unpacking the metaphors to increase my understanding.
Wucker’s newest book, You Are What You Risk, arose from the reaction to The Gray Rhino. Wucker is an international finance and risk wonk, with time spent researching and publishing on debt and finance on multiple continents. The Gray Rhino, while evocatively titled, is less personal and less human-centric. But reader after reader told her how much the book had changed their perspective, and helped them change their lives for the better. Sometimes it was getting out of bad relationships. Sometimes it was taking care of their health better. Sometimes it was personal finances.
The stories were about them. And so, Wucker’s latest book is much more personal. She shares more of the stories from her life that led her to this understanding. And she shares the stories of many individuals who had very different reactions and perspectives on risk. We spent much of the second half of the discussion talking about it.
Wucker leans into the positive aspects of risk-taking, the benefits that might accrue from taking the risk, as much as the negatives. Some people focus on the negatives, other on the positives. And people focus on different positives and negatives. We all have a risk fingerprint, in Wucker’s words, a unique way we perceive each opportunity. A major theme of You Are What You Risk is that being transparent about your own risk fingerprint, and working to understand the risk fingerprints of others leads to greater empathy, understanding and productivity.
A great deal of misunderstanding and conflict, some buried and some obvious, is due to assuming that others feel the same way about a mutual risk that’s being considered as we do. But each person and organization has a different way of thinking about the positives and negatives, and which positives and negatives matter more.
Part of our discussion of this was simply on how different stakeholders perceived the risk of climate change. While people outside of the fossil fuel industry, the organizations which depend on the industry, and the governments which gain significant taxes and royalties consider climate change to be something to be stopped as soon as possible, the major stakeholders of that industry perceive the risk very differently. Fossil fuel stakeholders considered and consider climate change to be a near term, existential risk to their revenues, profits and assets, much more than they consider it to be a longer term risk to humanity.
As I wrote at the time in a piece on the subject, as a result “they entered into a decades-long disinformation campaign to spread doubt, delaying the inevitable quite successfully.” Their risk profile was radically different than the UN IPCC’s perspective, or environmental and health organizations, or progressive and liberal governments globally, or regions with masses of people and expensive infrastructure in flood plains. And so their actions were radically different as well.
Unfortunately, the cognitive biases that mean we tend to ignore gray rhino risks unless we consciously choose to focus on them are also easy to exploit. Is something complex? We tend to avoid thinking about it, as Kahneman pointed out in his book Thinking, Fast and Slow. Complexity requires us to think slowly and carefully, and our brains are lazy. They’ll only expend that energy if there’s a good reason or we force them to. The fossil fuel industry increased the uncertainty far beyond what science told us it was, flooding the zone with shit, as Steve Bannon infamously and accurately put it, describing his odious personal political strategy and the strategy of so much of the right-wing at present.
The great book Merchants of Doubt by Naomi Oreskes and Erik Conway tracks this strategy through tobacco, DDT, acid rain, the hole in the ozone layer, and climate. They peel back the layers, finding often the same people and same venal scientists creating very similar confusion, uncertainty, and doubt in problem area after problem area.
Understanding risk profiles of people and organizations involved around any risk enables us to understand and possibly counteract the actions of those who see it very differently than we do. The world has been suffering due to the fossil fuel industry’s successful efforts to lean into the gray rhino nature of climate change, making too many of us turn to the Kardashians or major league sports instead as mind-numbing distractions.
One last point to draw out, something briefly mentioned earlier — Wucker’s work is much more read and attended to in Asia than in the west. Short-termism and individualism has reached its nadir in so much of US thinking, and to a lesser but still present extent in other western economies. Many in the west love their misunderstanding of the black swan metaphor, as it enables them to focus on short-term profits and gains, pretend that strongly negative outcomes that are predictable couldn’t possibly be predicted, and ignore longer term benefits for the economy and the world. And so, instead of building anti-fragile organizations and solutions, they bolster quarterly profits with stock buybacks, poor industrial policies and deregulation of the financial industry.
This week the exemplary story is about the failure of the Silicon Valley Bank. Deregulation under the Trump Administration, which saw bipartisan support among many Democrats infected with the same problematic mindset, although not Warren who fought hard against it, along with self- and money-obsessed VCs and billionaires like Peter Thiel, combined into a bank run that brought down the 16th biggest bank in the US, one with billions of deposits from startups and established firms. Instead of anti-fragile institutions and regulations, fragile ones. Instead of strategic long-term thinking, short-term profit taking.
The Biden administration is only now starting to address the USA’s industrial and transportation policy failures of previous decades which have led China to dominating most of the clean technologies necessary for decarbonization. China, of course, is very cognizant of gray rhino risks, and embraced Wucker’s book. It’s read at the highest levels of the Politburo, as well as in other Asian governments. It provides a useful term that was missing for a common mindset in Asia, an awareness of the need to establish and hold to good and resilient strategies that balance benefits across society.
As I’ve written before a few times, comparing the results for the two leading economies casts a harsh and contrasting light upon US policies and practices. China’s ownership of battery supply chains, massive leadership in deployment of solar, wind, HVDC and grid storage, massive deployment of electrified transportation, much better literacy rates, longer life expectancy, better COVID response, better Gini index, leadership in STEM PhDs, leadership in patents, significant advantages in purchasing power parity and more make it clear that China, at least in the past four decades, has been attending well to gray rhino risks, and not misinterpreting predictable events as being excusable black swans.
But as Kishore Mahbubani says in Has China Won?, don’t count the US out. It has a history of reinventing itself and a cultural dynamism that might rise to the occasion. To do so, the US has to get Rumelt’s kernel of strategy right. The country has to understand itself clearly, understand the state of the American empire in its latter stages, understand China as it is not as most Americans perceive it to be, and act thoughtfully, carefully, and with the long term in mind. I see scant evidence that this is occurring. I hope that they do, mostly because the world is better off with the US as a positive force, but also in part because I live in Canada, with its massive economic interdependence with the US and the longest undefended border in the world.
The conversation was wide and interesting. I recommend everyone reading this listen to the two episodes of the podcasts to hear Wucker’s insights, and to purchase her books.
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