Definition of grey swan

The term "grey swan" is derived from the term black swan which was the term given by Nassim Nicholas Taleb to extremely unlikely, unforeseen risk events with a major impact.

A black swanHowever, the slew of bad news in markets since the financial crisis suggests unexpected events with a major impact are happening increasingly frequently. This has led some analysts to start using the term grey swan to describe events that, potentially, are as catastrophic as black swan events but that are likely to happen more frequently.

 

grey swan in the news

Among the first to use the term grey swan were the risk team at PwC who put out a paper called: Black swans turn grey: The transformation of risk in January 2012. 

In June 2013, FastFT commented on a WPP trading update which mentioned the "grey swans" of the Eurozone crisis, the Middle East and dealing with the US deficit. 

In December 2012, Bill Gross, founder and co-chief investment officer for Pimco, writing for the Financial Times, discussed white swans, black swans and grey swans. " Investors in risk markets under the assumption of minimal price risk should be wary of historical white swan investments with 'grey' swan potential," he wrote.

In October 2012, WPP, the advertising group, cut its sales growth forecasts. Referring to “four grey swans” – factors that were not as unpredictable as a “black swan” event – Sir Martin Sorrell, chief executive, cited the US deficit, the eurozone crisis, political concerns in the Middle East, and the slowdown in China.

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