Key Takeaways
- Black swan events occur at least once a year. COVID-19, the Suez Canal blockage, the 2008 crash: at least one significant shock has hit almost every year for the past four decades.
- Grey rhinos are visible and still ignored. The inverted Treasury yield curve and rising US unemployment are both flashing now, and most analysts are looking elsewhere.
- The real danger is when both arrive together. Crude oil in early 2024 and wheat in 2010 both followed the same pattern: fundamentals-driven pressure from a grey rhino, then a black swan that pushed prices well beyond any fair-value band.
- Geopolitical disruptions now compound across everything. Hormuz, Ukraine, tariffs, and export controls are not separate problems; they run together through energy, fertilisers, logistics, and food inflation at the same time.
- Organisations that hold up share four things: structured risk mapping, early warning systems, cross-functional governance, and supply bases that are not over-concentrated.
- Procurement cannot predict every shock. It can be ready to move fast when one arrives.
Procurement teams often have a plan for the crisis they can see coming, but very few have a plan for two crises arriving at once.
That is the real challenge right now. Black swans (sudden, unforeseeable shocks like a pandemic, a ship wedged in the Suez Canal, or a war) get all the attention. But grey rhinos are the other half of the problem: large, obvious, slow-moving risks that accumulate in plain sight while organisations look the other way.
The term grey rhino was coined in 2013. It describes risks whose warning signals have been visible for months or years. They are not subtle. They are simply ignored, until they are not. And as a panel of senior procurement practitioners discussed in a recent webinar, the most dangerous moment is when the two types of risk hit at the same time.
The Black Swan Landscape Is Broader and More Frequent Than Most Organisations Plan For
Simon Frost, founder of Frost Procurement Adventurer and a specialist in supply security and cost modelling, mapped black swan events across the past four decades. The finding: almost every single year contains at least one.
These events fall into nine broad categories:
- Climate and extreme weather
- Financial crises
- Geopolitical shocks and war
- Pandemics and public health crises
- Logistics disruptions
- Trade and tariff shocks
- Cyber attacks
- Supply disruptions
- Economic policy shifts
Financial and geopolitical shocks are the most frequent and severe. Cyber and supply risks are genuinely disruptive but tend to be more contained.
The geographic scope matters too. COVID-19 hit everywhere. The Australian bushfires of 2019-20 were devastating domestically but had limited effect on global commodity markets. When a shock arrives, Frost’s approach is to assess both the category of risk and how far it actually reaches before deciding how to respond.
Market reactions to black swans are also uneven in ways that can surprise. When the Soviet Union collapsed, commodity markets barely moved. When Chinese demand surged in 2007-2008 and speculative capital poured in, prices rallied hard, then collapsed with the financial crash. The combined effect of COVID-19 and the Ukraine conflict produced compounding spikes that neither would likely have caused on its own.
The Middle East crisis shows how two commodities can respond very differently to the same event. Oil surged as the conflict escalated and shipping through the Strait of Hormuz came under pressure. Wheat stayed relatively stable as global stock levels were sufficient to absorb the disruption. Same shock, very different exposure.
Grey Rhinos: The Risk Everyone Can See and Nobody Acts On
If black swans are unpredictable by definition, grey rhinos are the opposite problem. They are entirely predictable and consistently dismissed.
Tom Bundgaard, who leads Expana’s macroeconomic and commodity analysis, pointed to two signals that are currently live, and both are being largely ignored.
The Inverted Treasury Yield Curve
When the spread between short and long term US Treasury yields inverts and then crosses back above zero, a recession has historically followed in the majority of observed cases. Bundgaard noted that historically the correlation has held in around 95% of instances over the past century, though past patterns do not guarantee future outcomes. That signal is present right now. The prevailing consensus treats it as background noise.
Rising US Unemployment
Going back to the 1950s, every sustained rise in US unemployment has preceded a recession. Since 2024, unemployment has been edging up. The signal is acknowledged and then set aside. “They don’t even mention it,” Bundgaard said. “They don’t pay attention to it.”
Individually, either indicator can be argued away. Together, they are exactly what the grey rhino concept describes: well-established, historically reliable signals that people have collectively decided not to act on.
Bundgaard framed the current macroeconomic picture as three rocks placed on an ice lake. The first rock is the already-strained macro fundamentals. The second is the shock of new tariffs. The third is the Middle East crisis. Each one is survivable on its own. The question is when the combined weight cracks the ice.
When Rhinos and Swans Collide
The most dangerous scenarios arise when a grey rhino sets the conditions and a black swan then amplifies the damage. Looking back, Expana’s commodity modelling illustrates how this pattern played out twice in recent years.
Crude Oil: First the Rhino, Then the Swan
In January 2024, Expana’s fair-value modelling indicated that crude oil prices appeared misaligned with underlying fundamentals. Supply, demand, inventories, and currency dynamics all pointed the same way: prices were significantly undervalued. Bundgaard called it a textbook grey rhino. Expana’s analysis was available to all subscribers via its platform.
Around six weeks later, a black swan hit. Prices moved sharply above the fair-value band, as they typically do when panic enters the market. Fundamental conditions had already pointed to potential upward price pressure. The black swan turned a correction into a spike.
Geopolitics as a Compounding Force
Janet Lung Standing, former Chief Procurement Officer at Johnson Matthey and advisory board member at Expana, made the point that geopolitical disruptions have changed in character. Earlier events tended to be isolated. What’s happening now is different: the disruptions are interconnected and they compound across categories simultaneously.
The current cluster of Hormuz shipping constraints, the unresolved Russia-Ukraine conflict, US tariff announcements, Chinese export controls, and pre-existing sanctions does not affect one commodity or one supply lane. It runs through energy pricing, fertiliser costs, logistics rates, insurance premiums, upstream chemicals, and eventually food inflation. Mapping risk category by category misses how much is actually interconnected.
A Commodity Lens: Peanuts vs Pistachios
Frost used nuts to show how the same dynamics play out very differently depending on the structural characteristics of a crop.
Peanuts are grown in more than 34 countries, including large producers like China and India. Short growing cycle. Even under significant climate stress, peanut prices stay relatively stable, because diversification provides built-in resilience.
Tree nuts (hazelnuts, almonds) are the opposite. They grow in very few countries, take years to bear fruit, and produce in quantities well under five million tonnes a year. When a grey rhino event hits a constrained tree nut, the price spikes can be severe.
Pistachios add a third layer. Grown across five countries (Iran, Turkey, Syria, China, and the US), every one of those origins carries meaningful geopolitical risk. A category manager buying pistachios is not just dealing with the grey rhino of climate and crop fragility. They are also exposed to a black swan in the form of sanctions, export restrictions, or regional conflict cutting off a major origin at short notice.
What the Organisations That Handle This Well Actually Do
Standing drew on more than three decades leading global procurement teams at Mars, Danone, and Johnson Matthey to describe what separates organisations that hold up from those that get caught.
Structured Risk Mapping and Early Warning Systems
Organisations that do this well map risk by category (climate, geopolitical, macroeconomic) for each commodity they buy. They run early warning systems designed to surface weak signals and identify which grey rhinos might arrive first. They do not wait for a risk to become material before starting to plan. Scenarios get built. Pilots get run. The work happens before it is urgently needed.
Cross-Functional Governance
When a trigger hits, speed of decision matters more than almost anything else. The organisations that respond well have their governance structure in place before the crisis, not during it. A nerve centre that brings together supply chain, commercial, and operations, already assembled and rehearsed, means the playbook can be activated immediately, without the delays and re-litigation that slow everyone else down.
This also means keeping the CFO, CEO, and board educated on the risk picture as it develops, not after it has escalated. A category manager who walks into a board meeting with a prepared response has been building that understanding over months. They did not put it together the night before.
Supply Diversification and Price Risk Management
For commodities with constrained origins, sourcing alternatives is just the starting point. Depending on the category, it may also mean backward integration with growers, recipe flexibility to substitute ingredients, higher stock levels, and working closely with suppliers, and sometimes customers, on contingency planning.
Where fundamental analysis highlights potential price misalignment, procurement teams may choose to consider hedging as one element of their risk management approach, in line with their own company policy and risk profile. The crude oil and wheat cases above illustrate the value of having the information to respond to emerging risks before a sudden shock compounds them.
Where It Usually Breaks Down
Standing identified two points where well-intentioned organisations lose ground. First, early-signal insight gets generated, presented to leadership, and then shelved, particularly when teams change. By the time the scenario escalates, the institutional knowledge built during the warning phase is gone. Second, when the trigger comes, the playbook is not ready and the governance to act quickly is not in place.
Both are preventable. But only if risk preparation is treated as a continuous discipline, not a one-off project that gets deprioritised when nothing is actively on fire.
Build the Optionality Before You Need It
The question is not whether the next disruption is coming. It is which kind, in what combination, and whether your organisation is ready.
Black swans cannot be predicted. Grey rhinos can be. Often are, by the people who then choose to look away. The organisations that come through both have governance structures that work under pressure, scenarios prepared in advance, supply bases that are not dangerously concentrated, and the discipline to act on weak signals before they become emergencies.
That kind of resilience is not built in a crisis. The grey rhinos are already visible. The only question is whether your organisation is paying attention.
This commentary is prepared by Expana and its group of companies, neither of which is an investment firm. We have no positions in the commodities or derivatives referenced. The views expressed are for information only. See our disclaimer for more information: https://www.expanamarkets.com/disclaimer/
FAQs
What is the difference between a black swan and a grey rhino?
A black swan is a sudden, high-impact event that was not predicted in advance, and arguably could not have been. The COVID-19 pandemic and the 2008 financial crash are common examples. A grey rhino is the opposite: a large, obvious risk whose warning signals have been visible for months or years, but which organisations consistently fail to act on until it becomes a crisis.
How often do black swan events actually occur?
More often than most risk plans assume. Analysis of the past four decades shows at least one significant black swan event almost every year. Financial and geopolitical shocks are the most frequent and the most severe. The planning implication is straightforward: black swans are not rare outliers. They are a recurring feature of the operating environment.
How can procurement teams build an early warning system for grey rhinos?
Track leading indicators across three dimensions for each category: climate and weather patterns, geopolitical developments, and macroeconomic signals like yield curve movements and unemployment trends. The harder challenge is organisational: documenting this knowledge so it survives team changes, and having a governance structure that is ready to act when signals escalate rather than simply noting them and moving on.
Which commodity categories are most vulnerable to the compound effect?
Those sourced from a small number of geographically or politically concentrated origins. Tree nuts like hazelnuts and almonds, grown in only a few countries, are structurally fragile. Pistachios, with major origins in Iran, Turkey, Syria, and China, carry both climate risk and significant geopolitical exposure. Energy and fertilisers are currently under compounding pressure from multiple active conflicts.
What should procurement leaders do first if they are not yet doing scenario planning?
Start with governance. Establish who makes decisions, and how quickly, when a trigger hits. Do that before a trigger hits. Then map your five most exposed categories by origin concentration and known grey rhino risks. The combination of governance and scenario clarity is what makes the rest of the work executable. Scenario planning without governance to act on it has limited value. Governance without scenario context has limited direction.
Written by Expana
