As a board, are you ready for the unthinkable?

Your next black swan is just over the horizon.

It’s natural for a board to switch to conservation mode, especially in the current climate. To focus on governance, ethics, regulatory compliance. Risk management and value protection. But a defensive bias could render your board vulnerable – unequipped to handle the unthinkable. Black swans are never far away.

The past twenty-five years have delivered one unexpected mega-disruptor after another: a global financial crisis, nationalism, COVID, conflicts in Ukraine and the Middle East, tariff wars. Even as I write, blockages in the Straits of Hormuz are impacting the world economy. The gold price is soaring. Factor in regional or localized events, and a black swan looms into view every five years.

Black swan responsiveness is about people and protocols

As an NED, you’ll likely experience at least two black swans during your tenure. They are significant and material. Could your board and executive team manage one? Look around the boardroom. If your colleagues follow the traditional matrix of skills, education, and experience, you may struggle. Nor can backward-looking AI help. You can never prepare for a black swan. But you can maximize your chances of tackling it.

Boards rightly seek demographic diversity. But even then, a board can lose the balance between protection and exploration. Black swan handlers need creativity, learnability, and proactivity. High-level thinkers with these qualities are broad, conceptual, and quick-footed. Transformational, rather than transactional. They are positioned to imagine the unthinkable and build protocols to deal with it when it happens. And it will happen.

The case of a leading retailer illustrates the dangers of homogeneity. One of South Africa’s biggest names in the sector, its board was dominated by chartered accountants. Buried in numbers and groupthink, they failed to step back and question why the profits were so high. When the CEO’s longstanding financial manipulation was exposed, the business collapsed. Can an accountant or engineer ever be a black swan thinker? Of course – given the right circumstances, personality, and exposure - as we’ll see.

Provisional protocols and systemic creativity

We can compare provisional black swan protocols to a fire drill. We hope the building never burns. We can’t foresee where the fire will break out, or why. But we still practice evacuating the building and containing the damage, so we know what to do if it does. Black swan protocols reduce panic and improve the quality of decision‑making. Designing them involves 5 simple steps:

Elevate your scenario work. Scenarios don’t have predictive validity. Building them does teach agility and forward thinking. Constructing several plausible futures, we ask which strategy serves all of them. But scenario thinking is still based on predetermined disruptors, not black swans. So, the question becomes: “Are we sufficiently nimble, creative, and responsive?” Scenario thinking can train minds to think ahead.
Extract protocols from past events. During COVID, boards quickly went remote and shifted from quarterly to monthly meetings. These adjusted measures give us a provisional black swan protocol: change meeting frequency to accelerate the response cycle. This uptick can extend into finance, controls, governance, and more. In determining the frequency, however, it’s vital to preserve the advisory-supervisory balance. The executive team will need headroom to monitor and address the rapidly evolving situation. Consistent, open communication between the Chair and CEO will keep the executive-board relationship on track and enable them to decide when to pull the board into a meeting.
Shake up your annual strategy meets. After debating the standard executive presentations and forecasts, ask: “What if none of this happens?” Focus not on detail, but on process. “What will we change? How? Let’s test a case.” I’ve yet to find a single board globally that has run this exercise. And everyone must participate. Agile thinkers produce ideas. Defensive thinkers challenge – and stretch their own muscles. A rising tide lifts all boats.
Incorporate black swans into regular strategy exercises. Rather than simply setting milestones along the strategic path, build in moments where you deliberately go off-road. “What do we do if the unknown happens?” Examples may include a localized event: a human rights uprising or a government disruption. Or a global event: a conflict, a supply chain threat (or, indeed, both).
Extend your risk register into the ‘gray swan’ concept. These are categories of phenomena that we can broadly anticipate, as they are sector, operation, or project specific, micro rather than macro. An AWS center fails (cybersecurity operation category). Pesticides contaminate a fresh food product line (sector category). What categories apply to your business? Where are the vulnerabilities?

Assess your thinking – 2 plausible scenarios: Ebola hits one of your operating markets. What systemic lessons did you learn from COVID? Not the details, but what worked and what didn’t? You lose several senior executives in a plane crash. The question is not “who then becomes CFO?” but “what steps do we follow?”

Check your board composition

Elon Musk is a maverick. If there were no like minds on the board, he’d be systematically handbraked. If the board members were all high‑risk innovators, the company would crash. In board searches, I now ask questions I never asked 20 years ago. “Is your natural bias defensive and value‑protecting, or progressive, innovative, and risk‑oriented? What is the cognitive style of each existing (or prospective member)?”

Black swans can’t be predicted, but boards can strengthen their capacity to face them.

By cultivating cognitive diversity, embedding provisional protocols, and challenging defensive bias, directors create the conditions for ‘steadfast agility’ under pressure. When the unthinkable arrives, preparedness won’t guarantee survival - but its absence almost certainly guarantees failure.

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