A grey swan is an event that can be anticipated to a certain degree, but is considered unlikely to occur and may have a sizable impact on the valuation of a security or the health of the overall market if it does occur.


Grey swans are, according to an article by the president of the Population Institute, Robert J Walker, "unlikely occurrences that are just likely enough that they should be anticipated." While grey swans can and ought to be anticipated, it can be hard to know the exact implications of a particular event; despite the possibility of determining the properties and potential impact of such an event, it is difficult to create precise calculations regarding the total impact.

Grey Swans and Black Swans 

The term grey swan comes out of the black swan theory. The black swan theory was developed by the scholar and analyst Nassim Nicholas Taleb to describe the immense impact of unpredictable events, as well as our collective inclination to normalize the event. 

Taleb outlined the three attributes of a black swan in an article in the New York Times in 2007: 

1) "It is an outlier, as it lies the realm of regular expectations, because nothing in the past can convincingly point to its possibility."

2) "It carries an extreme impact." 

3) "In spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

In economic terms, black and grey swans generally refer to the risk and potential impact of large, unpredictable events. While analysts can look at the impacts that similar events had across history, the exact extent of damage and risk cannot be calculated.

Grey Swans in the News

In his piece for Huffington Post, noted above, Robert J Walker argued that "a confluence of events—including climate change, population growth, debt loads and the world's rising demand for food, energy and water—are dramatically increasing the overall levels of risk in the world," and that many of these so-called grey swans could have secondary impacts with profound consequences.

These include earthquakes and even events like the Great Depression.

In 2017, the Asia-headquartered global investment group, Nomura released its prospective grey swans for the year. Some of those grey swans included the potential that U.S. production might boom, China might float its currency, the EU might reform, and the UK might rejoin, emerging market capital controls might return, and paper money might disappear.