As a Board, Are You Ready for the Next Black Swan?
Your next black swan is just over the horizon.
Andrew Woodburn | South Africa
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.
In this article, Amrop examines how boards can strengthen readiness for black swan events through cognitive diversity, provisional protocols, scenario planning and a board composition that balances protection with exploration.
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 localised events, and a black swan event looms into view every five years.
Black swan readiness starts with people and protocols
As a non-executive director, you’ll likely experience at least two black swan events during your tenure. These events are significant and material. Could your board and executive team respond with clarity, speed and judgement? Look around the boardroom. If your board is built only around the traditional matrix of skills, education and experience, it may struggle. Nor can backward-looking AI predict the unpredictable. You can never predict a black swan. But you can maximise your board’s capacity to respond.
Boards rightly seek demographic diversity. But black swan readiness also depends on cognitive diversity: the ability to balance protection with exploration. Boards that can respond to black swan events 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 board protocols to respond when it happens. Because eventually, 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.
How boards can prepare for black swan events
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 practise 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. They give boards a practical way to move from risk management on paper to crisis readiness in action. Designing them involves five simple steps:
1. Elevate your scenario planning
Scenarios don’t have predictive validity. But building them does teach agility, forward thinking and board responsiveness. 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.
2. Extract protocols from past crises
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 keeps the executive-board relationship on track and helps determine when the full board should be brought into the response.
3. Shake up your annual strategy meetings
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.” Few boards run this exercise with enough discipline. And everyone must participate. Agile thinkers produce ideas. Defensive thinkers challenge the ideas and stretch their own muscles. A rising tide lifts all boats.
4. Build 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 localised event: a human rights uprising or a government disruption. Or a global event: a conflict, a supply chain threat (or, indeed, both).
5. Extend your risk register into grey swan scenarios
These are categories of events that boards can broadly anticipate because they are sector, operation or project-specific. An AWS centre fails (cybersecurity operation category). Pesticides contaminate a fresh food product line (sector category). What categories apply to your business? Where are the vulnerabilities?
Test your board’s response with plausible scenarios
Consider these two scenarios:
Ebola hits one of your operating markets. What systemic lessons did your board learn from COVID? Not the details of the event, but what worked, what failed and what should be repeated?
Or, several senior executives are lost in a plane crash. The question is not simply “who becomes CFO?” It is “what steps do we follow, who needs to be involved and how quickly can we act?”
Board composition matters in black swan readiness
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. Black swan readiness depends on the right mix of cognitive styles: directors who can protect value, challenge assumptions, think creatively and move quickly under pressure. In board searches, I now ask questions I never asked 20 years ago, because board composition must account for how people think under pressure. “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 swan events 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.