Turn Black Swans Gray

by Alex Entrekin

Based on a quick read of the daily headlines, black swan events—scenarios that surprise businesses and leave them reeling—seem to be occurring at a startlingly frenetic pace. No doubt this trend is the result of our increasingly interconnected and globalized world. Even an event that takes place thousands and thousands of miles away can have a far-reaching impact.

Given the major changes in how people communicate, we know about such occurrences almost immediately. In some cases, such as the Arab Spring in 2010, social media played a major role in both covering and driving an event that toppled governments.

Clearly, whether they’re man-made or caused by natural disasters, unforeseen disruptions pose troubling threats and challenges that must be addressed. 

Predict the Unexpected

The frequency of black swans can make one question whether these are truly unpredictable events. Maybe some are really gray swans—situations that can have the same type of impact as black swans, but occur more frequently and can be predicted to a certain degree.

With the continued advances in big data usage and next-generation analytics, organizations have gained an unprecedented opportunity to identify and plan for these improbable but high-impact events. As recently as a few years ago, some businesses struggled to gather, integrate and analyze the necessary data to make informed decisions.

Today, data is everywhere, coming in multiple forms (structured, unstructured, multi-structured) and from an increasing number of sources. This abundance of data, coupled with advanced analytics, opens the door to explore data in ways that were not previously possible. For example, visualization and predictive analytics now enable the discovery of new patterns, new insights and new threats.

Reduce the Risk

Based on the definition of black swans alone, we clearly cannot predict or plan for all types of unexpected events. However, the latest generation of technology offers advanced analytics and faster discovery techniques to quickly and effectively cut through the noise to find signals and trends. And that’s a huge opportunity to better prepare for and manage the impact of these events—and maybe even turn some of those black swans gray. 

This article originally appeared in the Q2 2015 issue of Teradata Magazine.

Alex Entrekin is the vice president of Enterprise Risk & Assurance Services for Teradata.

 

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