Archive Issue
International Interdisciplinary Scientific Journal "Expert"
Volume 2, Issue 1 (2025)
Language of the original article: English
ABSTRACT. Economic transformation in the twenty-first century increasingly unfolds under conditions of heightened uncertainty, structural volatility, and overlapping systemic pressures. While contemporary research widely employs metaphor-based frameworks such as the “Black Swan” and the “Grey Rhino” to conceptualize disruption and risk, these approaches remain insufficient for explaining a recurring empirical phenomenon: the persistent failure of decision-making systems to act upon visible, repeatedly articulated, and institutionally acknowledged systemic risks. This gap becomes particularly consequential in transformation contexts, where delayed responses convert manageable pressures into destabilizing crises. This paper introduces the Blue Elephant as a governance-condition construct describing situations in which systemic risks are highly visible and formally recognized, yet remain structurally under-addressed due to persistent failures in translating recognized knowledge into transformation-level action. The Blue Elephant is conceptualized not as an event category nor as a probabilistic anomaly, but as a state of systemic misalignment between knowledge and action–a knowledge–action gap–in which available and institutionalized risk information fails to activate coordinated structural response. Ontologically, the concept captures a condition of recognized-but-discounted reality, shaped by institutional inertia, incentive misalignment, coordination failures, and normalization narratives that neutralize transformation governance. A central analytical contribution of the paper is the distinction between risk management and transformation governance, demonstrating that the Blue Elephant emerges precisely where formally recognized risks can no longer be addressed within existing institutional and strategic frameworks without structural reconfiguration. By reframing visible systemic pressure as a transformation-triggering condition rather than an external shock, the Blue Elephant provides a diagnostic framework for analyzing why known risks culminate either in crisis-forced restructuring or, under conditions of timely governance intervention, in coordinated renewal and adaptive outcomes. The study offers a conceptual foundation for future comparative and longitudinal research on systemic transformation under uncertainty, including empirical testing through governance-level indicators.
Keywords: Blue Elephant; governance-condition construct; recognized-but-discounted reality; knowledge–action gap; economic transformation; systemic transformation risks; institutional underreaction; transformation governance; crisis dynamics.
2. Keynes, J. M. (1937). The general theory of employment. The Quarterly Journal of Economics, 51(2), 209–223. https://doi.org/10.2307/1882087
3. Taleb, N. N. (2007). The black swan: The impact of the highly improbable. New York, NY: Random House. Available at: https://archive.org/stream/10.1.1.695.4305/10.1.1.695.4305_djvu.txt
4. Taleb, N. N. (2012). Antifragile: Things that gain from disorder. New York, NY: Random House. Available at: http://kgt.bme.hu/files/BMEGT30M400/Taleb_Antifragile__2012.pdf
5. North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9780511808678
6. Williamson, O. E. (2000). The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature, 38(3), 595–613. https://doi.org/10.1257/jel.38.3.595
7. Perrow, C. (1984). Normal accidents: Living with high-risk technologies. New York, NY: Basic Books. Available at: https://maritimesafetyinnovationlab.org/wp-content/uploads/2021/04/Normal-Accidents-Living-With-High-Risk-Technologies-Perrow.pdf
8. Kutler, J. (2021). Swans, rhinos and elephants are animating risk debates. GARP Risk Intelligence. Available at: https://www.garp.org/risk-intelligence/culture-governance/swans-rhinos-and-elephants-are-animating-risk-debates
9. Beck, U. (1992). Risk society: Towards a new modernity. London: Sage. Available at: https://uk.sagepub.com/en-gb/eur/risk-society/book203184
10. Reinhart, C. M., & Rogoff, K. S. (2009). This time is different: Eight centuries of financial folly. Princeton, NJ: Princeton University Press. Available at: https://econpapers.repec.org/bookchap/puppbooks/8973.htm
11. Brunnermeier, M. K. (2009). Deciphering the liquidity and credit crunch 2007–2008. Journal of Economic Perspectives, 23(1), 77–100. https://doi.org/10.1257/jep.23.1.77
12. European Central Bank. (2021). Climate-related risk and financial stability. ECB. Available at: https://www.ecb.europa.eu/pub/pdf/other/ecb.climateriskfinancialstability202107~87822fae81.en.pdf
13. Intergovernmental Panel on Climate Change. (2021). AR6 Climate change 2021: The physical science basis. Available at: https://www.ipcc.ch/report/ar6/wg1/
14. World Economic Forum. (2023). Global risks report 2023. Geneva: WEF. Available at: https://www.weforum.org/reports/global-risks-report-2023
15. World Health Organization. (2019). A world at risk: Annual report on global preparedness for health emergencies. Available at: https://www.gpmb.org/reports/annual-report-2019
16. Vlachos, I. (2024). The COVID-19 pandemic impact on supply chains: A systematic literature review. International Journal of Logistics Systems and Management, 48(1), 17–66. https://doi.org/10.1504/IJLSM.2024.138878
17. Rodrik, D. (2007). One economics, many recipes: Globalization, institutions, and economic growth. Princeton, NJ: Princeton University Press. Available at: http://press.princeton.edu/titles/8494.html
18. Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1–13. https://doi.org/10.1016/j.ejor.2015.12.023
19. Minsky, H. P. (1986). Stabilizing an unstable economy. New Haven, CT: Yale University Press. Available at: http://digamo.free.fr/minsky86.pdf
20. Tooze, A. (2021). Shutdown: How COVID shook the world’s economy. London: Allen Lane. Available at: https://www.spsonline.it/Corsi/Agora/Letture_libri/Tooze_Shutdown-How-Covid-Shook-the-World_s-Economy.pdf
21. Lawrence, M., Homer-Dixon, T., Janzwood, S., Rockström, J., Renn, O., & Donges, J. F. (2024). Global polycrisis: the causal mechanisms of crisis entanglement. Global Sustainability, 7, e6. https://doi.org/10.1017/sus.2024.1
22. Giddens, A. (1999). Risk and responsibility. Modern Law Review, 62(1), 1–10. https://doi.org/10.1111/1468-2230.00188
23. Namliiev, Y., & Kacicka, G. (2023). Crisis research foundations in the transforming world economy: a theoretical perspective. Kyiv Economic Scientific Journal, (3), 101–107. https://doi.org/10.32782/2786-765X/2023-3-15
24. Namliiev, Y., & Kacicka, G. (2023). Features of the functioning of the business sector in the conditions of the financial and economic crisis and the formation of the anti-crisis management mechanism. Kyiv Economic Scientific Journal, (2), 26–33. https://doi.org/10.32782/2786-765X/2023-2-4 [in Ukrainian].
25. Namliiev, Y., & Kacicka, G. (2022). Topical problems of regulating economic activity and developing anticrisis management. New Knowledge Journal of Science, 11(4), 5–12. Available at: https://science.uard.bg/index.php/newknowledge/article/view/940
26. Kacicka, G., & Namliiev, Y. (2023). Crisis phenomena as the basis for the emergence of destabilizing processes in the economy: the relevance of theories and development of crisisology research. Kyiv Economic Scientific Journal, (1), 103-116. https://doi.org/10.32782/2786-765X/2023-1-13 [in Ukrainian].
27. Diamond, P., & Skrzypek, A. (Eds.). (2024). The politics of polycrisis: Transforming social democracy in Europe. Foundation for European Progressive Studies. Available at: https://feps-europe.eu/wp-content/uploads/2024/12/241120_BOOK_3106-4_FEPS_Oxford_v6_web-1.pdf
28. Namliiev, Y., & Kopec, A. (2024). Anti-crisis policy strategies as a means of ensuring the economic security of enterprises. Kyiv Economic Scientific Journal, (4), 157-163. https://doi.org/10.32782/2786-765X/2024-4-22 [in Ukrainian].
ABSTRACT. Economic transformation in the twenty-first century increasingly unfolds under conditions of heightened uncertainty, structural volatility, and overlapping systemic pressures. While contemporary research widely employs metaphor-based frameworks such as the “Black Swan” and the “Grey Rhino” to conceptualize disruption and risk, these approaches remain insufficient for explaining a recurring empirical phenomenon: the persistent failure of decision-making systems to act upon visible, repeatedly articulated, and institutionally acknowledged systemic risks. This gap becomes particularly consequential in transformation contexts, where delayed responses convert manageable pressures into destabilizing crises. This paper introduces the Blue Elephant as a governance-condition construct describing situations in which systemic risks are highly visible and formally recognized, yet remain structurally under-addressed due to persistent failures in translating recognized knowledge into transformation-level action. The Blue Elephant is conceptualized not as an event category nor as a probabilistic anomaly, but as a state of systemic misalignment between knowledge and action–a knowledge–action gap–in which available and institutionalized risk information fails to activate coordinated structural response. Ontologically, the concept captures a condition of recognized-but-discounted reality, shaped by institutional inertia, incentive misalignment, coordination failures, and normalization narratives that neutralize transformation governance. A central analytical contribution of the paper is the distinction between risk management and transformation governance, demonstrating that the Blue Elephant emerges precisely where formally recognized risks can no longer be addressed within existing institutional and strategic frameworks without structural reconfiguration. By reframing visible systemic pressure as a transformation-triggering condition rather than an external shock, the Blue Elephant provides a diagnostic framework for analyzing why known risks culminate either in crisis-forced restructuring or, under conditions of timely governance intervention, in coordinated renewal and adaptive outcomes. The study offers a conceptual foundation for future comparative and longitudinal research on systemic transformation under uncertainty, including empirical testing through governance-level indicators.
Keywords: Blue Elephant; governance-condition construct; recognized-but-discounted reality; knowledge–action gap; economic transformation; systemic transformation risks; institutional underreaction; transformation governance; crisis dynamics.
References
1. Knight, F. H. (1964). Risk, uncertainty, and profit. Augustus M. Kelley. Available at: https://cdn.mises.org/Risk%2C%20Uncertainty%2C%20and%20Profit_4.pdf2. Keynes, J. M. (1937). The general theory of employment. The Quarterly Journal of Economics, 51(2), 209–223. https://doi.org/10.2307/1882087
3. Taleb, N. N. (2007). The black swan: The impact of the highly improbable. New York, NY: Random House. Available at: https://archive.org/stream/10.1.1.695.4305/10.1.1.695.4305_djvu.txt
4. Taleb, N. N. (2012). Antifragile: Things that gain from disorder. New York, NY: Random House. Available at: http://kgt.bme.hu/files/BMEGT30M400/Taleb_Antifragile__2012.pdf
5. North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9780511808678
6. Williamson, O. E. (2000). The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature, 38(3), 595–613. https://doi.org/10.1257/jel.38.3.595
7. Perrow, C. (1984). Normal accidents: Living with high-risk technologies. New York, NY: Basic Books. Available at: https://maritimesafetyinnovationlab.org/wp-content/uploads/2021/04/Normal-Accidents-Living-With-High-Risk-Technologies-Perrow.pdf
8. Kutler, J. (2021). Swans, rhinos and elephants are animating risk debates. GARP Risk Intelligence. Available at: https://www.garp.org/risk-intelligence/culture-governance/swans-rhinos-and-elephants-are-animating-risk-debates
9. Beck, U. (1992). Risk society: Towards a new modernity. London: Sage. Available at: https://uk.sagepub.com/en-gb/eur/risk-society/book203184
10. Reinhart, C. M., & Rogoff, K. S. (2009). This time is different: Eight centuries of financial folly. Princeton, NJ: Princeton University Press. Available at: https://econpapers.repec.org/bookchap/puppbooks/8973.htm
11. Brunnermeier, M. K. (2009). Deciphering the liquidity and credit crunch 2007–2008. Journal of Economic Perspectives, 23(1), 77–100. https://doi.org/10.1257/jep.23.1.77
12. European Central Bank. (2021). Climate-related risk and financial stability. ECB. Available at: https://www.ecb.europa.eu/pub/pdf/other/ecb.climateriskfinancialstability202107~87822fae81.en.pdf
13. Intergovernmental Panel on Climate Change. (2021). AR6 Climate change 2021: The physical science basis. Available at: https://www.ipcc.ch/report/ar6/wg1/
14. World Economic Forum. (2023). Global risks report 2023. Geneva: WEF. Available at: https://www.weforum.org/reports/global-risks-report-2023
15. World Health Organization. (2019). A world at risk: Annual report on global preparedness for health emergencies. Available at: https://www.gpmb.org/reports/annual-report-2019
16. Vlachos, I. (2024). The COVID-19 pandemic impact on supply chains: A systematic literature review. International Journal of Logistics Systems and Management, 48(1), 17–66. https://doi.org/10.1504/IJLSM.2024.138878
17. Rodrik, D. (2007). One economics, many recipes: Globalization, institutions, and economic growth. Princeton, NJ: Princeton University Press. Available at: http://press.princeton.edu/titles/8494.html
18. Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1–13. https://doi.org/10.1016/j.ejor.2015.12.023
19. Minsky, H. P. (1986). Stabilizing an unstable economy. New Haven, CT: Yale University Press. Available at: http://digamo.free.fr/minsky86.pdf
20. Tooze, A. (2021). Shutdown: How COVID shook the world’s economy. London: Allen Lane. Available at: https://www.spsonline.it/Corsi/Agora/Letture_libri/Tooze_Shutdown-How-Covid-Shook-the-World_s-Economy.pdf
21. Lawrence, M., Homer-Dixon, T., Janzwood, S., Rockström, J., Renn, O., & Donges, J. F. (2024). Global polycrisis: the causal mechanisms of crisis entanglement. Global Sustainability, 7, e6. https://doi.org/10.1017/sus.2024.1
22. Giddens, A. (1999). Risk and responsibility. Modern Law Review, 62(1), 1–10. https://doi.org/10.1111/1468-2230.00188
23. Namliiev, Y., & Kacicka, G. (2023). Crisis research foundations in the transforming world economy: a theoretical perspective. Kyiv Economic Scientific Journal, (3), 101–107. https://doi.org/10.32782/2786-765X/2023-3-15
24. Namliiev, Y., & Kacicka, G. (2023). Features of the functioning of the business sector in the conditions of the financial and economic crisis and the formation of the anti-crisis management mechanism. Kyiv Economic Scientific Journal, (2), 26–33. https://doi.org/10.32782/2786-765X/2023-2-4 [in Ukrainian].
25. Namliiev, Y., & Kacicka, G. (2022). Topical problems of regulating economic activity and developing anticrisis management. New Knowledge Journal of Science, 11(4), 5–12. Available at: https://science.uard.bg/index.php/newknowledge/article/view/940
26. Kacicka, G., & Namliiev, Y. (2023). Crisis phenomena as the basis for the emergence of destabilizing processes in the economy: the relevance of theories and development of crisisology research. Kyiv Economic Scientific Journal, (1), 103-116. https://doi.org/10.32782/2786-765X/2023-1-13 [in Ukrainian].
27. Diamond, P., & Skrzypek, A. (Eds.). (2024). The politics of polycrisis: Transforming social democracy in Europe. Foundation for European Progressive Studies. Available at: https://feps-europe.eu/wp-content/uploads/2024/12/241120_BOOK_3106-4_FEPS_Oxford_v6_web-1.pdf
28. Namliiev, Y., & Kopec, A. (2024). Anti-crisis policy strategies as a means of ensuring the economic security of enterprises. Kyiv Economic Scientific Journal, (4), 157-163. https://doi.org/10.32782/2786-765X/2024-4-22 [in Ukrainian].
© 2025 The Author(s)
This work is licensed under the Creative Commons Attribution 4.0 International (CC BY 4.0).
Namliiev, Y. (2025). ECONOMIC TRANSFORMATION UNDER UNCERTAINTY: THE BLUE ELEPHANT AS A GOVERNANCE-CONDITION CONSTRUCT. International Interdisciplinary Scientific Journal “Expert”, 2(1), 74–88. https://doi.org/10.62034/2815-5300/2025-v2-i1-007
Citation Format APA
Namliiev, Y. (2025). ECONOMIC TRANSFORMATION UNDER UNCERTAINTY: THE BLUE ELEPHANT AS A GOVERNANCE-CONDITION CONSTRUCT. International Interdisciplinary Scientific Journal “Expert”, 2(1), 74–88. https://doi.org/10.62034/2815-5300/2025-v2-i1-007.
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