Risk is things turning out differently than expected. Which constantly raises the question whether we understand the situation. The appearance of Black Swans catch us by surprise.
We tend to handle complexity through organisation and planning. In the process, much becomes familiar and expected, to the point of believing we have the situation under control. Meanwhile, only a small corner of a much greater universe of events have been so contained. And so every day is full of Black Swan moments, especially small ones.
For the big ones, we like to think we have created system defences strong enough to handle most eventualities now known to mankind. But our evolving complexity keeps throwing up new surprise possibilities.
We call them tail risks (“low probability, high impact”). But in the nature of things we mostly haven’t got a clue about these unknown unknowns as they fall outside our familiar reference frames. Neither their nature, size, probability.
I started this website in November 2013 with a Comment “Global risks locally perceived”. One of the risk clusters contained references to panic situations brought on by instant dissemination of catastrophic failure of some kind.
When marrying the outbreak of a non-containable contagious epidemic (a topic having some currency a few years ago) with instant communication means, interesting possibilities open up. The Ebola scare last year didn’t jump the fence, but the medical field’s awareness of future potentials here are major.
What stood out for me at the time was that business contingency planning is strictly limited to the known and familiar, assuming an awful lot of things to not go wrong. The idea of clients or staff not turning up for six weeks, and having no means to reach either, never mind what to do about perishables, was outlandish.
It didn’t fit our conception of our world.
And yet a virulent deadly epidemic when connected to instant communication can create the kind of situations far beyond our experience or comprehension, though probably reminding most of uncontrollable financial panics without any circuit breakers.
It will therefore not happen. It is ruled out of bounds.
Yet over the past 18 months something else unthinkable has slowly come into view locally. Catastrophic electricity grid failure, meaning no national electricity for at least a couple of weeks (six being the favourite number, though nobody apparently trying to guess how vulnerable/unstable the grid might be thereafter).
First reaction: won’t happen. Second reaction: government sources tells us it won’t happen (even if the Eskom CEO apparently often refers to it as unthinkable if it were to happen, something that should make anyone think twice).
This week, Engineering News carried an item originating with Reuters which explored in some detail what grid failure would mean. It looks remarkably like a 13th century visitation of the plague, or a 21st century global breakout of Ebola or similar flu virus. Or a situation where rule of law completely breaks down.
Things become chaotic.
We are told many households and businesses have by now done some first order contingency planning by acquiring diesel generators. Great stuff. Until you realise the infrastructure distributing diesel also runs on electricity.
So how quickly do you run out of diesel, nationally & locally?
If electricity, communication and liquid fuel distribution fail catastrophically, instantly or in a matter of days or weeks (and it is a cascading phenomenon, where the unprepared – the great majority – are knocked out immediately, and where pockets of contingency planning become overwhelmed in stages), life will drastically change in appearance as assumed fallbacks, defences and standbys fail to hold.
At which point true panic might hit, even though resolve to overcome will kick in just as strongly, sheer survival instincts taking over.
A physical inability to interact with clients & staff cannot be undone easily. So declare a holiday and write it off?
Does one have at least financial buffers to sit this out, or is the business a just-in-time wonder, also where its finances are concerned?
Phew, won’t happen. Then again, it could. Doesn’t cost anything to at least think it through on a quiet weekend morning, and mentally reckon the exposure, and what to do, what if, if only to plan that unplanned holiday in the garden.
Enough tinned sardines & unread books on tap, and not forgetting drink? And of course ready cash….and possibly some stuff with which to barricade in case undesirables come over unprotected walls. John Wayne films should have prepared you for all eventualities. Neighbourhood contingency planning takes on new meaning? Visit your local SPCA and hand out a few lottery tickets and get a couple of more friends for life into the bargain. These are some of the unintended consequences.
You should be fine, provided it doesn’t hit in July. Cold, and all that.
