Anticipating Disaster, or Putting the Fear of God into Top Management

Article excerpt

Looking Ahead

Acts of God are the most widespread and disastrous events to plague us on Planet Earth. Second, but less common and often more regional, are the acts of one or more devils-as terrorists, psychos or vengeful individuals. Third, and more common and usually less destructive, are the individual acts of incompetents-all too often committed in technological systems.

Katrina illustrates the first, 9/11 the second, and Bhopal, Chernobyl and most regional blackouts illustrate the third.

In complex systems-the only systems worth worrying about-the three types may be all involved, as the auto companies, for years, tried to blame not faulty design but the "nut behind the wheel" for most deadly auto accidents. Human beings are rarely the totally responsible source of an industrial accident, even when it is Category Two above. In our complex technological world, people and machines are components of a single system, in which good design can severely limit or eliminate the risk of failure, misbehavior, faults, or difficulties with any or all components.

Why must we continually experience disasters and catastrophes? Limiting the answer only to the United States, the primary reasons lie in the reality that American business optimizes on the short run, and therefore generally has no interest in anticipating low-probability, high-severity outcomes. We find consistently, in our futures studies, that when we identify "wild cards" of mid-to-low-probability affecting any mid-to-large-size business, the inventory can easily run from 50 to 125 incidents. These large numbers usually surprise our clients, because they have never assayed them, nor paid attention to others' analyses of wild cards.

Kinds of Wild Cards

Generally the wild cards fall into two categories: First, acts of God-that is, meteorological or geophysical events; second are socioeconomic events such as a sharp increase in credit card defaults or a pandemic. "Ho-hum" usually succeeds a flash of concern unless there is an unequivocal crippling implication, or a way to cheaply undercut the risk with safeguards, or there are clear, workable, low-cost routes to recovery.

Both government and corporations cut corners, especially when the cut corners are literally invisible to most observers. Corner-cutting is the usual response to budget cutting, which in the case of government is well documented as the result of technologically uninformed legislators making arbitrary decisions about projects. Those in the agencies with engineering responsibility are often timid or intimidated about driving home the riskiness of legislative penury. Consider, with regard to Katrina, the Congress and the Corps of Engineers, as they got down to the levee.

Waking Up the Corporation

What will make corporations more aware and more responsible for their component of anticipatable technological disasters or catastrophes? First are incidents in their own industry. There is severely limited psychological capability to transfer the sensitivity to risk from someone else's sector to your own. Linked to this, of course, is the need for an aggressive assignment, internally or through consultants, to analyze the susceptibility of a company's systems to any of the three types of disasters noted above.

Second will be lawsuits, most likely the class action kind, reflecting failure to identify risks or the failure to adequately deal with risks when identified by the industry or in one's own company. Just consider what class actions have done to the tobacco and asbestos industries.

Corporate boards may act but only when it is clear that they have a fiduciary responsibility, which the failure to exercise will land them broke and in the pokey.

Whistle-blowers within the company have potentially powerful leverage, but they cannot be counted on to be there.

Trade associations and industrial research organizations may incur crippling liability from failure to explore and to act on identified risks. …

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