Preparing for the unexpected: Part 1 in the Resiliency Series

Situation

Welcome to the 21st century, where recent events have made the interconnected and interdependent nature of life, living and commerce abundantly obvious. It appears that some people however, remain unaware of a series of anticipated convergences that might make the last few years of unprecedented disturbances look mild. If it were only human decisions and failures we had to contend with the future might be manageable, but there is far more to ponder. I refer to the fact that the ingredients to sustain life and commerce – the air we breathe, the water we drink, the energy and food we consume, and the planet we exploit - are blissfully ignorant of the plans, boundaries and policies established by men. No, these elements, which form the essence of life and living, more closely follow the universal laws of evolution and theories on industrial, economic, scientific and social evolution than they do quarterly statements. The problem is that trouble is brewing and in order to see the threats and develop a plan to respond, we must first connect the dots between the visible threats, such as sovereign debts, the Euro crisis, unemployment, food, power and water shortages, with the invisible threats seen only by a minority, such as geological and solar cycles, aging population, long wave industrial cycles, and the structure of revolutions. Those that can connect these stealthy dots improve their chances of survival by realizing that humanity is staring down the barrel of a few hundred trigger events which have the potential to create long-term systemic disruptions. These disruptions are not single events like an earthquake or hurricane but those might be the initial catalyst. I call these disruptions Large Scale Incidents (LSI™) and they commence from single trigger events but quickly escalate into massive, hundred billion dollar or more catastrophes. As with Katrina, the BP Gulf Oil spill or the current Japanese crisis, an LSI becomes an event that taxes global communication and transportation; it requires resources from the global industry, as well as international and national civil and military defense; it affects global commerce by disrupting manufacturing and supply chains; it wreaks havoc to capital investment plans; and finally, it affects the other elements which form the essence of life and living, the air, water and food chain. In other words, an LSI can wipe out your business, an industry, and even a civilization through tangible and intangible consequences.
 
As a former nuclear submarine officer trained to dodge an unfriendly torpedo at a depth of 1,000 feet with the nuclear reactor shut down, there are a few tips that might help assure survival if an LSI hit’s your sonar screen. The foremost lesson is that if the crew is not focused and aligned on the threat, it will probably kill you. Think about it. Secondly, it’s a good idea to have a plan for these situations since shooting at the exhaust trail of a rapidly accelerating threat is generally a waste of expensive and limited resources unless you are extremely lucky. That would be Mega Millions kind of lucky. No, surviving and thriving in a submarine is just like surviving an LSI, it’s not luck or crossed fingers, rather carefully calculating the threat’s trajectory and probability of evasive maneuvers and practicing six hours a day so when disaster strikes, the team is ready. Finally, these two lessons are worthless if the crew is busy squabbling about something trivial, like the mailbag being late, or the temperature of the shower water. This crew requires a leader with foresight, who aligns the team and instills the values that ensure victory; trust, transparency, teamwork, responsibility, accountability and integrity. The leader also requires a splash of deep knowledge and a sprinkle of wisdom. Deep knowledge allows the leader to be aware of the disturbances before the darn blip appears or the sirens go off. Wisdom, on the other hand, means the leader knows the answer to the important questions before the captain of your ship even asks them. What then are the threats and what questions must all the leaders out there prepare to answer for your captain? The first question is this: are you aware of the great convergences and more importantly, are you prepared for the ripple effect that lies hidden beneath the surface?
 
The Convergences

The probability of witnessing more LSI’s in the next five to ten years is unprecedented because so many cycles or events are happening simultaneously, yet at the same time there is not a single person who can confidently tell you what that probability is. It is unprecedented because never before have we been in a world of seven billion people, with some fifty percent of the population living in susceptible coastal regions, where supply chains are interconnected, and time and distance are irrelevant in the mind of traders, bankers and investors. After considering the conditions and catalysts discussed below that can spawn an LSI, perhaps you too will agree that the probability is increasing and the impact is also growing. This is not a good thing because an LSI is very disruptive.
 
Listed below is a short description of the visible factors that are happening all at once (converging) and how they exacerbate an incident At Time of Disaster (ATOD) and help turn a single event into an LSI.
 
Generally Visible Factors:

1.     The interconnected and interdependent world of supply chains, information, consumption and money ->where the impact in one country or region quickly impacts us all.
2.     Total population growth and population density ->where an incident historically may have impacted 5,000 may now be impacting 50,000 or 500,000.
3.     Sovereign debt burdens driving the Euro crisis and the monetization of the dollar and constraining local or state governments ->drives up inflation and the cost of response and key commodities and constrains the ability of local, national or civil response.
4.     Existing commodity shortages, particularly food, water and raw materials for critical infrastructure in dozens of countries ->this is exacerbated by losses and disruptions caused from the incident and the increased demand for more ATOD.
5.     More people not fully employed (different from pure unemployment) ->reduces the economic cushion that may have previously existed within a community as well as the ability of private citizens to provide assistance, and aggravates local community ATOD who then seek greater damages.
6.     Existing energy and power shortages and reliable power supply ->every historical LSI (i.e. 9/11, Asian Tsunami, Katrina, Gulf Spill, Japan) has in some form significantly reduced the generation, distribution and availability of energy.
7.     Significant social unrest (large absolute numbers) and turmoil driven by the commodity shortages, as well as unemployment, national-state-local-personal debt burdens and political regime changes ->causes an LSI to move from being an isolated incident to a potentially destabilizing geopolitical event.
8.     The federal and state deficits within America further negatively impacting economic development ->creates an unstable tax and regulatory environment which stagnates capital spending and delays long term strategic investments to provide more redundancy and reliability.
 
If that were not enough, those are only the generally visible conditions that exacerbate an incident. Some may even argue that these are not generally known despite the widespread media exposure. However, there is also a series of changes that take place over longer periods of time that few are aware of which also make the impact of a trigger event more explosive.
 
Generally Invisible Factors:
 
1.     Geological changes driven by solar and cosmic cycles ->causing a rapidly shifting north pole, increasing the earths wobble, and potentially destabilizing the earth’s crust as we enter what is expected to be a period of maximum solar flares that may or may not precipitate greater seismic activity.
2.     Aging population and skill shortages ->creating a workforce that does not have the tacit or explicit knowledge to solve problems let alone respond ATOD.
3.     Long wave industrial cycles (Kondratiev Waves) that imply the energy and transportation industries have outlived the normal long wave ->which drives these industries to take greater risks, or ignore system wide challenges that eventually create a sudden shift (i.e. Peak Oil, deep water drilling).
4.     The structure of scientific revolutions (Thomas Kuhn) that indicates how evolution is not a series of small incremental changes, rather incremental changes interrupted by radical shifts ->implying that the simultaneous merging of all these conditions and events could be a precursor to a larger, sudden shift.
 
The Catalysts

Thevisible and invisible factors listed above help enable an LSI when they are catalyzed by one of three sources of ignition which triggers the initial event, giving birth tothe cascading series of events. The three catalysts listed below are either increasing, or we are simply more aware of their occurrences. Whichever the case may be, the catalysts below have been growing in awareness and altering world-wide behavior and sentiments for the last decade and this is likely to continue in the next decade.

• Natural disasters such as earthquakes, tsunamis and hurricanes and the geological and cosmic changes affecting our planet
• Man-made accidents from fifty year old pipelines, cracking welds, skill shortages, failure to follow procedures, or lack of adequate loss prevention policies
• Man-made intentional events such as terrorism, rogue agents, or unrest in the Middle East

300 Trigger Events of Failure

The current crisis in Japan is a good illustration of an LSI but it is only one of potentially three-hundred possible trigger events around the world. Why is the Japanese crisis a good illustration? Because it demonstrates the convergence of all these forces; a natural catalyst being the trigger event, the visible impact to national (or global) food, water and power, the impact on the global supply chain, and finally the invisible forces at play such as long wave industrial (in this case nuclear) evolution, geological and solar cycles (the preceding solar flare) and the nature of revolutions (sudden shifts).

The initial catalyst however, the earthquake, is not the LSI. The LSI is the collection of events that cascaded from the trigger: the disruption of power, radioactive fallout, and the impact to global manufacturing supply chain, relocation of hundreds of thousands of people, contamination to the food supply chain, ocean, air, and water. The results are having an impact around the world in commerce, regulations, power generation plans, military deployments, and more. Hence, in order to be classified as an LSI the event must extend beyond regional boundaries and impact global resources, industries and result in changes to industrial patterns and consumer behavior.

I say there are approximately three-hundred possible trigger events that can cause a systemic failure by multiplying ten major industrial trade routes, each located across ten geographic hubs where an event is triggered by one of three catalysts. These trigger events then create a cascading effect which is the essence of an LSI.
The chart above shows the convergences, the combination of forces and catalysts that are happening at once that create trigger events, stimulating LSIs.

In summary, the synchronous and disruptive convergence of these factors shown in the chart implies it is a matter of when, not if, there will be more.

Many will say this cannot be so, but they are influenced by conventional wisdom and the normalcy bias, which cajoles us into believing that simply because it has never happened, it never will.
 
In Summary

A convergence of long wave cycles is increasing the probability and impact of large scale disasters, what I term a Large Scale Incident, or LSI. The LSI is a unique disaster created by a trigger event that is catalyzed by one of three sources, which due to a convergence of factors, cascades to form a far larger incident. Surviving and thriving  these threats requires a holistic enterprise resiliency plan which not only encompasses all internal functions and suppliers but the industrial eco-system, codependent industries, and sustainable food, water, power and facilities upon which daily operations rely. The world has entered a period of uncharted waters, where the air we breathe, the water we drink, the energy and food we consume, and the planet we exploit - are blissfully ignorant of the plans, boundaries and policies established by men. Despite the fact that we have learned the lessons before, it is not in the nature of man to adapt and change until forced out of necessity. As necessity is the mother of all ideas, inventions and evolution, we must embrace this mother and give birth to a new approach to maintaining availability. Disaster recovery, crisis response ATOD, and backing up data are no longer sufficient to ensure the car starts when we turn the key or the lights come on when we flick the switch. No, mother necessity is knocking at our door, asking us to take off the blinders and ask ourselves what we don’t know. The multiplying effect of the convergences is exponential and requires a new approach to managing systemic risks at all levels within society. The only way to survive and thrive the next ten years is to develop a resiliency strategy whose mission is to be always available, always adaptable and always excellent. It must be comprised of your supply chain, information experts, lawyers, risk and security managers, health and safety experts, environmental, regulatory, and local civil defense officials. Part II in the Resiliency Series will focus on the complications and impact to business operations, using the Japan incident as an illustration, demonstrating the effects of the cascading events. Are you prepared?