Black swan coming in…

Black SwanMake sure your company is equipped to deal with the unexpected.

Black swans are unexpected events with profound, even catastrophic effects. When they’ve happened, most people try to rationalise them and how they could have been prepared to deal with it. But the truth of it is that a black swan is so unexpected it’s virtually impossible to foresee it.

The Twin Towers is perhaps the classic black-swan event of recent times. It changed the face of geopolitics and while there were many theories about how the authorities should have seen it coming, this is just the perfect vision of hindsight.

“Business is becoming more and more vulnerable to such high-impact, unforeseeable events thanks to the uncertain global, and thus complex, business environment. For one thing, organisations are employing ‘just-in-time’ inventory strategies and supply chains are becoming more critical which dramatically increases our risk exposure; for another, there’s the pressure to be a 24/7 business,” says Michael Davies, CEO of ContinuitySA. “No getting away from it: there are just more potential points of failure.”

However, Davies continues, there’s one black swan that is keeping everybody in South Africa awake at nights: a national blackout or a sustained regional blackout. Because it would affect the whole grid or a section of it, such a blackout could last for days or even longer.

Although most commentators, and Eskom itself, believe either of these to be a remote possibility, Davies feels companies should give thought to how they would handle such an eventuality.

“Even though it’s unlikely, the consequences would be devastating so it’s just as well to have a plan in place,” he says. “In addition, understanding what would be required will also make your business continuity planning for the inevitable ‘normal’ load-shedding better.”

Davies offers the following points to consider.

  • Key to survival is the ability to generate power. At present, this still means diesel generators. Diesel stocks have to be managed actively (diesel goes off after a while), and generators and uninterruptible power supplies need to be tested regularly.
  • During a prolonged power outage, accessing replacement diesel is critical. Most companies will have enough for a few days at most, but a regional or national blackout could last weeks. One option would be to have a tanker-trailer so that the company could travel to get diesel in the event there is a shortage of local supplies.
  • If business premises are not owned and are multi-tenanted, it is likely that the landlord is responsible for power contingencies. Companies should ensure the generator is being maintained, and that the diesel supplies are managed.

At the same time, Davies advises that companies should give some thought to other high-impact, unexpected risks. He identifies cybercrime as one area of concern. While this type of crime is becoming more common, many companies do not realise how common because those who suffer such an attack generally do not publicise the event to protect their reputations.

Other challenges to which companies might not be giving enough thought include fire and flooding, especially in shared premises where one is vulnerable to the poor planning of fellow tenants.

“Whatever the colour (or size) of the swan, the only way to cope with the unexpected is to build a resilient organisation—one that is structured to cope with the unexpected,” Davies concludes.

[author] [author_image timthumb=’on’][/author_image] [author_info]Michael Davies has been involved in the Business Continuity Industry for more than ten years, having spent the last twenty years in the IT Industry with companies such as Dimension Data, Enterprise Technologies, Amdahl, Computer Configurations and MGX. Michael has predominantly been on the financial side of business with the most recent progression in 2011 being from financial director to CEO of ContinuitySA in 2011. He has spoken on organisational resilience and BCM at various conferences and heads up the largest independent BCM supplier in Southern Africa. Michael completed a B.comm degree from the University of Natal and a MBA from the Henley College in the UK. He is an affiliate of the Business Continuity Institute based in London and a member of the Institute of Directors [/author_info] [/author]

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