Do You Know Your Black Swan?

Risk is an inherent part of life. Daily, things go awry for individuals, businesses, organizations, and communities. Some issues are minor, such as a car battery failing or a high-speed internet disruption. These incidents are always inconvenient and seem to occur at the worst possible times. Thankfully, there are ways to mitigate certain risks, like taking an Uber to reach an important meeting on time or using Starbucks' Wi-Fi to complete a vital project for a client.

Some risks, however, can have a more significant impact, both financially and in terms of safety. Consequently, certain institutions cannot afford to wait for power restoration over a day or two, such as hospitals and data centers. They invest in generators, often running on natural gas or diesel, or have contingency plans to reroute patients or data to other locations.

Yet, some risks appear so far-fetched or unlikely that they are not even considered in planning. The concept of "black swan events," though not new, was popularized by economist Nassim Taleb to describe statistically rare events with extensive repercussions.

Just two days ago, it's likely that few in Baltimore considered how their lives would change if the Francis Scott Key Bridge were to collapse.

Regrettably, they are now experiencing their black swan event.

If it Can Happen in Baltimore, it Can Happen Anywhere

According to The New York Times, the container ship Dali left the Port of Baltimore around 1:00 AM on Tuesday, March 26, 2024. Soon after leaving the port, The Washington Post reported that “crew members aboard the Dali alerted authorities that the vessel had lost power, which prompted a rushed effort by authorities to halt vehicle traffic and evacuate people from the bridge.” At approximately 1:28 AM, the ship hit the bridge.

The bridge’s collapse has sent shockwaves through both the local Baltimore community and the broader industrial landscape. The incident not only disrupted local transportation but also raised crucial questions about the resilience of supply chains.

In an era marked by increasing complexity and interconnectedness, organizations must evaluate and fortify their supply chains to withstand unexpected disruptions. The events surrounding the collapse of the Francis Scott Key Bridge highlight why companies need to prioritize the evaluation of their supply chain resilience.

What Happens Now?

The repercussions of the bridge collapse extended beyond the immediate vicinity, affecting businesses reliant on efficient supply chains. From manufacturing plants to retail outlets, the disruption underscored the fragility of modern supply networks. Once again companies will find themselves grappling with delays in receiving raw materials, shipping finished products, and meeting customer demands.

As reported by NBC News, Secretary of Transportation Pete Buttigieg stated "there is no question that this will be a major and protracted impact to supply chains.” Secretary Buttigieg further stated that "it’s too soon to offer estimates on what it will take to clear the channel and reopen the port."

To illustrate the potential impact to the U.S. economy, The Port of Baltimore is the biggest automobile shipping hub in the country.

The Imperative of Supply Chain Resilience

The collapse of the Francis Scott Key Bridge serves as a stark reminder of the critical need for supply chain resilience. In today's globalized economy, where businesses operate in a web of interconnected suppliers and distributors, disruptions in one node can reverberate throughout the entire network. As we have all come to know all too well in recent years, factors such as natural disasters, geopolitical tensions, infrastructure failures, and pandemics can all disrupt the smooth flow of goods and services.

Companies that fail to evaluate and strengthen the resilience of their supply chains are vulnerable to a myriad of risks. These risks not only encompass financial losses but also damage to reputation, loss of market share, and erosion of customer trust. Therefore, proactive measures to enhance supply chain resilience are no longer optional but imperative for business continuity and long-term viability.

Key Strategies for Evaluating Supply Chain Resilience

To fortify their supply chains against potential disruptions, companies must adopt a multifaceted approach that encompasses the following strategies:

• Risk Assessment and Scenario Planning: Conduct comprehensive risk assessments to identify vulnerabilities within the supply chain. Scenario planning helps anticipate various potential disruptions and formulate response strategies accordingly. Specifically, business impact analysis studies should be conducted to identify and quantify the short- and long-term impacts that disruptions can have on organizations.
• Diversification of Suppliers and Geographical Spread: Relying on a single supplier or geographic region increases exposure to risk. Companies should diversify their supplier base and distribution centers to mitigate the impact of localized disruptions.
• Investment in Technology and Data Analytics: Leveraging advanced technologies such as predictive analytics, IoT sensors, and blockchain can enhance visibility and transparency across the supply chain. Real-time data enables proactive risk management and swift decision-making during crises.
• Collaboration and Communication: Forge strong partnerships with suppliers, logistics providers, and other stakeholders. Clear communication channels facilitate rapid response and coordination during disruptions, enabling agile adjustments to mitigate impact.
• Resilience Testing and Continuous Improvement: Regularly test the resilience of the supply chain through simulations and drills. Post-event analysis helps identify areas for improvement and refine contingency plans to enhance resilience over time.

Don't Wait for the Event to Happen to Make Your Plans

The collapse of the Francis Scott Key Bridge is a stark reminder of the critical need for companies to assess and strengthen their supply chain resilience. In a world where interconnectivity and unpredictability are the norms, disruptions are inevitable. Companies can lessen the effects of such disruptions and maintain business continuity by implementing proactive strategies like risk assessments, diversification, technological advancements, collaboration, and ongoing enhancement. The experiences from Baltimore highlight the necessity of making supply chain resilience a strategic focus for enduring growth and market competitiveness in the current volatile business landscape.

In the field of business continuity and disaster recovery, it's often said, "plan for the worst and hope for the best." Another way to express this is...

"Hope is not a plan."

Et, al...

Review: "2054: A Novel"

About three years ago, Elliot Ackerman and Adm. James Stavridis (Ret.) wrote a novel called "2034: A Novel of the Next World War". I read that book from beginning to end in a short amount of time. It was a well-written, page-turner of a book, and I couldn't recommend it highly enough.

However, it also scared the pee out of me!

Why?

Because it painted a convincing picture of not only how China and the US could get entangled into a war, but how it could also play out.

Fast forward to now, and the authors have written a sequel to keep you up at night. This one is called "2054: A Novel" which is set in a post-nuclear world where the United States and China have both suffered devastating attacks.

Spoiler Alert: You may want to think twice about buying real estate in either San Diego or Corpus Christi.

This new story unfolds against a backdrop of political turmoil and technological intrigue. The mysterious death of President Ángel Castro triggers a race to achieve the Singularity—a convergence of technology and humanity.

And the Verdict is...

If you didn't read "2034", you may feel lost and not appreciate how the actions in the first novel set up the climate in "2054".

However, if you appreciated the first book, you'll likely enjoy this one as well. Unfortunately, it lacks the intense excitement and fear that the first book provided. Although the book tackle's significant themes, it sometimes struggles to convey the sense of urgency that defined “2034.” Nevertheless, “2054” offers a compelling examination of technology, politics, and how each can influence the other.

If you enjoy what you've read here and you think I might have a clue what I'm talking about, then please reach out to me if you would like me to present to your firm or organization. I have experience talking to professional organizations, trade conferences, as well as universities. I've also appeared in newspaper articles and podcasts. Also, I'm available for birthdays and bar mitzvahs.