by Tom Gordon, CFPIM, Missouri Enterprise Project Manager
My great-grandmother had the reputation of being a ‘spae-wife’ – meaning a physic. She could very accurately read palms and cast horoscopes. Many young ladies in our community relied on her for some pre-marriage guidance. Around 1912 or so she started to see that many of our young ladies would be very quickly widowed. She saw the future but the problem was that she could not see what it meant.
Every December The Economist publishes “The Year in XXXX”, an analysis of the likely trends; socially, politically, financially and in business during the coming year. Invariably, they miss the Black Swans but are usually honest enough to admit it, much like my great-grandmother! In risk analysis, a Black Swan event is a metaphor for a major effect, which comes as a complete surprise. With the benefit of hindsight, we often “kick ourselves” because we did not see it coming.
Although I do not have my great-grandmother’s vision (admittedly at parties, I do love to tell selected people not to start reading War and Peace) nor am I reimbursed at the level of The Economist pundits, but there are some rather ominous Black Swans lurking in the closet of 2017 and in the spirit of risk mitigation they should be addressed.
At a macro-level, global warming is going to impact this tiny planet. Remembering the disastrous flood of about 20 years ago in the Midwest I am forced to wonder how many organizations, that are situated in the Kansas City bottoms, are nervously watching the weather forecasts.
A wise CEO will look at the skills in their organization and attempt to mitigate the risks associated with long-serving baby-boomers going off to Florida to play Mah Jongg or golf. A simple Skills/Experience matrix would certainly help in this exercise. It is especially important in the survival of family owned concerns. Many fail in the transition between generations.
Another concern brought on by the sound of beating wings is the whole supplier relationship, especially if critical items are imported. The place to start is the analysis and construction of a detailed supplier-relationship map.
An SNL comedian quipped during the recent election that we might wake up and find that President Trump has nuked Denmark. Well, it would certainly solve the Sleswick-Holstein question once and for all, but that is not quite so vital to US manufacturing as castings or bearings made in China.
A Supply Chain Manager should certainly start looking very seriously at domestic sourcing and a clever entrepreneur might see the opportunity inherent in the risk of supply relationship disruption and (a) build up critical component inventory and (b) prepare to manufacture those products in the US.
Information Security is an area where a 20-year old in a drafty garret somewhere can bring down the biggest organization. Again, simple precautions can help protect the organization and a good place to start is the ISO 27001, Information Security standard. The message is not to wait until ransom-ware cripples the organization – protect now.
The very nature of Black Swan events is that they cannot be anticipated at the micro-level but a certain degree of preparation will ameliorate their effects when (not if) they emerge from the closet.