Warren Buffett insists that “The CEO should regard his position #1 as the Chief Risk Officer. Now you have a lot of other functions too, but you should wake up every morning and think about ‘is this place built to take everything’?” Very few organizations address the full range of feasible threats to operations, ignoring disasters that experts say are “inevitable” though unpredictable.
When the grid goes down from a nuclear EMP attack or major solar flare, it will take at least a year to repair it. New technologies, including bioengineering, nanotechnology, artificial intelligence, are generating new means for a disaster that could halt economic activity for months, and lead to widespread, long lasting loss of law and order. Most businesses will not survive a bad collapse, with key people dead, plant and property that is not guarded looted and destroyed.
Business risk management or continuity of operations plans only deal with “normal,” historic disasters that have triggered relatively minor disruptions and losses. Our future is increasingly one of major Black Swan disasters that could lead to a collapse lasting from months to years. A “collapse” means the economy is no longer functioning and there is widespread loss of law and order.
It is very feasible for most organizations to protect their key people and facilities. There are investment strategies and standby lines of business that an organization can switch to when a collapse occurs. While much harder to do, there are some businesses that could even benefit from a collapse. Nassim Taleb, author of The Black Swan: the Impact of the Highly Improbable, uses the term “antifragile” for investments or businesses that are not just able to survive a Black Swan event, but actually benefit from them.
For many companies, a carefully analyzed and selected set of low cost risk mitigation measures, implemented in advance, can likely keep all or key parts of your organization operational, or at least not permanently destroyed, from even big disasters. Some examples of company collapse survival plans:
- arranging for a survival community like Fortitude Ranch to keep key personnel alive
- procedures to quickly save information and key resources by moving into a secure facility
- shifting to operations with reduced staff in a collapse of a product line that will be in demand, opening sleeping facilities, modifying building (prepositioned materials and plans, no construction until collapse), to keep facility and personnel safe
Many more examples and details are available in a White Paper you can download at https://www.collapsepreparedness.com/
With growing threats from new technologies and a high, increasingly likelihood of a “collapse” in a functioning economy and widespread loss of law and order, businesses should seek alternative modes of operation and even new lines of business that will enable them to at least survive the collapse, and ideally to continue operating, perhaps producing a different product that is producible and vital to have to survive a collapse.
While monitoring for threats to your business, it is wise to also look for Black Swan investment opportunities (as Nassim Talib does). Most disasters are not “bolt from the blue” attacks, but emerging threats that are usually reported on, but ignored by 99%+ of the population. If you are prepared to make some hedge investments, puts and calls, on public companies that are poised for great or disastrous change, you may be able to make a quick profit before the calamity that harms everyone hits. Companies can make hedge bets against some of the big public company losers, firms that will profit from the disaster you can invest in, and a very few antifragile investments that will do well against a wide range of pending Black Swan events. If you institute a technology and threat watch program, you may also find actionable threat information that lets you make some low (and strictly limited) cost hedge investment bets.
Taleb says the best use of our brain is to be on the lookout for Black Swans and think about how they might happen and the impacts they may have. Taleb’s book, Antifragile: Things that Gain from Disorder makes a compelling case for anti-fragile investments–an investment that will benefit when something bad occurs. You can often identify companies that will suffer severely from a pandemic: international airlines will suffer huge losses in many Black Swan scenarios, while some companies may benefit.
While 99+% of people are surprised by Black Swan threats, the intelligence community, hedge funds and those who are working to not be surprised can usually predict them and either avoid the damage or profit from them. The impact of new technologies and more people and more threats, plus our increasing vulnerability and the fragility of our economic system and technologies, is that we’re going to have a lot more Black Swan disasters.