In strategic planning, we don’t believe in making ourselves proof against every possible outcome. Risk reduction is all very well, but you can’t eliminate all possible risk – or at least, not in any kind of economically sensible manner. There will always be some things that it’s impossible to anticipate, or guard against.
Flood defence is a good thing in that it’s only sensible to mitigate against the risk that a river bursts its banks after a long period of heavy rainfall… but it would be almost impossible to fortify a riverbank against any conceivable quantity of water. At some point, the cost of defence exceeds the cost of occasional damage. In Paris, in 1910, the Seine flooded to something like eight meters above its normal level. While it’s possible for civic engineers to defend against a reasonable amount of floodwater, there was nothing to be done in the face of such a deluge, except to evacuate people and accommodate them elsewhere. The metro system was impassable, and the roads were impassable, except by boat. Roads in those days were surfaced with wooden blocks and these simply floated away: long after the waters receded, travel within the city remained difficult. Basically, it was chaos… but nobody was particularly to blame, because this was what we call a hundred-year storm: an event of such severity that preventing damage simply wouldn’t be practical. Instead, you take the hit, and rebuild when you can.
Trouble is, though, in some industries we’ve become very sloppy when talking about these “hundred-year storms”. Let’s consider the aviation industry…
In 1979, there was the Energy Crisis, as the aftermath of the Iranian revolution led to decreased oil output and a corresponding spike in the price of oil; a situation that only worsened with the commencement of the Iran-Iraq war in 1980.
Not something anybody could have predicted: a hundred-year storm. Just like the Oil Crisis of 1973 that all but destroyed the prospects for Concorde, the Anglo-French supersonic airliner. With fuel prices heading through the roof, no airline placed an order for a supersonic passenger jet, except the flag carriers of the two nations behind the project who were obliged to take it: British Airways and Air France each took on seven of the magnificent, loss-making machines.
In 1986 came the Chernobyl disaster. Nuclear power doesn’t have a great deal to do with air travel… but it produced a noticeable dent in the number of passengers carried, according to the Advisory Council for Aeronautics Research in Europe (ACARE), as the figure below shows:Then comes more trouble in the Middle East, with the Iraqi invasion of Kuwait, and the first Gulf War. Another dent in the amount of business being done by the airlines. Once that’s out of the way, there’s the 1997 Asian Crisis, a financial meltdown that affected South Korea, Thailand, the Philippines, Indonesia, Singapore and elsewhere.
The terrorist attacks of September 11th 2001 caused another dip and soon after, in 2003, comes SARS (Severe Acute Respiratory Syndrome) which spread from Hong Kong, soon affecting people in 37 countries – with air travel as a factor in its rapid spread. Then in 2008 you’ve got the ‘Credit Crunch’ impacting upon the amount of business travel being undertaken, and pretty soon citizens who are concerned about their job prospects become reluctant to book holidays…
We might call them hundred-year storms, but I count something like eight major, hard-to-predict events in a half century… not including the ‘small’ events that only affect a single airline, like the 1988 terrorist bombing of Pan Am Flight 103 over Lockerbie, which damaged passenger confidence enough to bring down the airline, eventually. It remains to be seen whether Malaysia Airlines’ recent woes with MH370 and MH17 will have a similar outcome.
It’s possible to worry too much about very rare events – genuine hundred-year storms – but it’s clear that this is an industry where the unpredictable can never be allowed to become the unthinkable: where major disruption occurs not once every hundred years, but several times every decade. It’s an industry that depends upon aircraft and engines that are ordered years in advance, where systems require many years of development.
Give me the hundred-year storm anytime: it’s got to be easier than business as usual in the aerospace industry.
ACARE (2004) Advisory Council for Aeronautics Research in Europe, Strategic Research Agenda, Volume 2 [available online]