We all read the papers, listen to the radio or watch the nightly news and, for the majority of us, we are incredibly fortunate to be able to turn off or tune out the problems that occur in our backyards or around the world. Risk managers of companies take notice of what is happening and assess risk daily. Risk managers are accountable for being the problem solvers with the exception they will lead the company to higher ground, remaining operational if the flood gates open up.
Is disaster severity predictable?
A disaster can be predictable, but the severity poses more significant harm in a condensed, populated area than in a rural location. Both are the same event, but the exposure and financial impact can be more intense.
With transportation, routing is an important consideration for a risk manager. Loads are accepted in advance, and many carriers have designated routes for specific shippers. Risk management embraces consideration beyond man-made errors or occurrences. Weather can have adverse effects on travelled routes before or during dispatch. Some of these circumstances are not limited to hurricanes, earthquakes, severe winter storms on the east coast /central North America, flooding and wildfires. These conditions have paralyzed travel routes and introduced additional risk to other populated and unfamiliar corridors for many companies. Having alternate routes mapped may sound like a simple task, but it isn’t. Consider the impairment for specialized loads and permits purchased in advance and introduce new perils for unknown risks (terrain). Suppose major rerouting of a lane is necessary. In that case, further consideration must be given to mechanic repair along a new route that may be sparse, fuel accessibility limited along the newly mapped lanes, and unfamiliar lodging and warehousing…just a few perils. Regardless of what is being hauled, weather conditions directly impact bottom-line profit, particularly if feasible corridors are rendered impassable.
There are also unpredictable risks such as terrorism, war and pandemics. With the pandemic, we are all too familiar with the inability of ships to dock and unload their shipments and continue to float aimlessly at sea. What about food supply for the crew, diesel, and the potential of inherent weather conditions on the rise while unable to dock? What about freight brokers awaiting containers from Russia and suddenly having sanctions imposed?
It takes a lot of focus from risk managers to develop planned alternatives for both predictable and unforeseeable risks.
Every company needs to prepare for minor, intermediate and catastrophic planning. Manuals should be designed for training and education on how to monitor, respond, mitigate, and document various aspects of the operations. For example, computer equipment and viruses, initiating emergency phone lines, availability for alternative locations, epidemics, pandemics, staffing solutions, contingent impacts on operations such as suppliers (equates to immediate economical impact) equipment (repair / replace / accessibility), routing for transportation, fuel, repair facilities, spill, pollution, delegation and accessibility of authority in the event of severe loss (insurance company, contact info posted in common area), as well as the employees (medical, loss of identification/ education, safety). All these risks, and many more, could have an immediate or lingering effect on customers or contracts and affect the integrity of the company if service or expectations are hindered.
These are just a few ideas. Risk management is very intense and complex. It is an educational arena where every penny spent in disaster planning is worth it. The least interruption to normal business operations translates into profit. If it is not feasible to hire full-time employees in a risk management role, then the advice would be to hire risk management consultants to assist, evaluate and create a living document that a company can build upon.