Predicting the unpredictable and thinking the unthinkable

“Human extinction may be the stuff of nightmares but there are many ways in which it could happen. While a dramatic end to humanity is possible, focusing on such scenarios may mean ignoring the most serious threats we face in today’s world”, BBC World News (2019).

It is February 2021, and who would have predicted or thought that we would still be engulfed in a global pandemic, a Brexit deal agreement yet to be fully understood, and a repeated call to arms for Scottish independence. With uncertainty in almost every aspect of life at the moment, risk is definitely on the menu, but how big is our appetite? It would appear that the way we approach and govern risk has never been more critical, but will we learn from recent events and ‘listen to the science’? The scale of the challenges faced by both Government and businesses seem endless. So, what has changed?

The Perfect storm

The recently published Global Risks report [1] and closer to home, the National Risk Register would suggest nothing has changed and the perfect storm is coming: a grim warning to us of climate change’s ever-growing problems, and the escalation of rising geopolitical conflicts and instabilities worldwide [2]. The word “instabilities” would suggest that secondary effects are also likely, including civil unrest and terrorism. The bad news is that the amplification of risk is likely to continue, the good news is somewhat sparse. What seems certain from a look at recent events is an increase in political risk generated by some states continuing to push the boundaries of what is internationally acceptable behaviour. The incursions of Chinese warplanes into Taiwan look set to test the waters of diplomacy and the resolve of the newly elected US President [3]. Unfortunately, politics and terrorism are like death and taxes, inevitable, but can we understand the risk element when it comes to prediction?

Listen to the science?

The French Security Operation BARKHANE in North Africa

Those of us who examine risk daily will be aware of the various risk models, and no doubt your business will have a preferred model. However, have you considered that the critical issue to risk modelling lies within the susceptibility of unpredictable risk, a category of risk both unthinkable and unexpected? If we were to move away from pre-determined, hard to explain ordinal scales and scoring methods, we would need to replace them with more accurate techniques. The science leads us to attempt to analyse the likelihood of an impactful event using more innovative risk models, including the “All-hazard approach”, which seems a perfect fit for the current position we find ourselves in. “What is the All-hazard approach”? A quote from the World Health Organisation explains,

“All-hazard is a concept acknowledging that, while hazards vary in source (natural, technological, societal), they often challenge health systems in similar ways” [4]

Then moving up a level, the introduction of probability processes such as Monte Carlo simulation planning (favoured by NASA and IBM [5] ) although better, still leaves accuracy at best still a guess, just a much more educated one.

The landscape is changing or slipping!

So, suppose we cast our nets wider and holistically look at risk on the bigger stage. In that case, we notice two main factors that have influenced the changing landscape of risk analysis and modelling over the last decade: the geopolitical position and the randomness of terrorism. Analysing and creating a political risk model has become increasingly difficult in recent years. The complexities of political modelling and the focus on smaller, more isolated issues are exacerbated by countries which are prone to pressure from potential state aggressors causing political and state tensions to spiral. The result is the increased dramatic exposure to uncertainty and threat, turning an isolated crisis into a significant event such as the annexing of Ukraine [6] and the here and now omnipresent COVID pandemic.

The violent shift in political divides and ideas makes the risk model hard to define and interpret. The “so what” of this situation forms other governments’ strategies and the stance now comes from sanctions, proxy wars, and state-sponsored terrorism/intervention. As I write this there is much discussion over sanctions being imposed by the EU to prevent the export of vaccine produced within the EU. If they go ahead, what next? Do we see a tit for tat series of sanctions that risks the vaccine rollout and the principle of free-trade and the market economy? Either way, it is a situation that was unthinkable only a few months ago.

Unbalanced warfare

Once we try to understand the political risk model, we are then confronted with the issues arising from terrorism risk analysis and realise that terrorism risk modelling is also unstable because terrorism is unbalanced warfare and therefore, how do we protect against it? Are we to assume that success lies with gleaning information from past terrorism campaigns and predicting the likeliness and type of future attacks, which means everything is probability/predicted based? [7] For Government and business, the question is how they can prepare for the changing nature of terrorism? Marsh’s 2019/20 Terrorism Risk Insurance Report [8] explains that unlike other perils, terrorism leaves the question for insurance brokers who contest quantifying the risk presented by terrorism because of its unpredictability.

The human factor

The unpredictability of human nature increases the risk as factions and disgruntled movement groups seek new outlets and approaches to deliver their message of displeasure, countering that of security forces who are constantly trying to predict the next move [9]. The Brokers’ Society explains that the human element continues the unpredictability with the cascading shift from the spectacular event to the lone-wolf scenario. For example, we now see the increased complexity of protest movements such as Extinction Rebellion favoured by a sympathetic nation but recently classified by the UK Home Office as a significant threat due to its challenged political views [10]. So, this leaves governments identifying how to protect the public, but how should businesses prepare? Avoiding hindsight bias but predicting the unpredictable trend of terrorism makes threat analysis and modelling extremely difficult.

Can we predict the future?

The “so what” of all this leads us to conclude that the theory of risk and risk modelling only works if you can predict the future, leaving governments, businesses and insurers relying on best guess efforts. Whilst the probability theory potentially lessens the chance of error, it remains to some extent, unbalanced by the threat of unpredictable risk. So, from all this, risk analysis requires a concerted effort to work. As we look ahead to the rest of 2021 and beyond, recent events have re-enforced that risk analysis must be precautionary, robust, and resilient. We must do what we can to inform our analysis, but the bottom line is that all too often, it is still only a guess,albeit an educated one.

If you would like assistance with your risk management and crisis response, then speak to our team at Inverroy Crisis Management Limited.

Related Information:

As our Sector Lead for Maritime Security and Business Continuity, Stu has written a number of blogs focusing on terrorism. He has explored issues ranging from civil unrest to sudden change. Click on the text to read each one.

Inverroy have supported national parliaments, renewable energy companies and hydrocarbon energy companies in crisis management, emergency response and horizon-scanning in the UK, Iraq, Mexico, Ghana, Senegal, Niger and Morocco. We also have experience of working in Libya and DRC.

Inverroy Crisis Management Ltd can offer energy companies a world-class resilience capability, encompassing emergency response, Business Continuity and Planning, Crisis Management, disaster recovery, horizon-scanning and risk management.

Inverroy can also build genuine, long-term local business continuity capability on behalf of our clients, training, supporting, mentoring and exercising local staff. This education capability can be extended to local higher education (Inverroy currently delivers both training and assessment in Risk Management modules to higher education in the UK).

Delivering a business continuity capability like this supports clients to meet Environmental, Social, and Governance obligations, makes them a more trusted partner with host governments, makes them more attractive to investors, and makes them more likely to thrive in the long-term.

Contact Information:

For more details and advice, contact Inverroy at enquiries@inverroy.com. Get in touch with us if you would like to improve your company’s resilience during 2021.