Risk Rap

Rapping About a World at Risk

Black Monday

Americans are waking up this morning to one hell of a Thanksgiving hangover.  As the USS George Washington plies the waters of the Yellow Sea daring North Korea to “make our day”;  we are barraged with the news that the King of Bahrain and the House of Saud is urging us to take out Iran’s nuclear reactors.  Wikileaks is spilling the beans about America’s hypocrisy and disingenuousness of empire while the plutocracy is concerned that Black Friday wasn’t black enough to keep their fat dividend checks flowing.  Our abandoned and ill led armies continue roaming the deserts of Afghanistan and Iraq like lost Bedouin in search of a pesky phantom jin that only materializes to harass, kill and maim our unsuspecting and vulnerable young soldiers.  The European Union is loaning $160 billion to Ireland’s banks so institutional investors can be made whole and the Irish people can labor the rest of their lives to pay off the debt.  This is getting Wall Street a bit nervous and may drive up interest rates threatening the portfolios of well healed investors and choking off our elusive economic recovery.  But as Sean Hannity is fond of saying, “don’t let your hearts be troubled”, cause Palin bagged a Caribou last night on Sarah’s Alaska and Cyber Monday is here and nirvana at Amazon is just is just a few clicks away.  Party on Garth…….

You Tube Music Video: Donald Byrd, Change

Risk, stability, peace, economy

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November 29, 2010 Posted by | disaster planning, nuclear, Uncategorized, war | , , , , , , , | Leave a comment

Leaky Reactors, Cyber Terror and Police States

This is how the world ends
This is how the world ends
This is how the world ends
Not with a bang but a whimper
The Hallow Men TS Elliot

A few interesting  news items recently passed without much notice.  Two nuclear reactors located in the Northeast had to be  brought offline due to operational failures.  The Vermont Yankee reactor sprang a leak and had to be shut down.  The other incident occurred at the thirty six year old Indian Point reactor located about twenty miles north of New York City.  The cause of the problem at Indian Point was a transformer fire.  Both reactors  are owned and operated by Entergy and mirror similar problems at the Excelon operated Oyster Creek reactor located in south central New Jersey.

These incidents are endemic to aging nuclear power facilities.  These plants came on line during the the 1970’s and are now approaching the half century mark of service.  When these plants were commissioned it was believed they would have a shelf life of 40 years.   As the expected useful life span of these facilities approach regulators routinely grant extensions to the operators.  Operating these facilities past that point heighten potential risk factors.  As nuclear reactors age, the stress on these complex systems and containment facilities raise risk factors heightening the potential of system failure that lead to catastrophic events.

Leaky plumbing at the Oyster Creek nuclear plant is the culprit in poisoning the Cohansey Aquifer with 180,000 gallons of tritium contaminated water.  Regulators and environmental officials assert that the level of radio active isotopes in the water supply that serves South Jersey and parts of Philadelphia is well within acceptable levels for human consumption.  I guess that all depends on your definition of human; but I and many others remain skeptical on the subject of drinking radioactive laced water.

The aging nuclear infrastructure of the United States is a growing cause for concern.  The nuclear power industry was halted in its tracks in the 1980’s by a strong No Nukes environmental movement.  At the time it was generally understood that the cost of catastrophic risk and the industries inability to solve the long term problem of disposal and management of nuclear waste turned the public against the industry.

The Three Mile Island accident in Pennsylvania and the disastrous meltdown at Chernobyl in the Russian Caucuses led to a moratorium on new plant construction in the United States leading to the actual abandonment of plant construction in the Washington and New York.  It created a capital market crisis as the fear of defaults on WPPSS  revenue bonds spread to cast long shadows on the entire Muni Bond market.  The state of  New York stepped in to purchase the facilities of Long Island Power in order to make bondholders of the closed facility whole with tax payer money.  It was kind of like socialism for investors.

While most of the world has continued to build nuclear plants to address growing energy needs; the United States has not built a nuclear plant since the 1980’s and has lagged the world in using nuclear power to address energy needs. Sentiment on the desirability of nuclear power is beginning to change.  The Pickens Plan, former VP Dick Cheney’s secret meetings to develop a national energy strategy, the Gulf Oil Spill, the need to reduce dependence on foreign oil and the growing acceptance that the burning of fossil fuels is slowly cooking the planet has placed nuclear power back on the table as a viable component of America’s energy portfolio.

China is committed to building 100 nuclear power plants to wean itself from its crippling dependence on coal.  The United States is charging hard to keep up with its fast growing Asian competitor in a 21st Century nuclear power race.  The aggressive pursuit of nuclear plant development will increase the power and control of corporate entities charged with their construction, management and on going administration.  To accomplish a dramatic build-out in nuclear infrastructure large areas of  land situated near a plentiful water supply will need to be secured.   Environmental impacts, regulatory oversight and public transparency will be sacrificed at the alter of cost efficiency, expedience in implementation and security to protect the vulnerable facilities against the pervasive armies of terrorists that lurk in the shadows near every nuclear plant.

The controversy surrounding the collusion of government and business to exploit the Marcellus Shale natural gas vein is an instructive model of what we can expect from the stakeholders pursuing an aggressive campaign to develop Americas nuclear power infrastructure.  The dismissal of regulatory controls, the eminent domain of corporate interests, the opaque wall that shrouds risks factors and hides the environmental degradation resulting from the practice of fracking and the sacrifice of watersheds and aquifers to the expeditious extraction of natural gas are some of the documented behaviors of  a wanton corporate will imposed on the body politic.  Tragically this near sighted perspective willfully sacrifices the sustainable ecology of communities to the sole purpose of the profitable extraction of resources to serve shareholders of private corporations.   The nature of the nuclear beast will require that its interests be enforced by courts of law guided by extreme prejudice and protected by police battalions, state  guard units and private security groups in the name of national security interests.

The recently discovered Stuxnet computer virus is an indication of how the stakes are being raised in the nuclear power shell game.  The launch of a successful cyber attack on a nuclear facility anywhere in the world is a real game changer.  Self deluded uber patriots act more  like real pinheads if they believe that the destruction of Iran’s nuclear power capability is a harbinger for Middle East peace or enhances the   security of either Israel or the United States.  A nuclear event in Iran or North Korea are real game changers for the course of human history and the well being of  humanity. A clandestine service that can take out Iranian nuclear reactors can also be deployed to take out a reactor that is twenty miles north of New York City.  Or consider the consequences of a summer heat wave ravaging the citizens Philadelphia dying of thirst because the water supply is contaminated with radiation.  The extent of civil unrest would be extreme overwhelming the local law enforcement and judicial capabilities.  If these bleak scenarios come to pass,  Americans will be pining away for the good old days when a quick feel up at the airport by a TSA gendarme is fondly recalled like a high school make out session.  The pernicious yoke of marshal law under the nuclear challenged corporate security state will be incessant in practice and swift, sure and dire in its execution.

You Tube music video: No Nukes Concert 1979: Doobie Brothers Taking it to The Streets

Risk: democracy, energy policy, nuclear power, civil liberties

 

November 22, 2010 Posted by | community, culture, democracy, disaster planning, ecological, energy, environment, government, military, nuclear, regulatory, risk management | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Evacuate to Where?

Tomas,  a dangerous tropical storm is bearing down on Haiti.  No doubt, Tomas carries with it the potential to drop perilous amounts of rain as it makes its way across the distressed Caribbean nation.   The millions of refugees living in tent cities in the aftermath of the devastating earthquake are now menaced again by potential flooding and landslides caused by the threat of torrential rains.

In response to the threat, government officials have issued a Code Red warning and advise the people living in the tent cities to evacuate.

The distressed situation of the Haitian people approaches biblical proportions.  It would seem that Moses himself has raised his rod against them to deliver pestilence, plague and destruction on this vulnerable island nation.  As Tomas approaches the defenseless people of Haiti, it threatens to wash them away in torrential rains forever swallowing them in an avalanche of mud.  Let us pray that the entombment of  tent city refugees in the good earth of Haiti is not  the final solution to this humanitarian nightmare.

A call to evacuate?  Evacuate to where?

You Tube Music Video: Charles Mingus, Haitian Fight Song

Risk: environment, refugees, natural disaster

November 4, 2010 Posted by | disaster planning, ecological, environment, geography, government, homelessness, poverty | , , | Leave a comment

Drill Baby Drill: The Bill Comes Due

Louisiana has declared an emergency shrimping season for the off shore beds at the mouth of the Mississippi River. The emergency harvest of shrimp, oysters and stone crabs is a desperate attempt to grab a final yield from a once bountiful aquaculture that sustained and defined the regional Cajun identity for many generations. The spreading oil slick gushing from a toppled offshore oil platform threatens to bury that life as it covers the delicate ecology with a toxic cloak that may spell a death blow to a regions way of life.

It is estimated that 210,000 gallons of crude oil are gushing into the Gulf of Mexico every day following the explosion and collapse of British Petroleum’s Deepwater Horizon offshore drilling platform that killed 11 workers. The Transocean rig was reportedly not equipped with a special safety devise that should have capped the well with the collapse of the oil platform. This assertion is being denied by Transocean stating that the well was equipped with the devise but unfortunately it failed to work. The use of the safety devise is a regulatory requirement for any offshore drill platforms in Europe but in the United States this safety devise is not required and is considered an optional operational risk devise. Like the recent coal miner disaster at Massey Mines, and word today that two more miners have died in Kentucky, occupational wages sometimes result in death. We need to understand that preservation of life and environmental safety are critical components of a cost of doing business that must be factored into ROI calculations and risk assessment scenarios.

The Coast Guard is in charge of emergency response to this growing disaster. The Coast Guard is skimming surface oil and using containment booms to control the growing oil slick. The Coast Guard is also considering igniting controlled burns of the surface oil which would release toxicity into the air. Another strategy being considered is the injection of chemicals into the spill to coagulate the oil. This strategy has never been attempted at such an extreme 5,000 foot depth and would also release additional toxins into the water. Technological solutions like the drilling of a relief well or the construction of a containment vessel would take months to accomplish. Man made solutions to cap the environmental disasters of their making always seem to pale in comparison to the scale and fury unleashed by the unrestrained power of nature.

This event marks yet another example of making an honest assessment of the true costs of our behavior and choices. Like the global economic meltdown that was the result of the unfettered credit orgy the bill for risky behavior always comes due. The continued focus on the exploitation and extraction of fossil fuels at the expense of alternative sources of energy comes at a great cost. This disaster may indeed be the death blow to an aqua industry that nurtured a region for many generations and informed a cuisine and culture respected and treasured by throughout  the world.   And like any excursion to a fine NOLA restaurant, someones always got to pick up the tab.

The bill always comes due. We want to gorge ourselves at the well of cheap energy only to discover how dear the price of this devil’s bargain really is. Environmental degradation is the most obvious tip of a precarious iceberg that threatens to tip as it melts into an ocean of unsustainability. A destroyed eco-culture of marshlands and animals, abandoned hamlets and townships no longer able to extract a living from the land are the immediate visible signs of the cost of this deal with the devil gone bad. We must begin to realize that the cost of cheap energy also requires our nation to continually engage in wars and military actions to protect this vital resource.

Cheap oil has badly skewed our economic infrastructure. It has encouraged our businesses to produce inefficient cars that led to the decline of a strategic industry and destruction of cities like Detroit and Gary Indiana. It caused the terrible moniker of rust belt cities to be pinned on a region of our country that was once the source of our nations wealth. Cheap energy help turn our prized manufacturing centers into economic anachronisms. Cheap oil has forestalled commitment to developing innovative green technologies that continues us to cede our position as a global manufacturing power. As we watch China and Brazil march forward with massive commitments to the development of energy innovation industries that will serve future needs of an energy dependent global economy, America is engaged in a bloody rear guard action to defend the ways of an old dying world too protect depleting trickles of oil.

Tonight as Americans go to sleep in their energy inefficient homes it is hoped that they may pause to consider that drill baby drill is a rallying cry for an unsustainable dying future. Think of the villages along the Louisiana bayous and how their way of life is coming to an end. Its time to consider the real costs of a Drill Baby Drill economy and begin to chart a course to a sustainable future.

You tube Music Video: Cajun Music: DL Menard and Louisiana Aces, Out My Backdoor

Risk: economic, environmental, culture

April 30, 2010 Posted by | culture, disaster planning, ecological, environment, politics, regulatory | , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Managing Pandemic Risk

pandemicThe Swine Flu outbreak carries with it the potential to severely damage the financial health of small and mid-size enterprises (SMEs). Left unmanaged pandemics can impair profits, generate losses, undermine the contribution of key employees, disrupt supply chains, halt operations and undermine an enterprises financial health that can ultimately lead to bankruptcy.

Though many consider pandemics as a force majeure risk event that lies beyond control, businesses can take steps to mitigate and manage the drastic challenges a pandemic can pose to a business. This is particularly important for businesses that find themselves in a weakened position due to the recession. Businesses that have become highly stressed due to the current business cycle are at acute risk of becoming insolvent due to the shock of this potentially catastrophic risk event. Business managers, bankers, shareholders and businesses with extended supply chains need to take steps to manage and mitigate the severe  effects of pandemic risk.

The first step is to create or update a business continuity plan. Business continuity plans need to address a range of issues that includes planning for disasters in general and planning for the unique challenges an influenza pandemic presents and integrate mitigation initiatives into critical business processes.

All businesses are unique. Addressing a pandemic risk event in your business plan will require you to conduct a risk-management assessment on all aspects of your operations, business processes and market impact to ensure continued operation and financial health of the enterprise.

Some things management must consider in its review are:

  • Assess how you work with employees, customers, contractors to minimize contagion threats
  • Determine mission critical business functions your business requires to maintain operations
  • Stress test your business operations to determine how to function with high absentee rates
  • Review inventories in case foreign or domestic suppliers and transport services are interrupted
  • Review supply chain links, determine at risk suppliers and identify backups
  • Reorganize work spaces to minimize the spread of the disease
  • Equip employees to support telecommuting
  • Develop communication strategies to update employees, customers and the media
  • Use this opportunity to expand e-commerce capabilities
  • Promote awareness of the problems associated with pandemic flu
  • Alert employees about what steps you’re taking and what they can do to limit the pandemic’s impact
  • Review sick-leave and pay policies to ensure they don’t discourage workers from staying home when they’re ill
  • Make backup plans if you need to pull people out of countries where the epidemic strikes
  • Develop a travel policy that restricts travel to areas where the virus is active
  • Stock up on masks and sanitizers, and consider staggering work hours to limit the size of gatherings

Sum2 publishes the Profit|Optimizer product series.  The Profit|Optimizer is the leading SME risk management platform that helps business managers and business stakeholders quickly assess enterprise risk factors and take considered action to mitigate and manage those risk factors. Sum2 will be releasing a pandemic risk assessment module by the close of this week.  The product will retail for $95.00 and will assist SME’s to assess, mitigate and manage the threats posed to their business by pandemics and other social disasters.

More information can be found on our website www.sum2.com.

Sum2 helps businesses assess risk and realize opportunities.

April 30, 2009 Posted by | business continuity, disaster planning, geography, operations, Profit|Optimizer, regulatory, risk management, Sum2, supply chain | , , , , , , , , , , , , , , | Leave a comment

For the Want of a Nail: Lennar Homes

for the want of a nail

for the want of a nail

Community developer Lennar Homes lawsuit against drywall manufacturers reminds me of the old Mother Goose nursery rhyme, “for the want of a nail.” The rhyme begins with a nail that was not available to affix a shoe to the hoof of a horse. The loss of the nail loses the shoe, which loses the horse, which loses the rider, which loses the battle, which loses the war, which loses the king which loses the kingdom. For the want of a nail is an instructive tale of how seemingly insignificant or minute events can create consequences that escalate into a catastrophic incident that impacts and endangers many.

The Lennar lawsuit is yet another egregious example of supply chain contamination that has recently come to light. The discovery of toxic substances within drywall manufactured in China and used in the construction of Florida homes has prompted the lawsuit against manufacturers and a number of installation subcontractors that purchased the contaminated drywall on behalf of Lennar.

Lennar’s lawsuit alleges that subcontractors it employed to install dry wall, substituted high quality domestic brands with the less expensive contaminated drywall. The subcontractors imported the contaminated drywall from China to save on costs of materials in an attempt to boost profits for their contracted work. The drywall was discovered to contain toxic substances after a number of homeowners began to complain of foul odors, product deterioration and in some cases sickness due to exposure to the contaminated product.

It is believed that the Chinese drywall was found to contain a quantity of dry ash which was used as a filler substance in the manufacturing process. Dry ash is a waste by product of coal fired power plants that are so prevalent in China. The dry ash is known to contain concentrations of heavy metals that are considered dangerous to humans.

This event is certainly unwelcome news for the beleaguered construction and real estate industries. Particularly so in deeply distressed markets like southern Florida. It has heightened the risk profile of all parties involved and could spell catastrophic consequences for some of the involved manufacturers, homeowners, and contractors. This event can also impact the profitability of banks that may be forced to write off non-performing mortgages and construction loans sold to affected homeowners and contractors. Insurance companies may be required to pay off clams for product liability and homeowner policies. Municipalities are also at risk due to this event. Tax ratables and property values are threatened due to property abandonment and the suspicion that toxins have been introduced into the community.

This risk event will require the drywall manufacturers to face severe legal liability. It will impact profitability due to the financial stress of remediation expenses. Most significantly these types of events do severe damage to the company brand and reputation. A great deal of company and product branding is about trust. This types of events compromise the trust of brand consumers. Once that trust is violated it is very difficult to win it back.

Lennar violated its customers trust by allowing its supply chain to be contaminated. This violation of trust will result in financial loss and may create a long term health risk for Lennars customers and their families.

The municipalities that welcomed Lennar with the anticipation that development will serve the citizens of their communities have now been scarred by an ecological hazard. This will continue to haunt the reputation of these towns for many years because it threatens the value of both contaminated and non contaminated homes.

The drywall installation contractors face a high probability of bankruptcy and potential criminal prosecution. This event will fire a deepening distrust of Chinese manufactured products. It will certainly add stress to the delicate political balance of the highly codependent China USA trade relationship. Instigating calls for more protectionism and “Buy America” mantra by American based manufacturers. The prospect of added strain with China is particularly delicate due to China’s important roll in financing government spending through its large purchases of US government bonds. All because some subcontractors wanted to realize a little more profit margin. For the want of a nail indeed.

The unfortunate realization is that this risk could have been prevented. Master contractors need to put in place service and supply level agreements that prohibit the use of substituted materials. Master contractors need to manage supply chains by insisting that all materials used by subcontractors meet quality specifications and are sourced from trusted and thoroughly vetted providers. Adherence to international product quality and testing standards must be ascertained before those are accepted into the supply chain. This is just one aspect of ascertaining weather a supplier meets acceptance criteria into a company supply chain.

The Profit|Optimizer helps manufacturers, developers, contractors and lenders conduct a risk assessment of their supply chain. It is something that many businesses often take for granted yet holds the potential to become one of the most dangerous risks to the financial health and stability of the business enterprise.

Sum2 sells nails. The Profit|Optimizer helps business nail down risks that can deconstruct your business. It is a great set of tools to build profits and construct a healthy sustainable business.

Next time you read Mother Goose “for the want of a nail” to a child remind them to pay particular attention to its sage advise. It may be the first lesson in effective risk management that they will receive.

You Tube Music Video: Peter Paul and Mary, If I Had A Hammer

Risk: supply chain, product liability, reputation risk, ecological

February 7, 2009 Posted by | disaster planning, ecological, manufacturing, product liability, reputation, supply chain | , , , , , , , | Leave a comment

Lousiville Business Community Iced Over

The massive ice storm that raged across the US this week has left a path of devastation in its wake. Particularly hard hit was the jewel of the Ohio River, Louisville Kentucky.

Damaging ice covers the entire region and the three largest electric utilities estimate that over 700,000 people are without power. This type of disaster has an immediate impact on small and mid-size businesses. Many small businesses are shuttered due to an inability to access power. Service oriented and home based businesses are also particularly hard hit by the power outages due to their dependency on digital technologies.

Business closure means that cash registers are not ringing. During these lean times of a deepening recession weaker businesses are particularly susceptible to the negative impact of these events. A single day of lost revenue can be the difference in a small businesses ability to maintain itself as a going concern.

The importance of having a set of contingency plans to accommodate these types of business interruptions is critical even more so due to the difficult business cycle we are now confronting.

The implementation of a sound practice program as advocated by Sum2 helps businesses to address these types of risks. The Profit|Optimizer helps managers craft an effective sound practice program. Sound practices incorporates plans to mitigate the negative effects of business interruption events and initiate actions that maintains profitability during the most adverse market conditions.

You Tube Video: James Taylor and Natalie Cole, Baby It’s Cold Outside

Risk; business continuity, sustainability, disaster planning

January 30, 2009 Posted by | business continuity, disaster planning, risk management | , , , , | Leave a comment