Published: November 06, 2009 10:38 am      

Managing risk in a dangerous world

One of the topics I frequently deal with as a management consultant is risk.

Businesses use risk-management techniques to help protect themselves from potential threats. The most serious threats can cause loss of life, loss of materiel, loss of revenues and even the total collapse of a business.

Typical threats to businesses include fire, flood, wind, hail and theft. Business threats are generally classified as high, medium and low.

The category assigned to a threat usually depends upon the business type, its geographic location and its facilities. For example, parts of our local region have a high threat of flooding, but a low threat from hurricanes.

Risk management consists of policies, procedures and techniques used to identify, analyze, assess, control and minimize unacceptable risks. For every threat, there are usually multiple risks. For example, risks associated with the threat of flooding might include loss of materiel, disruption of business operations, loss of data and lawsuits by customers.

Since it is impossible to eliminate all threats to a business, risk management is used to mitigate as many risks as possible associated with each identified threat.

Frederick the Great was the King of Prussia for nearly half of the 18th century. He understood risk management. Frederick said: “Little minds try to defend everything at once, but sensible people look at the main point only; they parry the worst blows and stand a little hurt if thereby they avoid a greater one. If you try to hold (defend) everything, you hold nothing.”

The “little minds” Frederick describes sound a lot like the present day U.S. Congress.

Rather than managing risk, Congress tries to take on every threat head-on – to defend against everything.

The consequences include wasted time and energy, out-of-control debt, panicked spending and a weakened nation.

We would be safer if Congress focused its energy on countering the threats posing the greatest risk to America.

Our representatives are out of touch. As evidence, I submit their past hearings on illegal steroid use in Major League Baseball and their recent hearings on head injuries in the National Football League.

Given the many genuine threats to America today, it is inconceivable that Congress has time to deal with such trivia.

Congress should practice risk management, focused on protecting America from the gravest threats – those that threaten national survival.

While I am not qualified to discuss all of these, I can recommend a useful approach.

First, Congress should identify and prioritize all grave threats to national survival.

This list would be relatively short. These threats should be further categorized as internal or external.

Internal threats are the easiest to fix, because they are self-inflicted. At the top of my list are uncontrolled deficit spending – including Medicare, Medicaid and Social Security; threats to the individual freedoms enumerated in the Bill of Rights; and America’s growing foreign debt.

Congress is capable of tackling these problems now. All that is lacking is the courage to do so.

Most in Congress are more concerned about getting re-elected than the future of the nation.

External threats are those posed by foreign governments and transnational entities.

Congress should keep in mind that external threats must satisfy two criteria to make the list: Capability and intent.

Neither capability without intent nor intent without capability constitutes an imminent threat. For example, the United Kingdom possesses nuclear weapons, but has no intention of using them against us.

Therefore, its nuclear capabilities are not a threat to us.

Here’s another example: Iran’s nuclear program is troubling, but it is not ready for prime time.

Certain radical Islamists want to destroy America, but they currently lack the capability to do so.

North Korea’s unstable leader is dangerous, but he can’t threaten our survival.

All of these are important and must be monitored, but they should not be top priorities for our legislators.

My short list of the gravest external threats to America’s survival would include those which could cause one or more of the following:

1) Disrupting the free flow of imported oil into the United States.

2) Disrupting the nation’s petroleum refining and/or distribution capability.

3) Disrupting electric power over a widespread region for an extended period of time.

4) Rendering a major urban area uninhabitable for an extended period of time through radiological, chemical or biological contamination.

The final list would be longer, but you get the picture.

As Frederick the Great suggests, it is impossible to defend against everything, so we must focus our main efforts on defending against those things which can threaten America’s survival. I’m sure there are many such threats I have never even considered, but then that’s not my job.

Identifying and countering threats is the responsibility of our elected officials in Washington. With runaway national debt and shrinking budgets, it is imperative they focus government spending on the highest priority national security needs.

Part of effective risk management at the national level requires ensuring the best possible leaders are elected to office. This is all of our responsibility.

Many citizens such as me believe our country is in decline. We can reverse this only by working together as Americans, not as Democrats and Republicans.

Make an early New Year’s resolution to get involved in 2010. Be involved all year long, not just when you go to your local polling place to vote.

Study the issues and let your elected officials know what is important to you. Then let them know how you rate their performance on each issue.

Resist the urge to vote a straight ticket. Look beyond each candidate’s party affiliation and into his or her character and leadership abilities.

This is the sort of change that can make a real difference in America.



Zachary Hubbard is a retired Army officer and freelance writer residing in Upper Yoder Township. He is a member of the Tribune Democrat Reader Advisory Committee.