Resilience cannot be based on instinctual decision-making

Resilience cannot be based on instinctual decision-making. Instead it should rely on forward looking risk assessments to avoid squandering private and public money in useless Capex.

Do we need resilience enhancements?

The Canadian government pledged a budget of 40M$ over five years to integrate climate resilience into building design, guides and codes.

It’s certainly a wise move as codes customarily rely on statistics, business like usual, and experience. None of those approaches is robust enough to cope with climate changes and their unusual (unknown?) set of new parameters.

Think about the good-old 200yrs rain event engineers use to design all sort of hydraulic infrastructures. Thinks about snow loading on roofs, service temperature extremes and many other classic “engineering” thresholds.

Just to prove the point, we have lately seen:

• a chocolate factory,
• many S&P 500 corporations face large financial impacts, and
• a very promising startup go down

because of climate (temperature) anomalies.

As we have discussed in earlier posts, contractual Force Majeure and the notion of negligence will “shift” because of climate change. Reportedly public officers see challenges on whether they should have foreseen catastrophic events, or even hazardous events on public roads. We have acted as expert witnesses in civil and criminal courts within this frame. CEOs and CxOs will follow, of course.
Insurance companies seem to react by denying some of their long term insurees renewal, based on “excessive risk” arguments.
Like for cyber attacks, actuaries are in trouble. For their science is based on a “rear-view mirror” approach and not a “forward looking” one.

Resilience cannot be based on instinctual decision-making

Clearly, designers have to come in:

1. supported by forward looking risk assessments in their decision making,
2. accept that code are insufficient and
3. “business like usual” a mortal sin.

Thanks to modern risk assessment methodologies it is possible to guide attention in a rational way toward areas that require “resilience” enhancements. We cannot base resilience on instinctual decision-making, We need to shore it by carefully crafted forward looking risk assessments.

Short case stories of resilience enhancements gone wrong

Twenty years ago we convinced a famous producer of hazelnut products to move their electrical rooms away from the cellars and put them in the attic. The idea was to increase resilience in case of a flood. Our risk assessment had proven that was the best “bang for the buck”. They had previously raised the whole unit, at great cost, by 1.5m, building a sort of artificial island in case of flooding. However the cellar remained “under water”. A total waste of capex in the name of “resilience” instinctual decision-making.

Another industrialist, also exposed to flooding, had built, at great expense, a “China wall” around his operation. It had automatic flood water-resistant gates. By doing so, he had actually reduced  by 30% the hydraulic section of the valley in which his operation was located. We explained he may have saved the factory from waters, but was ready for social turmoil and a class-action.
Resilience does not pair well with instinctual decision-making. Instead we should shore it by carefully crafted forward looking risk assessments like those produced using ORE.

Tagged with: Canadian government, Capex, climate resilience, decision making, Résilience

Category: Consequences, Risk analysis, Risk management