Oftentimes, disasters aren’t recognized at their true scale until the damage is being assessed. As the vulnerabilities of our interdependent world continue to reveal themselves through telling events, organizations are failing to recognize red flags until it’s too late to correct course.
So how does a world seemingly primed for continually escalating global disasters break the cycle and properly brace for the inevitable? By applying lessons learned from events that have already unfolded. Winston Churchill famously wrote, “those that fail to learn from history are doomed to repeat it,” and it’s a sentiment that could not ring more true in the world of risk management.
Learning from History: A Dual Concept Approach
To avoid repeating others’ mistakes, or finding yourself unprepared for the next crisis, two concepts are key. The first, Performance Visibility, is the idea that decision-makers need to be connected with what conditions are on the ground. The second is the concept of becoming crisis-agnostic, which sees organizations take lessons from one crisis and apply them within to prepare for future, related crises. When applied in unison, these concepts can help organizations to become more forward-thinking, agile, and prepare for events that most aren’t.
Performance Visibility is discussed in the 2020 article, Deepwater Horizon: Lesson Learned?, which chronicles the lessons from the 2010 Deepwater Horizon oil catastrophe. The article's author, Paul Balmert, defines Performance Visibility as “the degree to which a leader knows reality for what it really is. You can’t manage what you don’t know.” Put into practice, Performance Visibility would have recognized the countless warning signs the oil rig was generating, escalated them to the appropriate parties, and potentially avoided the disaster entirely. Instead, as multiple indicators pointed to an impending crisis, they were ignored, minimized, and as a result lives, livelihoods, ecosystems, and more were lost. Most crises don’t just appear out of thin air. Rather, there are warning signs, and if you’re lucky, you get more than one. But the question becomes whether your organization can read them and apply action as necessary.
A crisis-agnostic approach involves witnessing an event like Deepwater and applying lessons from the disaster to other potential situations. Based on a 2021 Global Crisis Survey, companies can fulfill a crisis-agnostic approach by:
- Designing a strategic crisis response plan to “mobilise swiftly, stabilise business operations and respond effectively to the shockwaves of disruption,” no matter the industry or scale
- Eliminating silos with “an integrated program, [which] is essential to executing a successful crisis response and to building resilience during 'peacetime'”
- Developing and prioritizing operational resilience through BCM planning, “not just to succeed, but to survive”
Performance Visibility allows risk professionals to identify, assess, escalate and address warning signs before an event occurs (and while it unfolds). A crisis-agnostic lens then allows organizations to view the disasters of others and make changes from within. When used in tandem, these tactics can effectively help organizations to spot problems while there’s still time to correct course, become more agile, and better prepare for future events before they happen.
Now apply this to the Suez Canal.
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Beyond the Headlines: The Suez Canal & Ever Given
The container ship Ever Given made international headlines when it blocked the Suez Canal, immediately cutting off the shortest shipping route from Europe to Asia and disrupting the global supply chain.
Fast Facts: Suez Canal Blockage
- Approximately 12% of global trade travels through the Suez Canal annually, a 120-mile-long man-made waterway through Egypt that connects the Mediterranean Sea and Red Sea (CNBC)
- More than $9 billion worth of goods pass through the Canal daily, equating to, approximately $400 million per hour (Business Insider)
- The Ever Given — one of the largest container ships in the world measuring a quarter-mile long, 220,000-tons, and a carrying capacity of up to 20,000 shipping containers — became lodged horizontally across the Canal on March 23, 2021 (The Guardian)
- The official cause of the incident has not been determined, though a number of factors including high winds from a dust storm, human error, and technical issues are being investigated (USA Today)
- The blockage immediately cut off access through the Canal, disrupting the passage of over 350 vessels and an estimated $60 billion worth of goods ranging from oil and cement to consumer products and live animals (CNBC)
- On March 29, due to the around the clock work from international teams for 6 days, Ever Given was dislodged after moving over 706,000 cubic feet of sand (CNN)
The timeline of events played out quickly. Organizations globally were left little time to assess the impact of events and pivot while others were blind to their organization’s indirect reliance on the supply chain. Until the Suez Canal crisis, many organizations were unaware of just how much of their supply chain (or their suppliers’, customers’, or customer’s customers’) could be impacted by a single choke point.
The aftermath? A global economy made painfully aware of the fragility of an antiquated infrastructure that today’s trade relies on.
A Question of Viability
While Egyptian President Abdel Fatah al-Sissi stated that the blockage “showed and reaffirmed the reality and importance” of the Suez Canal, the fact of the matter is that a crisis-agnostic view forces us to question the viability of the way we ultimately conduct today’s global trade.
What we’re witnessing is a canal completed in the 19th century struggling to meet the global demands of the 21st century. Completion of the Suez Canal in 1869 had an immediate impact on globalization, though its architects could never have conceptualized the magnitude of today’s economy that relies on its passage. According to the New York Times, the capacity of cargo ships has increased by 1,500% in the last century and a half, a figure that has doubled in the last decade alone.
Ports globally are investing vast amounts of money to accommodate these larger ships by digging deeper channels, building larger cranes, widening passages, and more. Just six years ago, Egypt spent more than $8 billion to deepen and develop new pathways through the Suez. Despite this investment, less than a decade later, a ship symbolizing the mammoth scope of today’s global trade was the very thing that shut down a main artery. The Ever Given’s pilot stated “the ships today are bigger than they used to be… This is something new. We haven’t seen this before.”
This increase in size is creating bottlenecks at crucial sea passages globally, increasing the probability of what we’ve just witnessed playing out again soon. Factor in the numerous other passages already seeing chokepoints, a crisis-agnostic view suggests potentially compounding future events that could spell out similar crises ahead.
The added weight is the geopolitical locations of these trade arteries. “The blockage of the Suez Canal offered a potent reminder of how important a handful of key maritime passages is to the whole global economy, as well as the strategic calculations of regional powers,” wrote The Washington Post’s Ishaan Tharoor, a columnist on the foreign desk. “A crisis there, or the Panama Canal, or the Strait of Malacca, or the Strait of Hormuz would roil global markets and — depending on the context — trigger potential standoffs between rival navies.”
This is why organizations need to apply a crisis-agnostic approach to events — there is almost always a bigger picture. Taking a step back from the Suez Canal and Ever Given, we’re seeing that the shipping supply chain may face similar interruptions from other sources, which should tell leaders that there are things their organization needs to start looking at and preparing for now before whatever the next event happens.
Looking more broadly at shipping choke points, both the Panama Canal and Suez Canal alone are no strangers to shut down, whether from collisions, ships running aground, severe weather, political turmoil, and more. If you’re looking at the recent events in the Suez and wondering what the warning signs could have been, this is what they look like. Repeated closure for a host of reasons, the increase in ship and cargo load capacity year-over-year to keep up with growing demand, an ongoing battle to continue digging deeper and winder passageways — this is the list of Performance Visibility organizations need to be looking at to assess whether anything that touches their business is reliant on products passing through canals or dependent on the global supply chain. Chances are, this will touch most organizations in one way or another.
Almost 70% of today’s international trade still moves by sea, a reminder of how dependent the global economy is on a fragile process that is continuing to show profound cracks, each running deeper than the last. The Suez Canal should be the world’s wake-up call to the delicate balance that our supply chain hangs in and the profound domino effect it has when balance is lost.
With a rocky past of unexpected closures already etched into its history, the events of the Ever Given in the Suez Canal is the world’s opportunity to put a crisis-agnostic view and Performance Visibility into practice — it might be our last warning of something larger to come.
But now that you have both of these tools, what are you going to do with them?
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Everyone Has Skin in the Game
The reality of the Suez Canal blockage is that an organization does not need to be reliant on the supply chain or have a direct stake in global trade for what happened to have a potentially catastrophic effect. Rather, in witnessing this event, companies that aren’t immediately taking a crisis-agnostic approach and assessing how it has an impact on them or their customers are ignoring a warning sign that is poised to reappear.
Organizations cannot afford to look at disruptions as one-offs or black swan occurrences. Today’s events have a larger scope than people realize, and if it’s not impacting them directly, it’s impacting the businesses they sell to or receive from.
In the first few months of 2021 alone, we’ve seen the Texas power and water crisis, a cyberattack on a Florida water plant, a sweeping hack on the Microsoft Exchange server, and more. These are what warning signs post-2020 look like, and teams need to train themselves to recognize and act on them accordingly.
The reality of our world is that there is always going to be a Suez Canal-type event. The only way to break the cycle of “if only we knew” is through the application of Performance Visibility and a crisis-agnostic approach to global risk. This is what it means to be operationally resilient — not only recognizing warning signs and events, but appropriately acting on them and changing organizational operations, technologies, and processes as needed.
As Paul Balmert, Principal of Balmert Consulting and the author of Alive And Well At The End Of The Day: A Supervisor's Guide to Managing Safety in Operations puts it, “Let’s get real. The lesson here is not to go sniffing out crises and playing hero. It is to understand just how valuable raising your Performance Visibility is to managing safety performance so you can manage these things long before they turn into a crisis."
Can your ERM program handle what’s next? Find out now.
No organization can predict and avoid every scenario. Effective operational resilience, however, does offer an innate ability to pivot when needed and recognize that even if a crisis doesn’t apply to you or your organization right now, the lessons learned do. If you’d like to speak to one of our specialists about how Origami can help your organization to achieve operational resilience, start a conversation with us.