Wednesday, 22 October 2014

Genoa: The city where maths kills people

On October 9th, 2014 - with HI CARE Association and PANTA RAY - the BCI Italian Forum was launched, the first Business Continuity Institute affiliated network in Italy for business continuity professionals. In a conference held in Milan, I had the chance to point out how the culture on this topic in our country is still very low and how it is important to pursue a radical change in mentality and in the approach to crisis management.

There was no need for the umpteenth flood in Genoa to confirm how urgent the need for change is. But unfortunately just a few nights before our forum, the Bisagno river overcame its embankments killing one person (in 2011 the victims were 6). The city woke up with a widely spread black-out, Enel declared that over 2,000 clients had no power, schools and universities were closed, several blocks were flooded and economic and infrastructural damages were significant (circa €200 million of public expenses and approximately €100 million of private damages to companies and shops).

A scene we are used to, not only in Genoa unfortunately. But there is a good piece of news, we finally found the guilty party: maths! The President of the Liguria Region Burlando declared: “It is the first time that mathematical models are wrong.” He must have missed all the financial slumps in the history of the world. “The phenomenon that was registered yesterday has never happened before and our weather forecasting models could not anticipate it. The model is still valid though, until now it has always predicted the weather so that we never made mistakes related to severe crises”. Good to know.

I think we can list thousands of reasons that led to the umpteenth tragedy: bureaucracy, soil consumption (which in Italy is twice the European average), the lack of resources, the typical Italian mentality that is nothing but focused on prevention and planning, etc. All valid considerations that highlight the need for careful reflections. But, maths?

I really do not want to concentrate the attacks on President Burlando, but I do have to highlight these statements because they reveal a problem that I have to face quite often as a business continuity and crisis management consultant, either with public entities and private companies. Here is the deal: Business continuity is often confused with risk management, a discipline that – by definition – is based on probability calculation and therefore on mathematical models. This is a problem, since business continuity is meant to ensure resilience to an organization regardless of the probability of occurrence of a potential disruption. Business continuity is applied on the so-called 'residual risk', or the part of risk which is not manageable or computable. Outcome: when mathematical models fail and no business continuity practices are embedded in the organization, disasters happen!

Risk management (and math, of course) is a fundamental discipline, as weather forecasting is fundamental as well. But thinking that they never fail is crazy and not doing anything but rely just on math models is criminal. It has to be said pretty clear, because people die and companies fail. The Ferraris Stadium in Genoa is right next to the Bisagno river. What if the 'math models' fail again on a football match day, when the area is full with thousands of supporters?

Earlier this year, we held a conference at the Chamber of Deputy with Joseph Bruno - Commissioner of the New York City Office of Emergency Management as the guest speaker. We discussed these topics and we presented the crisis management model of the City of New York to politicians and the highest members of institutional entities. Now we have launched this BCI Italian Forum, which is completely free and aims at aggregating the most important competencies on the subject to create a network in Italy as well. I want to stress a concept I already mentioned during my speech at the conference in Milan: there are no excuses anymore! Each of us needs to accept his/her own responsibilities and act to raise the awareness on prevention and preparedness in this country. Otherwise, to find the guilty party you just need to look in the mirror.

Alberto Mattia is Managing Director at Panta Ray, a management consulting company specialized in business continuity and crisis management and Secretary-General at HI CARE Association, a non-profit organization dealing with territorial security projects in Italy. Graduated in Economics and Finance at the Università Bocconi in Milan - Italy, Alberto has started his career in the US at BT Radianz and then JPMorgan Chase Bank. He has then worked as a Project Manager at Centrobanca and as a Risk Manager at UniCredit Group.

No comments:

Post a Comment