Who among us is not getting that whiff of dread… a giddy feeling, like we’re all riding a giant beer truck careening downhill toward the flashing red lights of a railroad crossing? Could it be that you are sensing our ultra-modern society on a collision course with a range of catastrophic threats?
In his most recent book, The Fifth Risk (1), bestselling author Michael Lewis dumps gasoline on the bonfire of this paranoia. The super-journalist spends some quality time with key leaders from the outgoing Obama administration in their last days in office. When he asks the question “What keeps you up at night?” there is no shortage of answers
For better or worse, we are all in the disaster business
Lewis takes us on a tour of that massive dysfunctional bureaucracy we call the executive branch of the federal government. He learns that a lot of what it does is try to prevent things from going very badly, from a cyber 9/11 that could send us back to the Dark Ages to a pathogenic virus that could wipe out half the population (2). The federal government employs over two million people, three-quarters of whom are in one way or another involved in national security.
The federal government employs over two million people, three-quarters of whom are in one way or another involved in national security
The Department of Energy is perhaps the best example. In his failed bid for the White House, the current Secretary of Energy promised to eliminate DOE. But then Rick Perry was briefed about all of the things his agency does to prevent unimaginable devastation,from countering the North Korea threat to shoring up our fragile electrical grid. He changed his mind (3).
DOE spends over two billion dollars a year scouring the world to make sure loose nukes don’t fall into the wrong hands. In the Obama years alone, it collected enough weapons-grade plutonium and uranium to make a hundred and sixty nuclear bombs.
But that is just the tip of the iceberg!
The worst risk-management organization imaginable
Our federal bureaucracy is a Frankenstein’s monster of cabinet-level departments, boards, commissions and agencies, more than two thousand in all, stitched together by successive generations of elected and appointed officials over some 250 years of history. The result is an immensely complex landscape of blinkered silos, with overlapping specializations and responsibilities. Congress tries to influence the work of this beast with its hundreds of different voices and ever-changing funding streams. But the White House and Congress rarely agree about all the things the agencies should be working on, or even know what they are.
With respect to the preventing things from going very badly part, Lewis describes it as kindergarten soccer: “everyone is on the ball, but no one is at their positions” (4). Hang on, because it gets worse…
Our government gets collective amnesia every eight years
Most of what we rely on government for is practical stuff that has little to do with politics. Especially the stuff that would keep you up at night if you knew about it. Every incoming administration has to take all of this on; figure out what it is and how to do it. But almost as soon as it gets over the learning curve, it’s time for a new handoff. Our government gets collective amnesia every eight years.
“It’s Groundhog Day” said one good government expert (5), “The new people come in and think that the previous administration and the civil service are lazy or stupid. Then they actually get to know the place they are managing. And when they leave they say, ‘this was a really hard job’. This happens over and over.” (6)
According to Lewis, the Obama team created detailed training courses about its inner workings in preparation for a handoff to the next administration. But after the 2016 election, there was only “radio silence”; the Trump people were nowhere to be found.
The hard truth sinks in as we stare up the steep slope of our risk curve and try to think of an organization that is less-suited to deal with it. Our dysfunctional bureaucracy, our legacy government, cannot coordinate a coherent response to the threats we face.
At this point, a mere bonfire seems inadequate to our paranoia.
Yet it is our only hope; there is no other mechanism.
The internet and globalization have increased the pace and complexity of our lives and created a tangled web of relationships and highly interconnected systems that comprise our critical infrastructure: power, telecommunications, the financial system, supply chains, transportation, healthcare, you name it. Regardless what their caretakers say, disaster professionals know that every one of these ‘smart’ systems contains the seeds of its own destruction; each is moving toward the precipice of catastrophe rather than away from it, by its very nature. Not even a tiny, random tremor is needed to trigger a major collapse—unexpectedly and resoundingly.
When accidents occur in high-risk systems, such as those dealing with toxic chemicals, artificial intelligence, or nuclear weapons, the consequences can be catastrophic. We call these kinds of low-probability, high-impact events black swans. No entity, private-sector or otherwise, comes close to being willing or able to take these on.
Ownership of the black swan must fall to government.
We can’t bring a bag of rocks to a gunfight
There is an urgent need to take aim at our 21 st century demons. The good news is that we have the technology and the tools we need to do this. We can bring modern risk management practices to bear to create order out of the chaos. We can look across the whole of the government and create a coherent approach that aligns the risk landscape with our risk appetites.
But we need a big army, with every sophisticated weapon available, imbued with executive authority and unleashed into this government, to flush out and capture the biggest portfolio of such risks ever managed by a single institution in the history of the world.
In the best case outcome, we could make the very bad things happen less frequently
This new team, the enterprise risk team, would be charged with systematically breaking through those silo walls, one by one, to unearth the white-hot risks buried deep within those two thousand agencies. Among the revelations in The Fifth Risk is the enormous amount of data collected, analyzed, and disseminated by these agencies.
The enterprise risk team would have access to all of that data. It would bring leadership from all over the government (and beyond) together to gauge and calibrate the shock resistance of the nation. It would be empowered to identify, assess, measure and monitor all of our risks.
This approach will minimize surprises and, more importantly, shorten the timelines of our responses to them. In the best case outcome, we could make the very bad things happen less frequently.
Give these big guns to FEMA
Disaster professionals call this process-coordinating across organizations to make sure we are prioritizing the right things and not missing anything-enterprise risk management, or ERM. Only ERM can create a permanent framework to manage our full range of risks and respond to new risks, and opportunities, as they arise.
But this kind of bold solution requires leadership of a special kind.
The kind of leadership that breaks down silo walls to create a commonality of purpose among people and agencies doing very different work. Some call that meta-leadership but we know it to be merely emergency management.
The Federal Emergency Management Agency can do this work because it is doing it now, from disaster planning to response operations and on and on, breaking down silo walls and getting everybody on the same page. With its mission to “ensure that as a nation we work together to prepare for and protect against all hazards”, FEMA must assume its role as the risk manager for the national enterprise.
The antidote to the flavor of the month
The mind is a terrible thing to understand risk. People just naturally imagine that the crisis that just happened is the one that is most likely to happen again (aka the “flavor of the month”). They are less good at imagining a crisis before it happens – and taking action to prevent it. This is the job of the emergency manager.
People just naturally imagine that the crisis that just happened is the one that is most likely to happen again
FEMA can establish the processes to systematically counter our human biases, and the political winds. It can force our government to imagine the disasters that have never happened. The sort of disasters that a Hollywood screenwriter might imagine: vivid, dramatic events. Along with these it can examine our systemic risks, what Lewis calls the Fifth Risk, such as contagion to the financial system or a tidal wave of severely ill patients into our hospitals.
The black swan is not a political animal
The day that the black swan comes is a Groundhog Day of a uniquely dark and chaotic variety. It brings with it a painful insight—about the mistakes we made and the actions we did or did not take that would have increased our options, or maybe even saved our country.
This is not a treatise on the appropriate size of government because, believe it or not, the black swan couldn’t care less about politics. Whether we take government for granted or imagine it to be a pernicious force in our lives over which we have no control, the Groundhog Day the black swan brings will remind us that the basic role of government is to keep us safe (7). Because on that day, government will be the only thing that stands between us and the things that will kill us.