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What is the true cost of ignoring risk ?

Industry Developments
Flood on airport

What is the true cost of ignoring risk ?

This winter we are experiencing unprecedented amounts of rain falling on the already saturated ground and resulting in major flooding.
The news headlines have not only concentrated on the obvious direct effects of flooding (loss of lives, property, livelihoods etc.) but also the consequential events which impact a far greater percentage of the population (ie. landslides causing closure of railway lines and numerous roads).
Headlines from a business point of view were dominated by the travel chaos experienced from the closure of a major London airport because of power supply problems, reportedly due to flooding of an on-site electrical substation. For me this incident raises some initial questions:

  1. How did the failure of one electrical substation cause the closure of the whole passenger terminal?  (single point of failure ?) – Where were the alternative diverse electrical supplies etc.?
  2. How much business revenue did the airport lose due to cancelled flights, retail sales etc.  – but more importantly what was the damage to the airports global reputation and brand ?

I hope a major Risk Review will be carried out, concentrating not only on the operational elements but also business and reputation – MAYBE Whiston Solutions SHOULD OFFER THEIR SERVICES...

It is very easy to cut budgets and stop investing in ‘back of house’ areas that are not deemed ‘client facing’ (ie. which you can’t see everyday) BUT which ironically form the foundation platform which allows the ‘client facing’ areas to function!!            Fact: Infrastructure failure = business disruption.

Indeed this point was highlighted on a recent flight I took, whilst sitting next to a gentleman who was enthusiastically praising the new fabric makeover within the aircrafts cabin. “must have cost a fortune” he said.
I replied “yes it's very nice, but I hope they haven't paid for this makeover to the detriment of the aircrafts maintenance budget !”.
He looked at me with a wry smile and remained silent for the rest of the flight, his focus and thoughts now shifted to the ‘back of house’ systems which were keeping us in the air at 30,000 feet !!

It doesn’t matter if you are a large Corporate or small independent business, investing in an independent ‘Risk Review’ now may pay dividends later...