7:53 am: The first wave of 184 planes commences a vicious attack on the US Fleet in Pearl Harbor.
9:45 am: The attack breaks off.
1 hr 52 min. 2,335 servicemen, 68 civilians lose their lives
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8:45 am: A passenger jet crashes into the north tower of the World Trade Center, exploding and tearing a gaping hole.
9:03 am: A second passenger jet crashes into the south tower of the World Trade Center exploding into flames.
10:05 am: The south tower collapses sending out a massive cloud of dust and debris.
10:28 am: The north tower collapses from the top down.
1 hr 20 min. 2,752 civilians lose their lives.
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December 7th, 1941 taught us a hard lesson. Some 60 years later on September 11th, 2001, the lesson was no less painful but very similar to its predecessor: security comes at the cost of constant vigilance, and sometimes not even then.
Vigilance. It wasn’t that as a nation we were not monitoring possible threats or that our security systems didn’t pick up chatter and other evidence of imminent attacks in either example. In hindsight it certainly seemed clear that something was wrong but at the time of each event our guard was somewhat down; our vigilance somewhat lax. Security is hard work; it takes and lot of effort and it takes constant attention, what we might call vigilance.
Complacency. The longer we go without something bad happening, the more complacent we become and the more fantastic or unreal such a possibility seems. We let our guard down. We become less vigilant. We may go through the motions but even when evidence starts to mount that something might happen, we discount that information. The possibility of a negative event happening seems much less real than our recent experiences and the result is we don’t act or we don’t act quickly enough.
The Difficulty of Remaining Vigilant. As time passes without something happening, we become desensitized; we are no longer vigilant. In fact, the feared event is no less likely to happen today as it was last year. The probability of the risk materializing is not really changed by the passage of time. If you take out a coin and decide to flip it to see what side it lands on, the likelihood of heads appearing on that flip is 50 percent. What if you flip the coin 3 times and it turns up tails all 3 times? Is it more likely that tails will turn up the fourth time? Actually not; the likelihood of heads turning up remains 50 percent.
While our attitude about what will happen next may change with time, the underlying risk or likelihood of the event happening remains the same. Time tends to decrease our vigilance not our risk of suffering from an event.
Businesses need to remain vigilant as well, and business risk is no different than other risks. The fact that something did not happen last year does not mean it is any less likely to happen this year. So how does a business remain vigilant and avoid becoming complacent about risk?
A Business Owner’s Guide to Remaining Vigilant
First, a business needs to understand what risks it faces. This is not always as obvious as it seems and a careful business risk audit should be initiated.
Second, once risks are identified, each risk should be viewed from a standpoint of how damaging it would be to the business and how hard it would be to overcome and remain viable. A serious risk with a low probability is often more of a concern than a nominal risk with a high probability. Many of us have never experienced a fire of our home, yet almost all of us carry fire insurance. Why? While the probability may be low, the consequences could be catastrophic, and the cost of carrying insurance is relatively low.
Third, once a risk is identified and its consequences understood, it is important to take into account how likely the event is to occur. A serious risk that is likely to occur is much more of a concern than a serious risk that is less likely to occur. An example might be in the construction industry. Condominium projects built in California have an extremely high incidence of construction defect litigation, when compared to similar single family residential projects. Adequately addressing the condominium project risk should be a priority for a business that builds both types of projects.
Fourth, take a fresh look at your risk landscape on a periodic basis. A once a year review (at a minimum) is a good habit to get into.
You have worked for 20 years to build your business, you have 100 employees and one of them comes to you for help. Joe is a supervisor and one of your better workers. He’s hardworking, always on time – someone you can depend on. He’s gotten into some financial problems and he asks you if you could just take him off payroll and pay him cash (under the table.)
