Why Mt Agung could be more than a holiday disruption.

Over the past few months, volcanic eruptions throughout Indonesia have made the news for the disruption to human life in Indonesia and the inconvenience caused by airlines cancelling flights to and from Bali. The current eruptions have been accompanied by travel insurance companies taking a clear risk leadership position, withdrawing coverage to people insisting on travelling into an area being impacted by an active volcano.

But what if the real problems are yet to come?

Volcanic eruption and its impact on modern life is not a big consideration in most business risk statements. Australia has been mainly free of the effects of volcanic eruption for most recorded history but we don’t have to look far to see how we could be significantly impacted by a regional volcano undergoing an explosive eruption.

In May 1980, Mt St Helens in Washington State ejected “about 0.3 cubic mile of uncompacted ash” (USGS) resulting in the loss of 57 lives and more than 200 homes, as well as damage to 185 miles of highways and roads. Over 1000 flights were affected while everyday lifelines – electricity, sewage and fresh water – were disrupted in Washington State.

In 2010, Iceland’s Eyjafjallajökull Volcano threw Atlantic and European air travel into chaos when it pumped huge volumes of ash directly into a very stable jet stream, which sent the volcanic debris across Europe and the UK.

So, what does this mean for business in Australia? 

Our recent experience is of small eruptions stopping Australians travelling to and from Bali, beyond that it is limited. But what if Mt Agung, Mt Butur or any of the 125 other active volcanos in Indonesia erupt with the ferocity of Krakatoa in 1883? 

That eruption fired ash an estimated 80km into the atmosphere, dropped average global temperatures by around 1.2 degrees. While the explosion itself, along with tsunamis, pyroclastic flows, food production loss and contamination of fresh water probably killed 36,000 people.

We don’t really know what the effect of such a massive disruption could be to life in Australia. The obvious is the immediate loss of any international jet travel through the ash cloud, but what would it do to shipping, electricity and international communications (including to cloud computing services that are so reliant on the international undersea cable network)?

Effective planning means you need to think about the most likely disruptions first; but remember to consider less likely, potentially more damaging possibilities.  Talk to one of the Tigertail team about how to test your emergency, crisis and continuity plans today.

With thanks to the US Geological Service and linked sources.

Mt. Agung, Amed, Bali

Fraud: When public, customer and community service loses out to self service

When crises unfold, poorly planned and untested response operations will stress any organisation. Fraud, corruption and malfeasance can be substantial risks during times of disruption.

While fraud losses have greatest impact on smaller organisations (often threatening existential risks to finances or reputation), even companies with mature identification and investigation capabilities are not immune.

Some of the worst examples have occurred most brazenly within the top tiers of large, established organisations. According to the Report to the Nations on Occupational Fraud and Abuse – 2016 Global Fraud Study, the typical organisation loses 5% of revenues in a given year as a result of fraud. And when owners or executives commit fraud the median damage increases tenfold.

Increasingly not-for-profit organisations have been place under the corruption spotlight. Risk amongst these organisations is higher partly due to less stringent reporting rules, lower accountability, and limited controls and oversight (especially in developing countries).

Which brings us to the recent Red Cross admission, “that millions of dollars meant for fighting the deadly outbreak of Ebola in west Africa were siphoned off by its own staff.”

It’s an example of untested channels and systems being built and operated with little planning and almost no testing. And while the Red Cross has “committed to holding all those involved in any form of fraud to account”, it’s too little too late. How many lives could have been saved if that money had gone where it needed to go?

Closer to our home, incidents of fraud in NSW have increased steadily since comparable records began in 1995. And all three levels of Australian government have experienced fraud or corruption within their own ranks over the last few years.

As corruption is demonstrably increasing across Australian businesses and governments (and can even happen to the Red Cross!), organisations without a plan for reducing corruption risk during times of crisis are simply asking for trouble.

While the specifics of the Ebola outbreak could not have been predicted, a massive scale crisis in western Africa could have reasonably been envisaged. Responsible planning for the immediate roll out of new operational channels and systems should remain ongoing for all organisations. Crucially, training and drilling these plans regularly reduces the likelihood of corruption during an emergency or crisis response.

Tigertail can help your organisation with crisis planning and training, including systems of communication, accountability and reliability.