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BlackswanHunting the Black Swans in Your Continuity Program

This is Vol. II, No. 6 in the DRG ongoing series regarding hunting and mastery of the black swans in your continuity program.

"Black Swans" in your Continuity Program are those events that remain outside the range of normal expectations, and may well produce a significant negative impact when they occur. For reasons of budget, culture, or simple lack of awareness, we just do not see or deal with these potentially devastating exposures in our enterprise continuity capability. This series discusses some of the most common of these "black swans" in business continuity programs, those that are really staring us in the face and screaming for attention.

Already published:

Volume I

Quarry 1: Employee Availability for Response Activities.
Quarry 2: The Level of Individual Employee Commitment to BCM
Quarry 3: Exercising Your Plans
Quarry 4: Exercising Your Plans: Objectives and Annual Programs
Quarry 5: Exercising Your Plans: Business Unit Continuity Plans
Quarry 6: Exercising Your Plans: Technology Recovery Plans
Quarry 7: Exercising Your Plans: Logistics, Communications, and Support Plans
Quarry 8: Lessons Learned
Quarry 9: New Year's Resolutions
Quarry 10: 10 Steps to Building a Black Swan-free Business Continuity Management Program
Quarry 11: New Year's Resolutions
Quarry 12: Developing "Black Swan Sighting" Skills: Warm-up Exercises

Volume II

Quarry 1: The Centrality of Power: Seeing the Connections
Quarry 2: Power Outages: Isolation Effects
Quarry 3: Power Outages: How Employers Can Get Involved
Quarry 4: Cascading Effects on the Support Fabric
Quarry 5: Deeper Dives to Narrower Terrains: Dive 1

Volume II: Quarry 6: Deeper Dives in Wider Terrains: Dive 1

Things have happened since last month – a large part of the US Federal Government has been shut down because Congress could not agree on an appropriations bill. While the effects are various and wide, I will be talking here about a specific event that happened in South Dakota at the beginning of October – and that you may not have heard about even yet. This is one example of how a single event can and will produce a variety of effects, some of which may not be recognized until much later.

Just a reminder: even though this is a real event, our intent is to get your imaginations oiled and spinning, as always. As a reminder: in order to understand what may happen or in this case, what has happened, we need to:

  • Include rather than exclude.
  • Accept that the improbable will occur, and that the effects may be wide-reaching and not fully understood at first glance.
  • Understand as much as possible about the conditions under which these improbable effects will become visible.
  • Define those conditions where cascading effects will occur – trace these linkages through the social fabric to know where the breaks will occur – especially when the impact seems minor at first, so that we can identify it as early as possible.
  • Be alert to gathering evidence that the situation is growing quickly into a compelling issue in multiple areas.

And so because of this extraordinary circumstance of the US Federal Government shutdown, we will step away from the usual discussion and our central scenario of a major lengthy power outage in the US Northeast. Today we will go to the wide open spaces of South Dakota and a severe weather situation that began early in the month of October. A record of 19 inches of heavy snow fell on October4, following a soaking rain in the previous days as well as 60 mph winds. And so, according to Fox News (which appears to have the most in-depth coverage of this event, this is the aftermath of that storm.1

Impacts from the Storm
On October 14, 2013 in a Fox News story, one rancher paints a scene of devastation north of Rapid City, SD, where a record 23 inches of snow fell during the first weekend of October (October 3, 4, and 5, with 19 inches on October 4), after soaking rains had flooded the region earlier in the week. Cattle were still in summer pastures, and had not yet grown their winter fur because of the exceptionally mild weather this autumn.

Matt Kammerer, a 45-year-old rancher whose family has operated in South Dakota’s Meade County since 1882, told FoxNews.com that he lost 60 cattle in the storm, or one-third of his entire herd.

“You’re talking about $120,000 of assets that are just gone,” Kammerer said Friday by phone. “And we still owe the banks, too. It’s like driving a brand-new pickup off a cliff and still having to make payments.”

Kammerer painted a gruesome scene north of Rapid City, where a record 23 inches of snow fell. “It’s just unreal,” he said. “There are cattle that are 8 or 9 miles away from the pasture they were in, just lying dead. And within that whole stretch, it’s just dead cow after dead cow, where they’ve gotten caught in dams, streams, fences, you name it. They’re dead everywhere.”

Carcasses of mature cows as well as calves were floating downstream in local waterways in droves, Kammerer said, stoking fears of a potential outbreak of disease.

“If you don’t get those picked up and buried, you’re looking at the possibility of disease or possibly contamination,” he said. “You’ve got to get them all picked up.”

Most ranchers in the state lost anywhere between 50 to 75 percent of their herds, according to Silvia Christen, executive director of the South Dakota Stockgrowers Association, which represents 1,500 ranching operations.

The number of animals is hard to confirm. In part, because the federal agency tasked with tallying livestock losses after a disaster is closed during the partial government shutdown.

Early Snow Kills Thousands of Cattle in SD
by THE ASSOCIATED PRESS
October 07, 2013 7:11 PM
PIERRE, S.D. (AP)

Gary Cammack, who ranches on the prairie near Union Center about 40 miles northeast of the Black Hills, said he lost about 70 cows and some calves, about 15 percent of his herd. A calf would normally sell for $1,000, while a mature cow would bring $1,500 or more, he said.
"It's bad. It's really bad. I'm the eternal optimist and this is really bad," Cammack said. "The livestock loss is just catastrophic. ... It's pretty unbelievable."

Cammack said cattle were soaked by 12 hours of rain early in the storm, so many were unable to survive an additional 48 hours of snow and winds up to 60 mph.
"It's the worst early season snowstorm I've seen in my lifetime," said Cammack, 60.

Early estimates suggest western South Dakota lost at least 5 percent of its cattle, said Silvia Christen, executive director of the South Dakota Stockgrowers Association. Some individual ranchers reported losses of 20 percent to 50 percent of their livestock, Christen said. The storm killed calves that were due to be sold soon as well as cows that would produce next year's calves in an area where livestock production is a big part of the economy, she said.

"This is, from an economic standpoint, something we're going to feel for a couple of years," Christen said.

Some ranchers still aren't sure how many animals they lost, because they haven't been able to track down all of their cattle. Snowdrifts covered fences, allowing cattle to leave their pastures and drift for miles.

"Some cattle might be flat buried in a snow bank someplace," said Shane Kolb of Meadow, who lost only one cow.

State officials are tallying livestock losses, but the extent won't be known for several days until ranchers locate their cattle, Jamie Crew of the state Agriculture Department said.

Ranchers and officials said the losses were aggravated by the fact that a government disaster program to help ranchers recover from livestock losses has expired. Ranchers won't be able to get federal help until Congress passes a new farm bill, said Perry Plumart, a spokesman for Sen. Tim Johnson, D-S.D.

In South Dakota, the 19 inches of snow that fell in Rapid City on Friday broke the city's 94-year-old one-day snowfall record for October by about 9 inches, according to the National Weather Service. The city also set a record for snowfall in October, with a total of 23.1 inches during the storm. The previous record was 15.1 inches in October 1919.

And in another story broadcast on NPR (National Public Radio) on October 14, 2013, we see more difficulties ahead for the ranchers:

A freak October blizzard earlier this month killed tens of thousands of cattle in South Dakota.

The number of animals is hard to confirm. In part, because the federal agency tasked with tallying livestock losses after a disaster is closed during the partial government shutdown.

Todd Collins lost a fifth of his herd in this storm. "My dad is 80 years old, and he says he's never seen a killer storm the first of October." The storm ended up being much worse than forecast. First came the rain, then hours of heavy, wet snow with 60 mile-per-hour wind gusts.

The cattle, grazing in their summer pastures, hadn't yet built up a thick winter coat of fur. Many, disoriented in the blizzard, wandered to exhaustion and fell victim to hypothermia before suffocating under the snow drifts.

Ranchers like Collins spent days rounding up the survivors. Carcasses litter the fields, some still tangled in barbed wire.

"There's about 27 over there in that pile, and then the rest are scattered all the way across here," Collins says.

Sylvia Christen, who works with livestock producers though the South Dakota Stockgrowers Association, knows this all too well.

Christen says that private insurance bought for cattle losses rarely covers suffocation deaths in a blizzard. She notes there are programs through federal agencies like the USDA aimed at disaster recovery for ranchers who suffer massive losses.

But when ranchers call the USDA these days, here's what they get: "Hello, you've reached the USDA service center. Due to the lapse in current federal government funding, all employees aren't available until further notice. Thank you."

South Dakota's Republican U.S. Sen. John Thune toured the blizzard devastation by air. He says the Department of Agriculture should put its employees back to work to deal with this disaster. "The Secretary of Agriculture has the authority in the case of an emergency like this to declare them as essential and so we're asking him to declare the personnel in these offices as essential so they can get back on the job," Thune says.

As Washington squabbles, industry groups say the safety net for these ranchers appears frayed. They point out that the pending farm bill is also mired in political gridlock.

Livestock producers are being told to document their losses with photos. But as of now, many who tend livestock in South Dakota are thinking less about government aid than they are about the logistics of burying thousands upon thousands of dead cattle.

Most of the national news coverage about this event is just starting to surface, primarily because the newsfeeds are generally hooked into the NOAA (National Oceanic and Atmospheric Administration) which tracks severe weather across the United States. Here is what appeared on the main NOAA website on October 14, 2013:

Due to the Federal government shutdown, NOAA.gov and most associated web sites are unavailable.

Specific NOAA web sites necessary to protect lives and property are operational and will be maintained.

See Weather.gov for critical weather information or contact USA.gov for more information about the shutdown.

However, some parts of NOAA were still operating as of October 14, 2013 at 12:37 pm:

URGENT - WINTER WEATHER MESSAGE...CORRECTED
NATIONAL WEATHER SERVICE RIVERTON WY
1237 PM MDT MON OCT 14 2013

...EARLY WINTER STORM ACROSS PORTIONS OF THE AREA THIS AFTERNOON
AND TONIGHT...

.ANOTHER EARLY SEASON WINTER STORM WILL BRING SIGNIFICANT
SNOWFALL TO MUCH OF THE CENTRAL AND NORTHERN MOUNTAINS...AS WELL
AS SOME OF THE LOWER ELEVATIONS EAST OF THE DIVIDE. RAIN IS
CHANGING TO SNOW AS A COLD FRONT SWEEPS SOUTH. IN WAKE OF THIS
FRONT...BREEZY TO WINDY NORTHERLY WINDS WILL DEVELOP. THIS WIND
WILL RESULT IN CONSIDERABLE BLOWING AND DRIFTING OF SNOW IN SOME
AREAS. THE SNOW AND WIND ARE EXPECTED TO GRADUALLY TAPER OFF FROM
WEST TO EAST TONIGHT.

A WINTER WEATHER ADVISORY REMAINS IN EFFECT UNTIL MIDNIGHT MDT
TONIGHT.

* SUMMARY AND TIMING...PERIODS OF SNOW...BECOMING HEAVY AT
TIMES...WILL CONTINUE THROUGH THE EVENING BEFORE TAPERING OFF
LATE.

* SNOW ACCUMULATIONS...3 INCHES HAVE ACCUMULATED SO FAR. 6 TO 10
INCHES OF TOTAL SNOW ACCUMULATION IS EXPECTED.

* WIND AND VISIBILITY...NORTH 10 TO 20 MPH WITH HIGHER GUSTS OF
20 TO 30 MPH. VISIBILITY COULD BE REDUCED TO UNDER ONE HALF MILE
IN PERIODS OF HEAVY SNOW AND SOME BLOWING SNOW.

* IMPACTS...HEAVY WET SNOW AND SOME BLOWING SNOW WILL CAUSE
DIFFICULT TRAVEL AND SLIPPERY CONDITIONS ALONG CASPER
MOUNTAINS ROAD. COLD AND WET CONDITIONS WILL BE HAZARDOUS FOR
UNPREPARED HUNTERS.

This new storm will certainly complicate the task of the ranchers trying to complete the collection and burial of their dead cattle.

And so if we step back and try to analyze this situation, what do we see:

  • A serious and potentially catastrophic situation for the affected cattle ranchers, particularly since the government program that would help to cushion their disaster losses is no longer operational and it is not clear when or if it will be fully re-authorized.
  • A very low probability for an event of this magnitude to occur at this time of year: a 94-year one-day record of 15.1 inches in October 1919 had held until this event. The 23 inches of this year's storm is 9 inches (or > 50% more) than fell during that record-setting event. Past events are bad predictors of future events. This event qualifies as a Black Swan.
  • Many of the principles that we have spoken about in earlier columns are being reflected here.
  • Unintended effects of this event may include catastrophic losses for affected cattle ranchers, if the expired disaster program is not re-created expeditiously. Or if State agencies are unable to cope alone to assess the losses to each rancher.

There are also effects on the larger economy: beef prices are likely to rise substantially because production at least through next year has been affected due to the loss of so many of this year's calves. Some far-thinking individuals may have already put this information to productive use.

I have given you the actual newsfeeds here because this is how information tends to come in during an event like this. Most Americans were probably unaware that this record-breaking storm had even occurred. And it is as yet impossible to assess all of the impacts ensuing from this event; some may not appear for months. Try to follow this event over the next few weeks at least to see what are its implications for beef prices as well as the future of the cattle industry in the US.

Stay tuned for more information on this weather next month, as well as deeper analysis of the impacts of the current government shutdown on just this one event.

About the Author

Kathleen Lucey, FBCI, is President of Montague Risk Management, a business continuity consulting firm founded in 1996. She is a member of the BCI Global Membership Council, past member of the Board of the BCI, and the founding President of the BCI USA Chapter. IBM chose her as the first winner of its Business Continuity Practitioner of the Year Award in 1998. She speaks and publishes widely in both North America and Europe. Kathleen may be reached via email at kathleenalucey@gmail.com.