RC: Could you provide a brief overview of the types of catastrophic events that may befall a business? Do you believe companies give enough thought to how these situations might impact their business?
Schwartz: Catastrophic events typically occur within a compressed period and have the potential to critically impact a company’s ability to achieve its mission. They frequently result in significant financial or reputational loss. Some triggers for crises relate to weather, environment, natural and man-made disasters, product safety and recall, equipment failure, data security breach, operational failures, loss of key staff, supply chain interruption, significant regulatory enforcement action, financial reporting fraud and leadership misconduct. Certainly, there has been increased awareness in recent years among larger companies that their reliance on technology, networks and software necessitates a disaster recovery response and mitigation plan, and that personally identifiable information, and commercially valuable information or intellectual property, must be protected from a data intrusion or breach. The often unmet challenge for companies is to think beyond these top-of-mind risks to answer the harder question: “Are we prepared for the unexpected?” The most difficult unexpected events are those with high-loss and low-frequency, the so-called ‘black swans’. Black swans will occur, but by definition, whether or when a particular one will occur is unknowable.
Jul-Sep 2015 Issue