The Wall Street Journal (subscription required) carried an editorial yesterday entitled 'The Probability of Catastrophe...' in which it noted that few organizations (least of all governmental ones) are set up properly to plan for catastrophic, long-interval, low-probability events (e.g., tsunami, asteroid strike, WMD terrorism, virulent 1918-style influenza, etc.). Organizational structures, as well as human behavior in groups often push against what, in hindsight, would seem to be prudent preparatory measures. All but the fourth reason cited by author Richard A. Posner could apply to large commercial enterprises and their internal political dynamics.
"The Indian Ocean tsunami illustrates a type of disaster to which policy makers pay too little attention - a disaster that has a very low or unknown probability of occurring, but that if it does occur creates enormous losses... The fact that a catastrophe is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence. Suppose that a tsunami as destructive as the one in the Indian Ocean occurs on average once a century and kills 150,000 people... if an annual death toll of 1,500 could be substantially reduced at moderate cost, the investment would be worthwhile... Why weren't any cost-justified precautionary measures taken in anticipation of a tsunami on the scale that occurred?...There are a number of reasons for such neglect. First, although a once-in-a-century event is as likely to occur at the beginning of the century as at any other time, it is much less likely to occur in the first decade of the century than later. Politicians with limited terms of office and thus foreshortened political horizons are likely to discount low-risk disaster possibilities, since the risk of damage to their careers from failing to take precautionary measures is truncated. Second, to the extent that effective precautions require governmental action, the fact that government is a centralized system of control makes it difficult for officials to respond to the full spectrum of possible risks against which cost-justified measures might be taken. The officials, given the variety of matters to which they must attend, are likely to have a high threshold of attention below which risks are simply ignored. Third, where risks are regional or global rather than local, many national governments, especially in the poorer and smaller countries, may drag their heels in the hope of taking a free ride on the larger and richer countries. Knowing this, the latter countries may be reluctant to take precautionary measures and by doing so reward and thus encourage free riding. Fourth, countries are poor often because of weak, inefficient, or corrupt government, characteristics that may disable poor nations from taking cost-justified precautions. Fifth, people have difficulty thinking in terms of probabilities, especially very low probabilities, which they tend therefore to write off. This weakens political support for incurring the costs of taking precautionary measures against low-probability disasters.
Another, more detailed analysis by 'Independent Media TV' (note the eerily ironic cursor drag-over effects on the interactive header graphic), dissects the tsunami response. One conclusion is that management culture is an important root cause of disaster (un)-preparedness:
"Typical in Asian management culture is the lack of contingency planning or planning for the uncertain outcomes of events or worst case scenario planning. Structured long term models with comprehensive plans, strategies, systems, logistics and training is also not a norm. The management speaks more of tactical responses and reactions after the tragedy."
Both pieces point to the need not just for better foresight, but for planning systems and organizational structures that can deal explicitly and efficiently for what seem to be a paralyzing array of 'outlier' possibilities - in almost any context.