April 14, 2020
Corona virus, risk theory and the Black Swan
By
Ron Aledo
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Corona virus, risk theory and the Black Swan
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From the perspective of Risk Theory doctrine, most of the first world (Western European Countries, the US, Canada, Japan) was ready for a flu pandemic. The issue is that the Pandemic they were ready for was modeled on recent experiences of the last 20 years: SAARS, ebola in Africa, swine flu, and bird flu.
In intelligence analysis, the Military Decision-Making Process (MDMP) and general Risk theory and gaming, we use the foundation of the
most likely threat/enemy course of action/risk and the
most dangerous threat/enemy course of action/ risk.
What no country in the world imagined was the size, geographic reach, and transmission/ mortality rates of this corona virus pandemic. These pandemic approaches very much what in the theoretical risk gaming is the
most dangerous threat/risk and is very far away from the
most likely one.
One of the most important factors in risk management gaming and preparedness is achieving the critical balance point between both the most likely one and the most dangerous one, keeping in mind the resources, budget, and human capabilities available for preventive planning. Achieving that critical balance point is the key element that might decide victory or disaster, catastrophe or success.
In many cases, the
most dangerous threat/risk is also what the great mathematician, philosopher and economist Nassim Nicholas Taleb described as the Black Swan: what no one expected, and no one knows how to react to because there is no prior model to work. Additionally, the ripple effects in domino chain are beyond calculation, prior models, and risk planning.
That is why no major country in the world was ready for this pandemic: not Canada, not Spain, not Italy, not the USA, not UK, not Germany) Also, as all data coming out of the Communist Party of China is unreliable, we can also consider that China was not ready. That is the reason why powerful rich countries like Germany or the United Kingdom are fighting for ventilators and masks. That is the same reason why all big powerful countries don’t have enough ready to go hospital rooms and ICUs units, not to mention simple humble gloves nor masks. That is the reason why all major countries’ health systems were not ready. Those health systems in Spain, or Italy or France, were not ready for the most dangerous (but highly unlikely) Black Swan risk scenario.
In the case of the U.S. we were prepared kind of well for the most likely scenarios. The US Government was ready for bioterrorism and produced good stockpiles of botulism antitoxin and vaccines for anthrax and smallpox. Also, we were ready for other health emergencies as depicted on the very recent November 25, 2019 plan ¨Advancing the Global Health Security Agenda: Results and Impacts of U.S. Government Investments¨ released by the White House. Again, the issue was that this plan was based on the assumption of the most likely risk of an influenza kind of virus and not a SARS-type of virus like the COVID-19.
The risk gaming models used to prepare for a pandemic did not correspond to the current crisis, as the 2009 H1N1, or swine flu, is an influenza virus (something for which a vaccine can be done a lot easier/faster), and the Ebola virus is far less transmissible than COVID-19.
The general set of assumptions used for the planning of a pandemic response assumed the wrong strategic level model. In addition to that, the misinformation from the China did not help prepare the U.S. Even the very respected Dr. Anthony Fauci said on January 21st that while we should take the coronavirus seriously, the virus was not ¨a major threat to the people of the United States, and this is not something that the citizens of the United States right now should be worried about.¨
The bottom-line is that the critical balance point between the most likely and the most dangerous threat was very much off target on the side of the most likely. That is a common issue in intelligence analysis, military planning, and even in corporative business models. It is very common and a flaw in general strategic level planning:
---You prepare for a small fire in your kitchen: not a meteorite falling from sky and destroying your kitchen.
---If you are a mailman, you prepare for a big dog: not for a lion that escaped the zoo.
---If city policeman, you prepare for increased gang violence: not for armed revolution/insurgency directed by Cuban intelligence operatives.
---If a medium size city hospital, you prepare for mass casualties from a large bus or train accident: not for a world pandemic with high mortality rate and transmission rates.
---If you are running to be the mayor of a large city, you campaign on reducing crime and unemployment: not in increasing the number of ventilators stashed in warehouses with no immediate use.
The lessons learned from this pandemic will be applied from now on into the risk management, security and crisis response planning for decades to come. Not only this extraordinary situation will change many aspects of the international economy, the world supply chain, and even of the geopolitical order (this might be the end of the open borders policies and of ideological globalism), but for sure it will change how governments and corporations will look into preparedness and risk reduction.
Ron Aledo is a former CIA and DIA senior intelligence analyst (Ctr), Joint Staff Intelligence and Operations officer, Intelligence Advisor to the Afghan Police in Kabul, and Director DHS Policy Office for Mexico.