Risk management

Evolution of cars and society, what does foresight tell us?

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Author: Manu Steens

In this post I share my own opinion. Not that of any organization.

The evolution of transport in the west can partly be outlined with ‘PEST’. PEST is a mnemonic that helps to map the environment of an organization or society. It stands for ‘Political’, ‘Economic’, ‘Social’ and ‘Technological’.

‘P’: There is a strong call for electric cars and it is not yet clear whether the technical evolution will fully evolve towards only fully electric cars and other vehicles or not.

‘E’: the question is whether, once the electric car breaks through as a standard means of transport, the insurances, partly due to technical evolution, have a clear picture. There is a debate about who will be to blame for damage. One of the occupants, or one of the automotive companies that took care of the software development…

‘S’. Common use (car-sharing), which has long been promoted for classic internal combustion engine vehicles, will continue to apply to electric vehicles. This will need continued political support to become more successful. People don’t all like to share a car. As the livelihood increases, this is an option for more and more people.

‘T’: The ‘Society for Automotive Engineers’ created an evolution towards autonomy in 5 discrete steps. Here’s how they did it:

  1. First there was the ‘driver assist’ (also known as cruise control)
  2. Afterwards ‘partial control ‘, (known as lane control)
  3. Then comes ‘highly automated’ (limited vehicle control)
  4. The fourth step is ‘fully automated / driver override’ (default vehicle control)
  5. To get to ‘fully automated’ (complete vehicle control).

Cars today have level 1 and 2 and some vehicles use level 3 like a certain brand with its ‘autopilot feature’.

Here, in this situation, eight possible futures arise, depending on the following three uncertainties:

  • Does the electric car break through completely or not? In the latter case, the classic combustion engine will again play a more important role than expected, or the market will shift towards hydrogen gas as a fuel.
  • Is car sharing breaking through or not? In the latter case, man is too attached to owning his own car.
  • Will there come a period in which the technology succeeds in providing sufficient certainty to people with a fully automated vehicle (level 5) or not?

In this article I want to look at the consequences of the future with ‘yes’ to all three uncertainties in 15 to 20 years:

  • Pure electric cars are the standard.
  • Car sharing is becoming the main mode of personal transport.
  • ‘Fully automated’ completely breaks through with cars.

What does this possible future mean for people and society? Thinking through PEST provides the following possibilities:

Politics

  • Power plants will have to become ecological, because the defense of fossil power plants will become incomprehensible in the eyes of future generations. This is due to the great need for electricity.
  • Politicians will demand a major say in technological development in terms of cyber security for cars.
  • Ambiguity of liability in the event of damage must be decided politically. Possibilities in the legislation must be investigated. This differs for the vehicles depending on their technically automated level.
  • Electric classic cars will not have a number of advantages in terms of insurance due to a lower level of safety in automation. This requires a political decision with changes in traffic legislation. If necessary, they will be banned.
  • Police can conduct multiple types of investigation on any vehicle. This requires legal protection of the owner. (route, location, times of use,…) .
  • By sharing cars for short distances, public transport will be more attractive for longer distances.
  • As state revenues from cars fall, other excise duties and taxes go up.

Economic

  • Fewer impulse purchases of snacks and soft drinks by drivers in those gas station stores that survive the switch with charging stations. Many products will have to reinvent their outlets, or they will suffer potential loss of sales.
  • Less shelf length for soft drinks and snacks, CDs and DVDs and booklets and magazines in remaining gas station stores.
  • Insurance is becoming cheaper for car-sharing users. Car owners may be the victims.
  • Transport costs with more car sharing become less per kilometer: you only pay when you drive.
  • Savings on personal transportation costs favor other expenses.
  • Electric cars are getting cheaper and cheaper. Until they become more expensive again?

Social

  • Less serious or less likely damage.
  • Less or no speed violations depends on the rigor of the legislation and its technical implementations.
  • Less pressure on emergencies in hospitals in terms of accidents on weekends. More intoxications on weekends or during the week. This entails a reorientation of doctors’ specializations.
  • In the cities, the air becomes purer, resulting in fewer particulate matter-related patients.
  • When you drink, cargo is safely delivered to your home. Will that be allowed?
  • The police will have to invest in cyber technology for vehicle checks.
  • Cybercrime for transport is also becoming a problem on a social level. It is not whether cars will be hacked, but when and what will happen to them.
  • Illegal drug deliveries with fully automated cars become possible.

Technological

  • Car sharing makes it technically more feasible to provide sufficient electricitypoles for the cars in cities.
  • They are working purposefully to phase out fossil fuel plants: as they are insufficient in terms of efficiency for transport compared to other electricity generation, they become irrelevant.
  • Society is taking a big step forward with AI in traffic. This will require greater availability of the Internet.
  • Cybercrime is becoming a challenge. The vehicles of the future must in no way be an open system for intrusion from the Internet, except by police services.
  • The police and customs will be able to stop cars and freight transport for inspection in a secure manner.

Conclusions:

Governments will have to determine good indicators to see if this possible future will materialize. If necessary, they will have to develop regulations.

The insurance companies will work with governments to develop a method to allocate liability in the event of damage. This becomes more difficult when cars of different technical levels are involved in a claim.

The food industry will have to look for and find new outlets.

Automotive companies will have to invest heavily in the development of quality software algorithms and their implementation.

There will be a pressure reduction in urgency. Emergency services and their emergency physicians will partly reorient themselves to other specialties. Universities should follow the evolutions of traffic to see when they need to make and what changes.

A new type of crime or terror will eventually emerge: cybercrime on cars to disrupt them and associated extortion. Police and government departments will prepare for this. This will be difficult with the ‘war for talent’ that is already present. The automotive industry is therefore also making an effort to secure this, making cars as ‘unhackable’ as possible. Cooperation between the car industry and the police forces is inevitable.

Reconstruction Ukraine – what are key points ?

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Author: Manu Steens

In this article I write my own opinion, not that of any organization.

Ukraine is currently being shot into the Stone Age. The target par excellence is critical infrastructure: water and energy installations, as well as others, such as road infrastructure, ports and airports, do not come out unscathed.

The question then is, with what will remain of it, not only what it can look like, but especially what are key points for reconstruction.

On rough terrain, such as a broken road infrastructure, transport costs quickly rise to five times those of an intact road network. The financial cost has thus been demonstrated as an important risk for the supply chain.

Health care: care for the injured, but also the current tuberculosis and the still present corona pandemic and the flu wave and associated pneumonia, need for action: provide for a reconstruction of sick care.

Training: schools are needed to provide a renewed approach to training for future generations, but the infrastructure includes not only the buildings, but also the teachers, the classroom infrastructure, projectors, IT systems, course materials,…

Airports that have been destroyed must be rebuilt, not only for civil aviation, but also for military aviation. This is important for easy accessibility deep in the country, once there is peace.

The water supply needs to be redeveloped, debris cleared.

In order to rebuild that critical infrastructure, concrete mixers have to run, pumps move water, and therefore electricity is needed, for that in one of the most important first infrastructureworks the electricity nodes have to be rebuilt. In order to clear the debris and brick buildings, heavy machinery and vehicles are also needed on site. So transport will have to be possible, and one must provide fuel and people. Then nutrition is also needed.

With such reasoning we find out what is important for the reconstruction of the Ukrainian state, when we do this from scratch: a first attention should be given to the following sectors (not necessarily in that order) (non-exhaustive list)

  1. Agriculture and livestock farming and (sea) fishing as a basic link in the food chain.
  2. Food and beverage production and the hospitality industry, including drinking water sector
  3. Medicine, medicine and hygiene. They may be exhausted and run slower for a while, also due to recovery from past crises.
  4. Clothing for protection against weather conditions.
  5. Substances and simple chemistry (such as fuels, soap, calcium carbonate (for many applications), …)
  6. Advanced chemistry e.g. petrochemical sector products (e.g. for medicines).
  7. Materials such as clay, metals, glass, and building materials
  8. Electricity and other forms of energy (because then a lot can work where there are people who can work)
  9. Mobility / transport (because then factories can be supplied and the supply chain works back)
  10. Means of communication (because justice depends on it, but actually the entire society)
  11. Relaunch of the schools: what about the people who could not do their year?
  12. Politics: keeping predators at bay who want to take over the economic markets in the terminally ill country in order to make it easier to take the future markets
  13. Banks, with a key role for economic / financial transactions

What is important as a supporting skill is the specialized supply chain of many of these sectors. These include roads, railways, waterways, ports, airports, warehouses, cooling, production sites…

So a big interest of politics will be to facilitate those supply chains. A key role for her is to ensure that the different sectors work together to achieve optimal results. In order to get these things going, support from abroad is needed. Read the EU.

However, such a situation of reconstruction entails risks: threats and opportunities.

For example, every port that is set up threatens to become a hub of drugs, counterfeits, e-waste (waste import), weapons, illegal immigrants, etc.

The clearing of bombed-out apartments and critical infrastructure not only produces gravel, but also precious metals such as copper, which is wrapped in plastic. If one tries to remove this plastic by burning it, dioxins are released. They initially move in the air, then rain out and thus end up in the food chain or elsewhere in fauna and flora.

Due to the large future demand for vehicles, the country will become a market for second-hand and third-hand vehicles from Western European countries. Transport of such vehicles is known to transport a lot of waste in the cargo areas of these vehicles.

The high need for cheap means of communication will increase the demand for second-hand means of communication such as mobile phones and computers, causing second-hand devices to change hands again. In addition, a new reinstallation takes place, which greatly shortens the life cycle. That gives a false appearance of cost-benefit responsible means of communication.

Weak legislation and a lack of income from the country will tempt farmers to use very strong very unhealthy weedkillers to maximize their crops, which does not benefit the health of the customers.

Due to a shortage of police presence in the transition period to a rebuilt state, crime will flourish during that transition period .

A shortage of inspectors creates investors looking for pollution havens. Although, according to certain studies in the literature, this is often not the reason for attracting foreign investment. More often people are looking for many and cheap well-trained workers, for an abundance of skilled suppliers and for an environment with several other investors. A number of these are in themselves bottlenecks.

Longer-term investments are needed before they bear much fruit.

The destroyed country can become a haven for extremists.

The conclusion of all this is that peace in the short term requires a well-oiled government apparatus.

When are scenario thinking and future planning appropriate in risk management ?

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Author: Manu Steens

In this article I write my own opinion, not that of any organization.

On the one hand, we have risk management.

In risk management, it is common practice to translate a risk as a product of probability and impact.  The most well-known formula for measuring a risk is:

R = P * I

R is the measure of risk, P the measure of the probability of an undesirable event occurring and I its impact on achieving the objectives of the organization. Both are considered known.

Special attention in this article is paid to the situation in which there is a high degree of uncertainty with a risk. Unlike certainty, usually mathematically defined as a number between 0 and 1, or between 0% and 100%, uncertainty is rather something we feel but on which we cannot attach a clear mathematical definition that leans back on certainty. What we do know, however, is when the uncertainty is maximum for the occurrence of an event as a result of a cause. That is if the probability is 50%. Why? Because then the occurrence of the event is a coin on its side: you really do not know which way it will fall.

On the other hand, we have the combination of the future strategies with scenario thinking.

In itself, risk management is also a bit like thinking towards the future: if the probability is high, for example 95% chance of occurrence, then there is a relative high certainty of the occurrence of the impact. It is then, from risk management and in function of the impact, that one has to define and implement a measure. This allows the impact to be optimally prevented or mitigated (in the event of a threat) or provoked to the maximum (in the event of an opportunity).

However, the reasoning I want to make here is this one where the uncertainty is maximum. There it is therefore unclear whether the event will occur, or not. So a twofold future occurs: the event happens or does not happen. With this, a game of extremes occurs, for example:

  • Will it be war or peace?
  • Will healthcare become more preventive or more curative?
  • Will sufficient measures be taken in time for the climate or will it become an unbearable climate?
  • Will there be famine or abundance?

With such uncertainties one can consider these uncertainties in their own right, where one has two futures per uncertainty, or one can  express them per two against each other (if they are sufficiently independent), obtaining quadrants that represent four futures.

In theory one can work with n uncertainties, where one then obtains 2n futures but it becomes problematic, because already from n = 3 one has 8 futures, which becomes unworkable and also because in practice it  becomes more difficult to maintain the independence of these uncertainties.  And that is necessary to foresee extremely different futures.

For each of these futures, instead of directly defining measures, one can then start thinking about scenarios. This is a strategic choice, where one defines how one will act in a certain direction depending on which future becomes true. This instead of putting a single project or action in the pipeline because one has a strong expectation regarding whether (probability rather high) or not (probability rather low) the event with a specific impact will occur.

In order to be able to make the right choice, it is necessary to explore the evolution of the circumstances of the organization.  In other words, lowering the uncertainty about the knowledge of the future. To do that, one has a number of things that one can do.

  • The very first thing to do is to dare to question the assumptions. Are the assumptions that were made the good ones.
  • One determines the extreme futures, the scenarios, and whether one is ready for it, or whether, in contrast, one still has work to do. Usually it is the latter. To this end, one looks at which strategic option is most useful in which possible future. These options involve developing possible future projects or actions, and thoroughly considering their effects with a 360° view. As far as possible, tests or exercises are carried out to estimate the possible effects.  What are the shortcomings that need to be filled in?
  • Furthermore, there is the collection of the necessary information. One will define relevant parameters – indicators – and follow their trends. One determines in advance when one will decide on the basis of which (combination of) indicators which strategic options one will roll out. This is important, because being there in time and preparing for a future can determine whether one can get a  competitive or societal advantage from it or whether one is more likely to encounter a problem.
  • When the future unfolds, one deliberately monitors it, and consciously chooses the pre-agreed options tailored to the actual nuanced future. The timing of the decision and the roll-out of action plans is then crucial.

Conclusion:

Scenario thinking and future planning are relevant within risk management. However, one should have a good idea when this is the case. A rule of thumb is: do this with priority where the probability of an event with a certain impact is average.

Usually there are multiple risks with an average probability. Then give priority to risks with a high impact. After all, these give a more extreme course of the possible futures. As much as possible, make sure that you work with uncertainties that are maximally independent of each other if you plot them against each other.

However, if the impact is very large, and opportunities exist to influence the probabilities in your favor, do not fail to do so with common risk management strategies. “Choose your battles wisely.” After all, future planning and scenario thinking are especially useful when the internal and / or external environment of the organization are substantially uncertain. The choice to work on certainty, or to try to take advantage of uncertainty, is also a strategic choice in itself. And that depends on the capabilities of the organization. The internal environment can usually be influenced. Tinkering with the external environment is usually an impossible task. That is why this technique is also important when trying  to look at risk management objectively for the organization as part of the world.

What are the possible futures of covid19 ?

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Author: Manu Steens

In this article I am writing my own opinion, not that of any organization.

Some time ago I read the book “Handboek Scenarioplanning-Toekomstscenario’s als strategisch instrument voor het managen van onzekerheid” (Handbook Scenario Planning-Future Scenarios as a strategic instrument for managing uncertainty). That book has worked on me like a red rag on a bull. It inspired me to apply the first steps of the procedure discussed in the book. I think that a productive result can be presented very quickly when going through those first steps: a crisis anticipation team can be used in any crisis center. How do I see that? As the procedure prescribes, I start from 2 axes with, in my opinion, a lot of impact and a lot of uncertainty:

  1. Disease flare-up vs further disease decline
  2. The hospital system breakdown vs the hospital system stays upright

This gives rise to four scenario’ s as follows :

  1. Further decline of the disease and the hospital system stays upright : “Road to freedom”
  2. Flare-up of the disease and the hospital system stays upright: “We survive”
  3. Further reduction of the disease and the hospital system collapses: “Delayed stress and PTSD”
  4. Flare of the disease and the hospital system collapses: “Doomsday” scenario.

Figure:

Only one scenario has been extensively proclaimed and explained in the media : the “Road to freedom”.

This can be brave, but one lesson identified that can be predicted from this is that a CAT (Crisis Anticipation Team) should work on developing the other 3 scenarios.

At the moment it is known that hospitals are groaning under the load of covid19 . Other illnesses are delayed for treatment. This entails separate future aspects that are already known and recognized in previous waves, and of which we already know that we will be confronted with them:

-> Postponement of non-urgent treatment results in an overrun of the hospital system with severe non-covid19 cases after the covid19 crisis, regardless of which scenario of the 4 we face.     

-> After the “Road to freedom” scenario, the scenario “Delayed stress & PTSD” can still occur with a high probability. This with a lower uncertainty of occurrence over time. So it would be logical that society, on a global level, should take measures to this end.     

-> This situation can also occur after the “We survive” scenario.     

-> I don’t even want to talk about the “Doomsday scenario”, because then there is no workable hospital system left. Although a “Doomsday scenario” may also occur in varying degrees, as a series of slow-falling dominoes in terms of falling short for hands on the beds .     

Conclusion: a crisis anticipation team can, in my opinion, devote itself with the greatest efficiency and effectiveness to preparing for a failure of the hospital system, when the hands on the beds start to fall short, for example due to burnout and other work-related illnesses.

In order to find solutions, we have to look thoroughly on the labor market for who can do what. A relaxation in job provision to migrants could possibly help? Those of them with medical experience may be able to contribute to the solutions. Or people who are still studying can, as under part of an internship, deal with the more simple tasks of some professionals who then receive the task of “hands on the bed in ICU.”

I hope I’m wrong. Either way, it will never be easy.

Ultimately, if citizens really want to opt for the “Road to freedom” scenario, they will have to exercise a lot of discipline themselves. Because the virus does not adhere to any rules.

Covid19 and Cognitive Dissonance.

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Author: Manu Steens

In this article I am writing my personal opinion, not that of any organization

Currently I am to delve into how people can spot opportunities. This has in common with having mission that one must have fantasy, creativity and imagination. This is needed in order to arrive at an alternative for merely dealing with threats within risk management. The advantage of opportunity management is that one already has a more developed leg within risk management on which one can rely, namely that same threat management. But one needs fantasy. And that is where things sometimes falter to be creative. In what way?

An important, well-known psychological obstacle is cognitive dissonance.

So with that I start with a difficult term from psychology, which can destroy both opportunities and mission by preventing them.

“What is cognitive dissonance and give a good example” you will ask.

Cognitive dissonance was introduced by the psychologist Leon Festinger in 1957. The term is used to describe the discomfort we feel when our beliefs are questioned by conflicting information. Because most people are driven by the desire to stay psychologically consistent. In order to achieve this, one will ignore, forget, not want to hear or know or even reason away any contradiction to one’s own truths . So one does not want to question one’s own “values”. These “values” are sometimes also called “frames” and are personal.

You can also find a word of explanation here: https://en.wikipedia.org/wiki/Cognitive_dissonance .

A strong example that made headlines is Alan Greenspan’s unshakable belief in market self-regulation, which saw the biggest housing crisis to trigger the worst global crisis since the Great Depression. The situation clamored for government oversight of credit institutions so that the banks would not lend money to unsuitable borrowers. Greenspan declined this, trusting that the market would filter out bad credit risks. It became a real estate bubble. Because of the cognitive dissonance of a man in a powerful position. He ignored all warnings. It wasn’t until October 23 that he acknowledged that he had made a mistake in relying on self-regulation of the markets. Those interested will find more here: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis

What about Covid19 then ? An article about a report by the Secretary-General of the United Nations was published on September 20, 2019. The title block lettered : “The World Knows an Apocalyptic Pandemic Is Coming But nobody is interested in doing anything about it.” ( https://foreignpolicy.com/2019/09/20/the-world-knows-an-apocalyptic-pandemic-is-coming/ )

So there was this institution, the United Nations, that has to provide the world some protection, and it tried warn the world that a pandemic was at the door. Yet, after the facts, politicians around the world shouted they couldn’t know. There may have been some form of massive cognitive dissonance here, with all its consequences. Apparently a man can turn the world into crisis, but an organization of people who can see beyond their own truths are incapable of saving the world.

In addition, the question can always be asked what we could have done if massive credence had been attached to the report of the United Nations. Because actually, they did not know where it (the pandemic) would come from. They did not know that.

In the meantime, we hope that we can learn from Covid19, and we certainly have: there have been a number of strong examples. Vaccines have never been on the market so quickly, never before has a vaccination program on such a scale been rolled out so quickly, with growing pains though. But they do it anyway.

In the meantime, the researchers are of course not sitting still with the development of other vaccines for other diseases. One of these that is now very promising is one for malaria. To this end, there is an enormous lesson learned from Covid19: if we, the people, want it, we can vaccinate the entire world. This means that it is an opportunity from the lessons learned from covid19 to apply the vaccination experience on a large scale to this terrible disease. A plea on this issue can be found here: https://theconversation-com.cdn.ampproject.org/c/s/theconversation.com/amp/new-malaria-vaccine-proves-highly-effective-and-covid-shows -how-quickly-it-could-be-deployed-159585 

The question is whether an identified lesson here will also become a lesson learned for our world leaders, or whether they would react cognitively dissonant.

In the latter case, however, I have a question. People are allowed to be very committed to their jobs in high positions. However, this implies that these people have great responsibilities that their job entails. Do they then have the psychological right not to consider perspectives if they are inconsistent with their deeply held beliefs, whatever they are? Do they have the right to refuse? Not to consider? To reason away? In other words, are they entitled to cognitive dissonance? Or should they arm themselves against it? And do they have a duty to do so?

Can citizens around the world hope that the dramatic errors of judgment of Covid 19 will give rise to something beautiful, namely more research on vaccines and on logistics to bring the right vaccine to the right target groups? If not, we will again pay an expensive price for an inflexible attitude. World leaders must therefore (dare) to break through their frames.

So my advice here is: “break through the barriers of your frames, have imagination, create a mission ! Learn to recognize the opportunities that present themselves and take advantage of them. Help each other in this! Step out of the reign of the ‘yesterday till now’-activities and look out for possible futures, including those within seven generations.”

To be able to do that, a good risk culture is needed at the top of the world. This means that every employee within every organization (hence from bottom-up) must be open at his / her level to recognizing and tackling not only threats, but also using opportunities. You do not do that by declaring a story of risk management ex cathedra to the world. Maybe one can do that by realizing a cultural change in the world, perhaps first at the level of the high positions, whereby people not only have an eye for the negative, but rather for the positive. A mission is necessary for this. And maybe our generation will see the result, maybe only the next generation will see the result. But let’s try. After all, we don’t really have another option.