Hurricane Irene: understanding risk management and supply chains for the uninterested

Even if you are professionally  uninterested in supply chains or risk management you should have heard of Hurricane Irene hitting the US East Coast including New York. The very unusual prospect of New York tunnels being flooded (with animation being shown  on several  TV stations ) has cancelled trains,airplanes and closed colleges  and there is now news that the Merritt Parkway highway might be closed in Connecticut. A state of emergency has been declared at both the State level by the Governor and by the President for Federal aid. If you live in the track of the storm you must be getting calls and messages from friends worldwide – so intense has been the communication. A local dinner invitation with friends  has been pushed up to early lunch on Saturday although the storm is scheduled to arrive on Sunday at 2 am. Our hosts do not want to put their guests at risk !

Once a risk is identified for an organization – the key lesson from the Hurricane Irene preparation is communicating that risk. It is this latter piece where organizations including Governments seem to fail but the current communication of "hope for the best but prepare for the worst" is rather effective for the Hurricane Irene.

And if you live in the path of the storm you will see that grocery stores have run out of bread,water and batteries because of the repeated warnings that power might be gone for several days and weeks in some areas. When you look at nearby shelves that are full of ice-cream, beer or soda and empty shelves of water you get the idea of supply chains by item or SKU. Also, how consumer demand ultimately drives supply chains and distribution channels. The re-order time for water at grocery stores is obviously longer than the weather notice and the time it took for the Irene risk to sink in with consumers.

An update to follow on this post after the hurricane.

Update Monday, August 29, 2011 Hurricane Irene did less damage than expected. So there is now talk  whether the risk was over-hyped by the media and civic authorities. And that's the thing with risk management. When things are better than expected folks tend to get into the "crying wolf" mode – but hey the purpose of management is to minimize risk and from this blog's point of view the hype was worth it.

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