In this episode of our BryghtCast edition of the Managing Uncertainty Podcast for the week of August 26th, 2019, Bryghtpath Principal & CEO Bryan Strawser and Consultant Bray Wheeler take a look at three current risks and upcoming events:
Bryan Strawser: Hello and welcome to the Managing Uncertainty Podcast, Bryghtcast edition, for the week of August 26th, 2019. I’m Bryan Strawser, principal and CEO here at Bryghtpath.
Bray Wheeler: I’m Bray Wheeler, consultant at Bryghtpath.
Bryan Strawser: We’re going to start off the Bryghtcast edition today by talking about Tropical Storm Dorian, and we’re recording this episode on Monday, so this information may be a little more dated by the time that you hear it, but Tropical Storm Dorian is currently in the Caribbean. It is moving at a North-Northwest track right now. It is currently several hundred miles to the southwest, southeast, rather, of Cuba and the Dominican Republic and Puerto Rico. But kind of four key messages here that we’re hearing from FEMA and the National Hurricane Center, and that is that Dorian is expected to bring tropical storm conditions to portions of the Lesser Antilles Islands on Monday and Tuesday. Tropical storm watches and warnings are currently in effect for those islands.
Bryan Strawser: Hurricane conditions are possible in portions of the Windward Islands, and a hurricane watch has now been issued for St. Lucia. Residence and companies in those areas should refer to advice from local government officials and products from their local meteorological service for more info. The National Hurricane Center expects that Dorian will produce three to eight inches of rainfall from St. Martin to St. Vincent, including Barbados, with isolated totals as high as 10 inches in portions of the Northern Windward Islands. The risk of direct impacts from wind and rainfall has increased over the last few days for Puerto Rico and Hispaniola. Interests in those areas should monitor the progress of Dorian and tropical storm or hurricane watches will be likely required later today, as in today on Monday. Any potential impacts from Dorian in the Bahamas or Florida later this week are highly uncertain given the potential for this system to interact with the high terrain of other islands.
Bryan Strawser: We know that FEMA has activated the National Response Coordination Center in Washington, DC. The FEMA private sector office is activating the national business emergency … I’m sorry, the National Business Emergency Operations Center or NBEOC and FEMA’s NBEOC members now have access to the portal where FEMA is sharing information, and I know from checking in there earlier today, tons of states in the Southeast, Eastern United States, particularly Florida, are at a watch state and are carefully monitoring what’s going on. And of course the governor of Puerto Rico, despite being in some recent upheaval, is also on full alert here as the storm moves in their direction.
Bray Wheeler: Bryan, what are some of the typical agenda things that they’re starting to talk about as they activate?
Bryan Strawser: Well, it looks like they’re going to have the first call tomorrow. This is FEMA with the private sector community. Those are joint calls held between the National Business Emergency Operations Center, which is at FEMA in the National Response and Recovery Center and the National Infrastructure Coordinating Center or the NICC at DHS, which kind of coordinates infrastructure protection across the United States. So these calls are typically a weather forecast, and this is straight from the mouth. It’s straight from the horse’s mouth. It’s straight from the National Hurricane Center and the National Weather Service explaining what they’re seeing and what they’re predicting. And they can go from macro to micro on this forecast and do. And then there’s usually a pretty good discussion about what FEMA and DHS are doing with the states and territories in this case.
Bryan Strawser: And then there’s usually some kind of update from the impacted states or territories. Although honestly during Hurricane Maria, Puerto Rico didn’t get on these calls. It was being relayed through FEMA’s folks on the ground.
Bray Wheeler: Oh, okay.
Bryan Strawser: Rather than them being directly on there, at least the calls I were on, and I was on most of the Hurricane Maria calls because I had, we had clients that were impacted in Puerto Rico. And then there’s usually representation from some of the DHS cross-sector coordinating council, sector coordinating councils, where a business representative usually provides some kind of update. Like we often talk a lot about, we often are talking a lot about energy, you know, utilities and electrical power.
Bray Wheeler: Sure.
Bryan Strawser: Healthcare. So we have ASPER from HHS, the assistant secretary for preparedness and emergency response, someone from their team over at HHS, so they own all the healthcare emergency response.
Bryan Strawser: And then it just depends. I mean, when it comes to, if Puerto Rico and the other U.S. territories, the U.S. Virgin Islands, are impacted, as it appears they’re going to be, there’ll probably be a lot of Coast Guard because the Coast Guard is going to be focused on making sure the ports are open, the ports are safe, that we can get transportation in. And then, the big thing with Maria, the response to Hurricane Maria that was supplies needed to come in via barge or ship from the U.S. mainland. It’s a thousand miles to get to Puerto Rico and the airfield was in horrendous shape. The other challenge with Maria at the time, two years ago, is that we had been in such a response mode from the two previous major, like two of the biggest hurricanes ever. Here comes Maria, which is bigger. I mean, the warehouse was empty.
Bray Wheeler: Right.
Bryan Strawser: And the warehousing on Puerto Rico, in particular, had been used for a previous … So like, for previous hurricanes. So there wasn’t the kind of stuff in-theater that you would expect to have. That’s not true in this case. The stuff is there. FEMA, the update I saw this morning, they had USAR task forces, that’s urban search and rescue. A lot of the other kind of first-line in folks were either already in Puerto Rico or they were staged to be moved to Puerto Rico through military resources post-landfall. So I think we’re in a different response situation than, as a country, than we were two years ago. But again, Puerto Rico is a thousand miles off the coast. So are the rest of the U.S. Virgin Islands. It’s a long haul to that supply chain as opposed to a domestic.
Bray Wheeler: Right.
Bryan Strawser: I say domestic and an incident within the lower 48.
Bray Wheeler: Yeah.
Bryan Strawser: It’d be like Hawaii and Alaska. It wouldn’t be any different. It would be hard to get resources there quickly.
Bray Wheeler: Sure.
Bryan Strawser: In an incident. So that’s kind of what I’m seeing. I didn’t go through the detailed FEMA update this morning.
Bray Wheeler: Is there anything companies should be thinking about or preparing, even to kind of help assist or just have things lined up?
Bryan Strawser: So I think there are a couple of things. One is to take a look at your operations in Puerto Rico and make sure that you’re prepared for disruption there, not just in terms of tropical storm or hurricane coming in and what that could do to your infrastructure, but also go back to the lessons of Maria and what could this mean in terms of losing power, using utility power, water, staff, transportation and logistics. These were all big challenges in Maria. The Puerto Rican electrical utility set-up is not very resilient.
Bryan Strawser: It certainly has improved from its pre-Maria days, but it’s not fully rebuilt. There’s a lot of challenges there. And then I think, you know, we’ve got to be honest. The government of Puerto Rico as a territory has been in some significant upheaval over the last few weeks. The governor resigned in the scandal. They appointed a new governor. The Puerto Rican Supreme Court ruled that that appointment was unconstitutional and tossed him. And now they have a new governor and I believe also someone refused. The lieutenant governor refused the job.
Bray Wheeler: I believe so.
Bryan Strawser: So we’re on to governor number four. So there’s just a lot of upheaval and uncertainty there. But at the same time, there’s a huge FEMA presence in Puerto Rico, and there’s also some really good emergency management leadership in Puerto Rico and have been there since Maria. So I’m cautiously optimistic of what … This also doesn’t appear to be … I mean, Maria was a massive Cat-5 storm.
Bray Wheeler: Right.
Bryan Strawser: This is not that either. But Puerto Rico’s resiliency situation … It’s a challenge.
Bray Wheeler: Yeah.
Bryan Strawser: So those are things companies need to be, just go back to your lessons from Maria and be prepared to manage through those disruptions. And I would plan to stage personnel and supplies that you can get in via ship or air for post-landfall.
Bray Wheeler: So next up, topic wise, we just wanted to touch on the major world event that’s going on right now, in particular, that’s sucking up quite a bit of the news is the 2019 G7 summit that’s being held in France. Some of the objectives that they had for the summit, kind of going into it, was fighting inequality, whether that’s gender inequality, access to education, health services. They were also talking about reducing environmental equality through climate finance, preserving biodiversity, the oceans, strengthening social dimensions of globalization for fair trade tax development policies, taking action for peace against security threats and terrorism, and then tapping into opportunities created by digital technology and artificial intelligence. So really some of the main … I mean that’s some pretty high bar objectives, but really what they- [crosstalk]
Bryan Strawser: I was going to say. That was some pretty highfalutin stuff right there.
Bray Wheeler: Uh-huh. Really what they were talking about, I think what dominated the conversation was a lot of trade talk, certainly between the U.S. and China, kind of casting a shadow over those conversations. They were also talking about taxes on technology companies and that was kind of the main focus of the technology conversation. They were also talking about some of the geopolitical stuff that’s going on including Ukraine, Libya. But I think where it got really interesting was Iran and the Iranian nuclear question and the promotion of peace and stability in the region, which kind of took the U.S. a little bit by surprise. They weren’t expecting that an Iranian delegate was going to, was invited and showed up to the meeting.
Bryan Strawser: It was the Iranian foreign minister, is that correct?
Bray Wheeler: I believe so.
Bryan Strawser: And my understanding, at least from U.S. media is that the United States was not told of this individual’s invitation or presence. So an interesting move there by the French.
Bray Wheeler: Yes. And a lot of the media conversation was kind of directed at kind of a one-on-one meeting that France and Iran had, kind of amongst the G7 agenda that was going on. And then kind of lastly, kind of a topic-wise, so really before I get to that one, really the G7, you know is that it’s that major kind of annual meeting with kind of the top seven GDP economies in the world minus Russia who was kicked out. President Trump asked that they be brought back in. So that was kind of part of some discussion. But really that summit touches on a lot of topics.
Bray Wheeler: It’s one of the major kind of meeting points for a lot of these world leaders. A lot of folks, dignitaries from Secretary-General of the United Nations, the president of the European Union, World Trade Organization, World Bank, kind of all those major leaders are also invited to attend, and so it’s a lot of kind of touchpoint on some of these issues. Next year, it’s in the United States. So often what we see with the G7 summit as well is protests and an opportunity for folks that get some counter-messages out. There was some protest activity this year. There wasn’t, it didn’t make a whole lot of media, but definitely going into next year, hosted by the United States in an election year is a potential that, you know, could become an issue that companies need to kind of plan around depending on where it’s hosted.
Bryan Strawser: Do we know where it’s going to be hosted?
Bray Wheeler: We don’t know where it’s hosted yet. The president has indicated he’d like it at one of his properties.
Bryan Strawser: Of course he would.
Bray Wheeler: But they haven’t named a location as of yet.
Bryan Strawser: I recall that there was a … Was it a G7, G8 meeting or was it a NATO meeting that was supposed to be in Chicago that wound up being moved? I think it was in the years back.
Bray Wheeler: I think it was a WTO.
Bryan Strawser: You’re right.
Bray Wheeler: It might’ve been a WTO, I believe, that ended up getting moved. [crosstalk]
Bryan Strawser: Yeah, you’re right. You’re right.
Bray Wheeler: But there was like some serious protest activity around that. And what was the meeting in Seattle many years ago?
Bryan Strawser: WTO.
Bray Wheeler: That was WTO as well?
Bryan Strawser: Yeah. I could see given the president’s, you know, the polarization around the president, that this could be a significant protest event in an election year if it was held in a major urban center.
Bray Wheeler: Yeah. Well, and especially whenever the topics of conversation end up kind of being arrived on during that time, will probably most definitely be a forum for protest.
Bryan Strawser: So the Iranian conversation at the G7 was wide-ranging. You had the UK and US really want to address the issue of maritime security in the Persian Gulf. And we’ve talked about that previously here. You have the nuclear issue with Iran going on. We also had, there was a discussion about Hong Kong and you know Hong Kong, we’re not going to dwell on the Hong Kong protest here, but there was continued escalation this weekend. It looks like the three big things that went on is that protesters formed a human chain throughout the city. There was at least one incident where it’s alleged that protesters were chasing police. The police were cornered in one situation and they drew their weapons. And I have seen a photo of that.
Bray Wheeler: Yep.
Bryan Strawser: That I believe that was Associated Press, Reuters had out, and then in one case, , they’re claiming that the police fired their weapons, not at people but like up in the air or whatever.
Bryan Strawser: Definitely not a U.S. law enforcement kind of situation that you hear too much about.
Bray Wheeler: No. [crosstalk]
Bryan Strawser: But in addition, law enforcement was using water cannons for the first time to quell protestors and move them out of some areas. So I think that the situation of Hong Kong remains unresolved.
Bray Wheeler: Yep.
Bryan Strawser: There was, I thought, an interesting article over the weekend in one of the London papers about a meeting of many business leaders and former government leaders with Carrie Lam, the chief executive for Hong Kong, where they advised her she needed to find a way out of this mess. The business leaders, of course, are concerned about disruption, and they’re somewhat fearful of direct intervention by Chinese authorities, and she refused to back down. She gave very succinct “nos” several times in the conversation, and this, of course, was being leaked by someone. This was not open to the press.
Bray Wheeler: Right.
Bryan Strawser: One, that doesn’t, it obviously doesn’t bode well in the short term for protest activity, as it’s getting leaked out that you know, protestors are only going to feel more passionate, probably about protesting, more emboldened.
Bray Wheeler: Right.
Bryan Strawser: I think so too, in the path that they’re on.
Bray Wheeler: Well and even sort of kind of piggybacking on some of them, some of the activity to, there was reports that they were even beginning to cut down towers that they believed were facial recognition towers, so they’re going to the point of they’re taking out infrastructure that they believe is going to be used against them. Not in the intended probably positive way of what that some of that technology is, but they’re definitely, you know, the use of water cannons is definitely a different tactic, which means the situation is not kind of becoming more under control as probably folks had hoped, kind of last week as things kind of calmed down and there was kind of a little bit of a mea culpa by the protestors kind of following the airport stuff that they tried to kind of calm down and kind of put a new face on everything.
Bray Wheeler: Clearly that’s not going to be kind of the MO going forward. The fact that police are using the water cannons, that there’s the destruction of infrastructure. There is Carrie Lam’s refusal to back down. You know, we’ve kind of been talking about it for weeks. This will likely continue for weeks. I mean the big, big piece for companies I think is just to continue to monitor and stay, stay on this-
Bryan Strawser: Plan. And plan.
Bray Wheeler: And plan.
Bryan Strawser: Make sure that your plans or you’re ready to execute. I mean when they’re out in the streets with angle grinders taking down cameras that they think are facial recognition, it’s not going away in the short term.
Bray Wheeler: They’re, they’re committed to the bit. Yeah. I would just say that you know, kind of on the planning front too, for companies, be prepared with a few different scenarios. Take some time with your different teams and representatives and think through, you know, if there is another shutdown, what are we doing? If there is a Chinese insertion, what are we doing?
Bray Wheeler: Just think through some of those kinds of big moments that have the potential to happen and start thinking about what would be our first few steps that we would do in that situation and that at least gives you something to start running on.
Bryan Strawser: And how quickly can you execute that.
Bray Wheeler: Right.
Bryan Strawser: It’s not a bad time to think about a crisis exercise or a tabletop to kind of game through some of the possibilities that could happen and make sure that you’re prepared and more importantly that your crisis team and your partners and your folks on the ground in Hong Kong are prepared as well. That’s it for this edition of the managing uncertainty podcast. We’ll be back on Monday with a deep dive into an interesting topic. Hope to hear from you then.
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