Category Archives: enterprise risk management

Flint Water – A Catastrophic Failure of Government


Since it seems that everyone else is piling on to the dialogue regarding the Flint (Michigan) water situation, I suppose it’s my turn.  It is not my intent to light a political brush fire here, but given the current election season and the emotional charge of this catastrophe, that may be easier said than done.  My guess is that I will tweak someone’s political sensibilities before I’m done here even if that is not my intent.  So here goes.

The lead-poisoned water in Flint is a result of failure in so many ways that it’s difficult to catalog all of the failures.  Moreover, I think the fact that the failure spans so many levels and departments of government is the heart of the problem.  Infrastructure is one of the most basic and primary of all duties of government.  As a society, we elect officials to be good stewards over our collective taxes and hire good people to administer the basic needs of society: roads, defense, courts, and other basic infrastructure.  Honestly, all the rest of the activities of government (e.g., social programs, public education, etc.) are “add-ons” that have become a distraction and resource drain on the fundamental duties of government.

The situation in Flint is disturbing, and that’s putting in mildly.  Even more disturbing to me is the race to the bottom on full display among the political class and ideologues.  Everyone is blaming someone else, covering their own backsides, seeking political advantage in what amounts to a sickening display of political gamesmanship.  All while Flint residents continue to rely on bottled water and filters when what they really need is world-class emergency infrastructure project to replace the water pipes – something that a properly incentivized private sector contracting firm could pull off if the political class would just shut up and recognize this.

The political left is hanging this all on Michigan Republicans.  The political right is blaming Michigan bureaucrats and the Obama-led Environmental Protection Agency.  The fact is, every level of government has failed Flint here.  Democratic and Republican politicians along with unaffiliated bureaucrats working in a flawed administrative state all bear responsibility.  Government fails because it’s incentives to manage such complex systems are all screwed up.  There is no accountability, and that’s by design.  It’s the EPA Animas River fiasco all over again.  Same screwed up results, different year.  Government fails.  Big government fails big.  Then the political class rushes in to assign blame, capture a political public relations advantage, and convince us that even bigger government is the only solution.

The late Harry Browne (Libertarian presidential candidate in 1996 and 2000) used to say, “Government is good at one thing: It knows how to break your legs, hand you a crutch, and say, ‘See, if it weren’t for the government, you wouldn’t be able to walk.'”  The Flint water catastrophe is a failure of government risk management, administrative management, oversight, and more.  I don’t believe that any one person set out to poison the people of Flint, but that’s not what Michael Moore would have you believe.  Then again, Michael Moore wants Governor Rick Snyder arrested so that he can sensationalize the entire disaster to help his leftist political causes which will only serve to give us larger and more incompetent government.

Why do we continue to trust and put our faith in behemoth government bureaucracies at the state and federal level when they have so often and so spectacularly failed?  Seems to me that this catastrophic failure of government at all levels and of all political stripes should be enough to convince us that maybe, just maybe, we should try downsizing the behemoths and trust ourselves at the local level just a bit more.  We’ve tried everything else and I don’t see how it can get any worse.



Space Shuttle Challenger


Thirty years ago today, the space shuttle Challenger exploded just 73 seconds into its flight, taking the lives of all seven astronauts, including school teacher Christa McAuliffe.  As with most tragic events that affect an entire nation, I remember where I was when I learned of the disaster.  I was just returning home from a morning class during my undergraduate days at Michigan State University.  My roommate and I watched the network news bulletins in utter disbelief.

The investigation following the disaster concluded that the cause of the explosion was a failure in an O-ring component of the solid fuel rocket boosters which allowed hot gas to escape and ignite the shuttle’s external fuel tank.  The O-rings had a design flaw which had long before been deemed to be acceptable and several previous successful shuttle launches seemed to support that conclusion.  However, the O-ring design flaw presented greater risk at colder temperatures.  On the morning of January 28, 1986, the Florida temperature was a mere 36 degrees Fahrenheit.  In the days following the disaster, we learned that there were engineers who had cautioned that the O-rings may not properly seal at temperatures below 53 degrees Fahrenheit, but such cautions were either ignored or were not effectively communicated.

Much has been written regarding this disaster and its obvious risk management failings over the last 30 years.  There have been alternative theories, talk of conspiracies and cover-ups, and frankly some pretty wacky stuff.  I can’t help but wonder if this disaster might have been averted had their been more of an enterprise-wide risk management process in place.  Don’t get me wrong… NASA and all of the contractors involved in the space program for the last 50+ years have always taken the significant risks of space travel very seriously, and have had many processes and checklists in place to ensure that no step was missed and no procedure left undocumented.  The ingenuity and dedication to astronaut safety was on full display in the case of Apollo 13.  That NASA mission also endured a catastrophic explosion, but with a much happier ending.

The fact is, bad things will happen.  The entire profession of risk management and the insurance industry that serves us exist only because there is risk in everything that we do.  We need to be prepared to identify and control these risks, and finance the economic impact of the risks that slip past us.  Enterprise risk management is a relatively recent approach and evolution from the traditional risk management approach where risk and risk control existed within organizational silos.  ERM addresses risk more holistically and bridges across those organizational silos.  I am no expert on the Challenger disaster and the investigation, but it seems to me that there is a fair amount of evidence that the launch decision on that cold Florida morning 30 years ago was made without the benefit of sufficient risk information from across the NASA enterprise.  And if that is true, what a shame that enterprise risk management couldn’t have evolved a few decades earlier.