Known Unknown

I was woken up in the early hours of Wednesday morning by a long, low, rumbling vibration coming through the ground, and I assumed that it was a heavy lorry moving slowly along the normally quiet road where I live. Actually, it turns out that I was woken up by an earthquake measuring 1.7 on the Richter scale. The epicentre was about 8 miles from my house.

I live on the edge of the English Lake District, an area of the world that most people think does not suffer from earthquakes. However, this view is entirely wrong as it lies on a geological fault line running through the northwest of England that is prone to earthquakes. In fact, this is the third one that I’ve experienced in about 20 years.

Fortunately, all of these earthquakes have been less than 2.0 on the Richter scale and have not caused any damage. But what is to say that they might not be much larger in years to come and cause significant damage to the area? Just because there’s no record of a large earthquake in the northwest of England, it doesn’t mean that it won’t occur. Surely, if it’s on a fault line, then there is a chance that we will experience the “big one” at some point in the future. If so, what is that chance? What is the probability that the northwest of England will experience a large earthquake in the coming year?

This is a classic case of a known unknown. We know that the northwest of England has a geological fault line and that earthquakes have been recorded three times in the last 20 years (a chance of 15% that the northwest of England will suffer from an earthquake in any one year). What we don’t know is the size and impact of the next earthquake.

So, do all those organisations in the northwest of England that are on or near the geological fault line have an earthquake on their risk registers? And if so, what have they estimated the likelihood and impact of an earthquake. On the evidence of the past 20 years, the likelihood is 15% of an earthquake within the coming year with an impact of zero. But what if the earthquake is about 8.0 on the Richter scale (about the same of the big earthquake in San Francisco in 1906) and the impact is huge? Does anyone have this on their risk register, and if so, what are they doing about it?

My company, Merrycon, is based on the geological fault line, and we have identified a large earthquake as a threat to the company. However, despite spending every day managing risk, we don’t keep a risk register. A large earthquake is just one of the many known unknowns that could destroy the company’s offices and assets, but instead of meticulously recording each threat, estimating the likelihood and impact of each, and trying to think up mitigating actions that we could take, we have a Business Continuity Plan that covers the loss of the northwest of England – from whatever cause.

This is how Merrycon handles its known unknowns.