ISO 31000 (Risk Management) and its supporting publications encompass an impressive to-do list of risk management guidelines for organizations. However, if an organization selectively pursues some of the ISO guidelines and ignores others, highly undesirable events — even tragedies — can occur. This is what happened with the Titanic.
ISO 31000, section 4.2, suggests we align risk-management efforts to our objectives. White Star Lines, the Titanic’s builders, fulfilled this requirement. The objectives were to create a luxury liner at the lowest costs, in the least amount of time, and maybe even break the speed record for an Atlantic crossing. These were admirable goals. The Titanic also followed ISO 31000, Section 5.5.1.b., by “taking or increasing the risk in order to pursue an opportunity.” The builders did so because they believed their risks were not extraordinary and could be controlled. This is a common judgment error.
THE PURSUIT OF OPPORTUNITIES, NOT AN ICEBERG, SANK THE TITANIC
The individual risk opportunities that Titanic pursued were not terribly unusual, but collectively they created a perfect storm fueled by three main, linked, cascading risks:
- Ship design shortcomings influenced by cost-cutting efforts
- Flaws in rivets
- Mistakes in the operation and evacuation of the vessel
ISO 31000, Section 5.4.2, warns us that “Risk identification should include examination of the knock-on effects of particular consequences, including cascade and cumulative effects.” The World Economic Forum, in its 2014 Annual Global Risk Report, highlights cascading and connected risks many times as a serious threat. The report also stated the need for better efforts to deal with such threats by supplementing traditional risk management tools with new concepts, methods and tools.
What are cascading risks?
Cascades can be beneficial, neutral or destructive. We define cascading risks as a series of interacting risks that emanate from leadership (aces) through the work culture (kings) and work processes (queens) that create bad performances (jacks) and negative feedback loops (jokers) back to leadership. Leaders then either apply learnings in creative ways or ignore the cascade signals, which can lead to disasters. Detailed cascading risk analysis can aid in minimizing such risks.
Cascade #1 That Threatened the Titanic – Inadequate Design
The Titanic’s design was not unsinkable, as was widely publicized at the time. It had many “watertight compartments,” but they were open at the top, like an ice cube tray. It had far too few lifeboats, a result of cost-cutting efforts during the design phase. It had a double bottom, but that did not extend up to the waterline, where the iceberg sideswiped the ship. This design flaw was quickly corrected on the Titanic’s sister-ship, Britannic, which was still under construction at the time of the Titanic’s sinking.
The Titanic’s builders claimed that it was constructed considerably in excess of the Lloyds registry safety requirements. Therefore, they never saw the need to seek Lloyd’s registry approval. However, Lloyds disputed that claim publicly after the Titanic sank.
Cascade #2 That Threatened the Titanic – Bad Rivets
The Titanic required 3 million rivets to hold her together. Archives tell us that, at that time, there was a shortage of riveters and the necessary materials to create high-quality wrought iron rivets. White Star’s competitors converted to 100% steel rivets, which were much stronger.
The Titanic used steel rivets in the straight section of the hull but not in the front, where the iceberg hit — wrought iron rivets were easier to rivet by hand than steel rivets in those sections. The recovery of the Titanic’s wreck from the sea floor confirmed the low quality and brittleness of the rivets in the impact areas. Higher-quality rivets would have kept Titanic afloat longer and saved more passengers.
Cascade #3 That Sank the Titanic – Operation and Evacuation Errors
The Titanic was cruising near top speed, which was very risky on a moonless night through an area with active iceberg warnings. Just hours before the disaster, the captain canceled a lifeboat drill for no apparent reason. It was suspected that the captain was attempting to break a cross-Atlantic speed record. That recklessness and the collision with an iceberg sealed the Titanic’s fate. Her brittle rivets in the impact area popped off and allowed water to rush into the hull. The Titanic sank in less than three hours. 1,502 people perished after a disorganized evacuation filled the far-too-few lifeboats to just 61% of capacity.
Although ISO 31000 attempts to protect us from ourselves and the outside world, we cannot be selective in what we implement. We need to follow all of the guidelines and even test areas that we believe are safe. We must also heed ISO’s challenge to examine cascading and cumulative effects. Effective risk-based thinking must include cascade effect thinking.