How ready are you for whatever the world might throw at you?

Using the closure of the Suez Canal as a case study, this week's podcast explores the concepts of fragility and resilience. We discuss whether we can really prepare for unexpected events or should just rely on our adaptability.

A few things we mentioned in this podcast:

• The cost of the Suez Canal blockage
• Lottery winners and accident victims: is happiness relative?

For more information on Aleph Insights visit our website https://alephinsights.com or to get in touch about our podcast email [email protected]

Hello and welcome to the Cognitive Engineering Podcast produced by me, Fraser McGruer for Aleph Insights. In this series of podcasts we take a look at interesting topics and discuss what we think they tell us about analysis and decision making. I'm here with Chris Wragg, Nick Hare and Tom Spence of Aleph Insights and this week we're discussing the blockage in the Suez Canal.

Sounds like a digestion problem.

It does. Talk to us about this particular blockage, Nick, and why we would like to discuss it. It's fun, isn't it? This is really good fun. I love this story. So this ship, I think, ship called the Ever Given sailed up the Suez Canal, somehow veered off sideways and got stuck, thus blocking what turns out the Suez Canal is quite a heavily used waterway. And it was blocked for, you know, a week, I think, or so before they managed to unbung it. There's that brilliant photo of like a tiny little earth mover trying to dig it out. Anyway, look, we're all still here. We're all still alive. And I know that the waterways getting blocked is one of those things that Navy types like to worry about a lot. You know, it would be utterly catastrophic if, you know, the Panama Canal closed or the Malacca Straits or the Straits of Hormuz. If that goes down, that's it. You know, the Western economy economy will be on its knees. But, you know, actually, OK, was it that costly? Was it as bad as we thought it was going to be, as people might have predicted, you know, one of the getting the Suez Canal bunged up? More generally, do we tend, a lot of people will tell you that we don't think about low probability risks enough. But putting aside the probability, my question is, do we overestimate how bad it's going to be when things go wrong? Yeah, I mean, that's it, really. OK, that's the question. Are we actually a bit too pessimistic when it comes to looking at things that can go catastrophically wrong? Because actually, maybe they'll be all right. So one of the things maybe we want to talk about is this specific example. Are we in a position to immediately dismiss its impact and say, well, actually, it's all fine? I guess we can, you know, we're all sitting here still with roofs over our heads and stuff. The world hasn't fallen apart. But is there any data there? Is there anything we can say that actually, this has been pretty bad? Anyone want to weigh in on that,

Tom? Yeah, well, I think it was pretty bad. As someone who used to work in the shipping industry, I can confirm that a lot of my former colleagues were quite stressed by it. What did you do? What was your job in the shipping industry? He was a lobster fisherman. Yeah, yeah. Have you ever seen Deadliest Catch? No, I did a few different roles. I worked as an analyst and I also worked in operations as a shipping coordinator for a while. OK, this is right up your street, this. It is right up your canal. Yeah, very good. It was pretty bad. What does that mean? For example, in Lebanon, there were blackouts across the entire country because the power plants couldn't have fuel delivered to them because the fuel that comes to those power plants was on a ship that was trying to get through the Suez Canal, but couldn't. We might not have seen much here because we've got a relatively resilient economy. And also, as a side point, a lot of the energy resources that come from the Middle East to Western Europe actually go around the Cape anyway, rather than through Suez. If you look at ship tracking data, you can see that maybe half of the Qatari liquid natural gas tankers actually go the long way around rather than through Suez. There's already some redundancy. Out of interest, why is that? A mixture of shipping costs. It costs money to go through the Suez. So sometimes if you're not pressured for delivery dates, you might take the cheaper option and go the long way around. OK. But also, I guess,

I mean, there must be some pressure of traffic, which means that it is no longer quicker to go

through the Suez Canal. No, it's always quicker. Oh, OK. But it's just unless there's a ship

jamming it. Unless there's a ship jamming it. A hell of a traffic jam. Yeah. Sorry, I interrupted you there, Tom. So you were sort of, you were taking us through some of the effects.

Go on. Yeah. And similarly, you had, I think there was one example of a particular vessel that was stuck in the canal itself, so not even in the waiting zone, that was delivering a shipment of livestock, I think southwards through the canal. Every single animal on board that vessel died. Really? Good Lord. It's quite hot in the Suez Canal. It's quite high impact for those animals then. Yeah. And for whoever was hoping to receive a shipment of animals. Unless they were

planning to eat them, because actually then the work's been done for them. I'm not sure they had

refrigerators on board the vessel, sadly. So, you know, I think it's a question of resilience, right? And I think, you know, for a lot of Western European countries, the impacts weren't that bad. We're not necessarily that dependent on the Suez Canal. The closer you go to the canal, the more likely your shipping is to be dependent on it. And also the fewer alternative routes you'll be utilising as a standard. I also say more generally, the Suez Canal is kind of a medium criticality choke point. So a few years ago, Chatham House did a study on maritime choke points, particularly for the food industry, for global food. And they basically categorised them into three groups. One of the kind that it's inconvenient if there's a blockage, if you can't transit these choke points, but you can go around them pretty easily without too much additional cost or time. So that's like the Straits of Dover, for example, or the Strait of Malacca. You've got alternative routes that you can use. The next is, you know, blockages that would be quite a big problem. So, for example, Suez or at the other end of the Red Sea, you have the Barbel Mandeb or you have the Panama Canal. However, there are other routes you can get around these. Same goes for the Straits of Gibraltar, as long as Suez isn't blocked. But the type that have the potentially highest impact are those where there are no waterways that you can you can use to get around a blockage. And Chris mentioned one earlier, that is the Straits of Hormuz and the Turkish Straits are another big issue there. And these, you know,

So is that like the Dardanelles? Yeah. So it's both the Dardanelles and the Bostrus.

ports, that kind of place. I want to stop you there for a moment, Tom, because that was super interesting. And I mean, if we don't want that, we've got to stop that and start the boring stuff. Yeah. Well, if the question is, how fragile are we? Right. How fragile is our system? It seems to me the answer is very fragile. Maybe. And by the way, I've got a new phrase that I'm going to try and bandy about, which is medium criticality choke point. I like that one. So that's my new phrase for the day. Yeah. So it sounds like it was already categorized as just medium anyway. Potentially what can go wrong, because I think, as you said, there's alternatives, right? But I have a question though. Did the actual impact correspond to what forecasts had been made of what the impact would be? I mean, was anything that happened surprising? Was it surprising how quickly people adapted? Or was it surprising how difficult it was for people to do adapt? Or did we get it about right? I don't think anyone was particularly

surprised by the impact after it happened, at least not in the shipping world. You know, ship operators are used to having to redirect vessels as are traders. So it wasn't out of the ordinary. It would have been a lot of work for them to do it because, you know, you don't normally have to redirect that many vessels at once. But even at the beginning, you saw a mixture. Some vessels immediately turned to go to Cape Route. Some thought, right, well, we'll wait it out here, see how long the blockage will take to clear, and started moving off later than that when they started assessing the risk differently. And, you know, the price increases associated with delays, fueling costs and so on, they're all known. I don't think anything surprised people.

I guess. So I guess that should mean that that would lend some credence to the, you know, the scarier end of the choke point scenarios. I mean, if they were right about the impacts of Suez. OK, so I want to get let's talk about the scary ones then. Let's talk about the Strait of Hormuz because I this is my question really is, you know, looking at the scarier end now, assuming we can have a bit more confidence in those forecasts, is the scarier end, you know, really scary or actually is it just scary, you know, in comparison to a normal day? And in fact, we'll be fine. I mean, how bad would it be? That's that's the question because I don't I want to have a strong opinion that we're all being a little bit, you know, that people worry too much about these sorts of things. But I don't know. I actually don't I don't have that strong opinion. I genuinely don't know. I sort of think it could be either way could be true. Yeah. Yeah. I mean,

I think that one of the one of the ways we overestimate the impact of these things is by looking at the looking at what is prevented. Right. So so if you look at the amount of grain, you know, that comes out of the former Soviet Union or you look at the amount of petroleum that comes out of the Gulf region and you go, oh, you know, that's x percentage of the of the world's, you know, resource for that thing. So that's going to have that's going to have a major impact. That means we get, you know, 20 percent less of of that particular thing. But I think what that sort of doesn't take into account is the absorption of that risk by society, this this idea of broader societal resilience. Right. So you can't eat wheat. You eat potatoes instead. Right now. And I can't eat bread. You can just eat cake. Cake. Exactly. Which also, you know, happens to have cereal crops in it. But, you know, little did Marie Antoinette know. So, yeah, the but but, you know, and if you don't have, you know, one source of fuel, it might be very difficult to replace in in our sort of, you know, current energy economy might be very difficult to replace petroleum. But there are other mechanisms like, you know, rationing and, you know, reducing energy use and so on. And I think, you know, like, you know, in the UK, we have had, you know, low level protests in sort of living memory about, you know, fuel rationing.

25% global reduction in oil output because of what OPEC decided to do. And, you know, we're all still

here. Yeah. But but I think I think it's the fact that, you know, that society itself is able to adapt to shortages in a way that people forecasting things look at the status quo and and then they judge the impact based on, you know, the effect on the status quo without realising that we're very adaptive as, you know, organisationally and individually. Yeah, it kind of reminds me of the,

you know, the sort of cognitive adaptation, which or, you know, the reverse, if you like, of the hedonic treadmill, you know, where people think the new TV is going to make them make them blissfully happy. And it does for about a day and then it just feels no different to watching your old TV. And there's some evidence that the same thing works in reverse. And there's a very famous study about amputees and, you know, the extent to which they were they were unhappy, you know, afterwards, but nothing like the extent of unhappiness that people predict they would have if, you know, if they had to have one of their limbs amputated. And it's just a general, you know, it's a general sort of cognitive phenomenon, which I suspect is associated with the fact that we have evolved to strongly avoid things like that happening to us. But when they do, it is not adaptive to, you know, give up that, you know, we've adapted both to fear these things, probably more than we need to, but also to adapt to them when they happen. And I just wonder if, you know, societally, whether that's the case. And I also just partly have this, I know that there's there's just such a tendency towards doom and gloom. Certainly, when I was in, you know, in the MOD, a lot of futurists were all full of, oh, it's, you know, everything's getting worse and more dangerous. And we're all more interconnected and more fragile. And, you know, and actually, when you look at the stats, everything's getting better, by and large. And I think I don't

event that, that it does go, does go wrong. Yeah, Tom, I want to bring you back in here.

Anything, anything to add at this point? Yeah, well, I wanted to add to Nick's point. I think with this kind of event that we're talking about, it's quite easy to predict the first order effects. You know, the Suez Canal closes, you can predict shipping delays, you can predict cost increases, you can predict, you know, food wastage or spoilage, that sort of thing. But it's when you start getting to the second and third order effects, that things like this become very hard to predict. What is the impact of those cost increases on society? What is the result of failure to deliver X, Y, Z shipments? And how will it impact, you know, the wider world? And I think that speaks to what Nick was saying about how when you start doing that kind of thing, it's easier to, to kind of sell a picture of doom and gloom. You know, no one's going to be that interested if you say, actually, we don't think it'll, it'll happen. You know, it'll matter that much. But I think in either of those views, there's not necessarily that much rigor in terms of the

I suppose. Which is the, you know, is it worth preparing for these types of events? Because if you look at what happened with COVID-19, you know, the UK's national risk register, the top risk of concern was pandemic influenza, right? Which is not a million miles away from what happened. I know it's slightly different and so on. But we were already as prepared for COVID-19, I think, as our government apparatus would have allowed us to under those circumstances. And yet it didn't really make much difference to how we were able to respond. So the question is, is it worth preparing for these things? Or should we just rely on our adaptability?

I was hoping you were going to go on to say that one of those 17 people was working on a universal cure for coronaviruses that would have been ready six months later had they not died. And they hadn't written their notes down. But also inadvertently, you've just terrified me, Tom, because I don't have on-grid gas. So my gas is off-grid. So this is really bad news to me. I could have been a statistic, right? Hang on, off-grid is good, right? It sounded bad just then. It sounded really bad. Off-grid means you're fine. No, it was the off-grid.

Off-grid customers were the ones who were most affected. A lot of them didn't receive their

deliveries. But I'm off-grid for my barbecue. I've got a gas barbecue. So I'm concerned that if there was one of these cold snaps again, yeah, I might not be able to make delicious burgers. Yeah, exactly. I'd have to resort to pan-fried burgers. Doesn't everyone else have barbecues on Christmas Day? I think we've come to an end there. Anything anyone wants to add as a last moment thing at all? I'm going to take that as a no. All right, so we'll wrap up there. I feel like this is one of those episodes where we've had a special guest. So we've had our special guest, Tom Spence, shipping expert and high-impact scary things expert as well. So yeah. All right, so we'll stop there. As always, thanks for listening. If you have any thoughts or suggestions for topics, you can email us at podcast.alephinsights.com. We'd love to hear from you. If you've enjoyed the podcast, what should you do, Nick? Yes. Sorry, I wasn't ready for that. Let me think of a thematically appropriate response. Sail full steam ahead into the light button. Yeah. Why doesn't Chris say that? Ask Chris what to do. No, that's it. We've done it. Okay. So thank you as always for listening. I'm Fraser McGruer. We've been here with Tom Spence, Nick Hare and Chris Wragg of Aleph Insights. Until next time, goodbye.