In April international space agencies participating in the  2019 Planetary Defense Conference, launched an exercise designed to simulate the response to an asteroid strike on Earth. It is a result of increasing efforts over the past two decades to improve humanities chances of surviving the threat of an extinction level event from the impact of a large space object with the planet, similar to that considered to have led to the mass extinction of dinosaurs. Commenting on the purpose of these international agencies Mr. Rüdiger Jehn, Head of Planetary Defense for the European Space Agency (ESA) said, "The first step in protecting our planet is knowing what’s out there. Only then, with enough warning, can we take the steps needed to prevent an asteroid strike altogether, or to minimise the damage it does on the ground.”

Our interest in these events is due to the lessons we believe they offer to organizations striving to improve their own ability to survive existential threats through effective Strategic Risk Governance and Management. As Mr. Jehn observes the first step is to “know what is out there”, in other words to find the “known unknowns” that may represent a threat. This corresponds to the essential process of Anticipation. We urge our clients to search in the “Realm of Ignorance” and “forage for surprise” to actively look for the few key Strategic Risks* that should concern them.

NASA’s Centre for Near Earth Object Studies (CNEOS) was charged by congress in 2005 with finding 90% of objects of a size, distance from earth and trajectory thought likely to represent a potential threat to the planet. Since then CNEOS funding has risen from $4m to nearly $200m p.a. as the number of such objects found has grown. 20,000 have been identified to date and the number is still growing at about 150 per month. Without such active search humankind would still be living in profound ignorance of the potential scale of the threat from these space objects – the same kind of profound ignorance that many boards of directors experience, as they become familiar with imperfect strategic assumptions and information about risk that fosters their Strategic Risk blindness.

Once potential threats have been identified there is still great uncertainty about when or if they will occur. NASA and other agencies seek to identify two parameters – the date of potential impact and the probability of occurrence. At first sight this may seem analogous to the approach taken with the conventional risk register assessments of companies. This is a mistake – when NASA computes a probability of impact they are basing this on the known measurement imperfections of size, position and trajectory. In other words, there is a robust basis for a computed probability. This is not the case for the overwhelming majority of Strategic Risks identified by businesses; these are uncertainties, frequently a manifestation of the complex economic environment in which businesses operate, for which, as John Maynard Keynes observed in 1937 “…there is no scientific basis on which to perform any calculable probability.”

The clue to the relevant Assessment of Strategic Risk is in Mr. Jehn’s comment: “…with enough warning”. What matters for boards is not a subjective and unreliable probability but when the threat might materialise. It might be argued that there is as much difficulty in assessing the time to impact of an asteroid as the probability of impact. This is true – for asteroids. But when businesses focus on the expected time to event threshold for Strategic Risk there is much more data and evidence that can be applied to make a best estimate. Moreover, by applying the lessons learned from the Good Judgement project**, the estimation algorithm we use is amenable to update and adjustment over time. This is just what NASA, ESA and other agencies do to improves their estimates of time to, and probability of, impact. The key metric remains time, since this is what either facilitates or limits any potential response to the threat. Moreover, if the rate of change of the observed time to event accelerates, i.e. starts to become much shorter, this is a vital indicator of the need for action.

The action required for Adaptation or mitigation of the effects of the observed threat is clearly determined by the nature and severity of it. For NASA and ESA such actions are “… the steps needed to prevent an asteroid strike altogether, or to minimise the damage it does on the ground.” For business organizations having strategies that are robust to their assumptions (i.e. they may survive such assumptions being wrong), or having built resilience, for example maintaining key strategic reserves, are amongst the methods that can be employed to adapt to anticipated threat. The lessons from corporate failures nearly always demonstrate that failure to adapt in time to an emerging existential underlies their eventual demise. It is just such a failure that NASA, ESA and others hope to avoid by running their simulation exercises.

When boards and executive teams apply these proven Anticipation, Assessment and Adaptation processes to their own Strategic Risks they may avoid, as NASA and ESA hope to also, an Extinction Level Event!

* We define Strategic Risk as any event which has the potential to cause serious adverse effect on strategic goals up to and including the death of the corporation

** Tom Coyne was a member of the winning team in the Intelligence Advanced Research Projects Activity’s forecasting tournament, as described by Philip Tetlock and Dan Gardner in their book “Superforecasting”