The resilient society

A London Business School is gaining wide recognitionfor his breakthrough thinking on how to manage major global disruptions. Nitin Bakshi has been studying how societies respond to disasters such as floods, terror strikes or economic slowdowns — and he’s now sharing some thoughts with a world looking for better ways to cope with such crises.

The biggest terrorist threat to the world may come in relatively small 20-foot by 8-foot by 8-foot metallic boxes — cargo containers. Consider: as many as 32,000 containers enter US ports every day. The threat of one of those containers being tied to an act of terrorism is so great that the US has mandated that by 2012 every container has to be inspected before it leaves the international port of origin.

Nitin Bakshi, Assistant Professor of Management Science and Operations at London Business School, has been tracking such developments closely. His research interests focus on the management of disruption — catastrophic disruption — natural disasters, terror strikes, economic downturns and the like.

Yet, Bakshi has a special point of view on major global disruptions. “Traditionally, the view has been that when we are talking about society-wide disasters, it is the government who has to do everything in terms of responding. Those who are not part of the government are just supposed to fall in line. However, the current thinking (including senior officials in the US administration) is that this is just not viable anymore. We need to get individual citizens and also the private sector involved,” he says.

Managing a disaster

Bakshi began his professional career working for Unilever in India where his interest in supply chain and operations grew. That may be why he sees many untapped solutions to managing a major disaster residing in the private sector. For example, he believes that retailers could have much to contribute when society has to confront an overwhelming catastrophe.

“Retailers have substantial expertise in bringing goods to the market and distributing them in a short span of time, and they also have fantastic communication infrastructure,” he notes. “Now, in a time of disaster, why not capitalise on this kind of infrastructure, which is already in place, rather than try to reinvent it from scratch, from the government’s point of view? If a public evacuation is being planned why not use the communication and logistical infrastructure of Tesco and Sainsbury, who also stand to benefit from an earlier restoration of normality?”

Bakshi’s ideas are drawing a lot of attention from the popular media. His dissertation on ‘Disruption Risk Management and Supply-Chain Resilience’ won the 2009 George B. Dantzig Award, given for the best dissertation in any area of operations research and management sciences that is innovative and relevant to practice. Last February, a paper he co-wrote with Noah Gans of the Wharton School (‘Securing the containerised supply chain: Analysis of government incentives for private investment’), was reported on the Homeland Security Newswire after it was first published in Management Science (Vol. 56, no. 2, 2010).

He says that he doesn’t mind his ideas getting wide scrutiny. “I do wish to see some of the ideas that I propose implemented, rather than restrict myself only to an academic exercise. My training is in Operations Management. Hence, my perspective is biased towards the operational aspects of strategies for disaster recovery. This is not to say that the operational angle is the only take on the matter, or necessarily the single most important one, but it is where I can contribute the most.”

Resilient society

In terms of the danger of terrorists striking via the thousands of containers passing in and out of major ports, Bakshi’s research revealed that if the US or the UK were to unilaterally try to inspect containers without help from the private sector, it would create a massive traffic jam at ports as ships waited to unload their cargo. He concluded that the private sector could help.

“The data we gathered on container movement showed that the inspection scheme being followed currently by the US government may be an infeasible way to achieve 100 per cent inspection,” says Bakshi. But he believes the real solution lies in a partnership with the business world. “Private sector companies have been subcontracted by the government to run port terminal operations. If and when there is a disruption because of terrorism-related risk, these private companies stand to lose a lot.

“It is in their direct interest to avoid such a disruption. Intensive inspection of containers can result in congestion which is detrimental to trade. These companies are in the best position to manage congestion within the terminal. So these companies have proposed that they are willing to invest in the infrastructure for container inspection as part of their business continuity plans — all they need is some oversight  and support from the government. This illustrates what I mean by elaborating on the role of the private sector in creating a resilient society.”

Bakshi, with two colleagues, has also studied the two major systems that could be used to inspect containers. He notes, “I favoured the SFI inspection system, which emphasizes a rapid primary scan of all containers, followed by a more careful secondary scan of only a few containers that fail the primary test.”

Yet this work fits into an emerging pattern for Nitin Bakshi. “I’m trying to exploit the information or knowledge that has been created in different fields and apply them to disaster management,” the professor says. He observes that national economies are no longer isolated from each other. A disruption in one part of the world can dramatically affect other parts: when Pakistan faced major flooding this year, its role as a major supplier of raw material to garment manufacturers around the world was seriously hampered. This is why Bakshi insists that managing a major disruption requires strategic thinking. “When you think of management of these disruption risks, you are talking about strategies you put in place before, during and after the disruption,” he says.

And while Bakshi certainly takes a strong human interest in major disasters, he also notes that his studies strongly tie to the interests of business. “I would like to emphasise that the strategies that I study as part of my research are not just in the spirit of  being a Good Samaritan; this is as much about profit maximisation and economic stability. Depending on how quickly a society can recover from a disaster, would determine how soon a firm can resume  normal operations in that region.

“Let’s say there is a flood-related evacuation: depending on how quickly the community recovers and comes back, that’s when businesses can buy and sell again, when people can go back to work.”

Being resilient is to everyone’s advantage

London Business School - Nitin Bakshi