Robust Biz Continuity Plan Is Non-negotiable

Banks provide the lifeblood to the financial well-being of different segments. In a crisis, we have to do everything to safeguard their interests

- AMITABH CHAUDHRY

Why would a virus outbreak in one city in China throw the world into disarray? The answer lies in a mathematical theory proposed almost half a century ago. In a 1972 meeting of the American Association of Advancement of Science, mathematician Edward Lorenz gave a talk titled, ‘Does the Flap of a Butterfly’s Wings in Brazil Set off a Tornado in Texas?’

Lorenz was talking about the science behind complex systems, what we now know as the Chaos Theory. It tells us that the more complex a system gets, the more fragile it becomes. These systems are very sensitive to their starting conditions, so a tiny difference in the initial ‘push’ you give them causes a big difference in where they end up. This is also known as the ‘Butterfly Effect’.

The most complex of human-made systems is globalisation, with supply chains spanning continents. In 2014, Ian Goldin, professor at Oxford University, wrote a prescient book titled Butterfly Defect (an obvious pun on the Butterfly Effect) and warned of risks to the global economy arising from six vectors. Amongst them, one was ‘pandemics’.

Unfortunately, Professor Goldin’s warning was ignored, and when Covid-19 struck, the world was utterly unprepared. Given today’s hyper-connected world, the virus outbreak in China quickly affected almost every country. We have all seen the result — hundreds of thousands of deaths, millions infected, trillions wiped out from the global GDP.