A Case Study: Southwestern Airlines December 2022
Bob Jordan, the CEO of Southwest Airlines, believed the business would swiftly rebound from the extreme cold that resulted in hundreds of flight cancellations throughout the country in the days before Christmas. But by Dec. 25, it became obvious that the airline’s operations were in full meltdown. After a restless night, Mr. Jordan and his staff concluded that cancelling even more flights—two-thirds of its schedule for many days—would be the only option to save the airline’s operations. He stated, “We just couldn’t keep up with the volume.”
The press coverage was brutal, and the backlash is ongoing. ZDNET wrote, “Southwest Airlines just insulted unhappy customers in a truly spectacular way.” Fox Business recently reported that shareholders are suing the airline. Additionally, the NPR estimates that the incident may cost Southwest up to $825 million.
Can Southwest Airlines weather (no pun intended) the storm after the storm? Time will tell, but we are reminded by what Carl Sagan once said, “Extinction is the rule. Survival is the exception.”
Extinction Level Events: Definition
An extinction-level event in a business refers to a catastrophic event threatening the business’ existence. This could be caused by several factors, such as: a natural disaster, a cyberattack, or a sudden change in market conditions. These events can have a devastating impact on a business. Potentially, it could lead to bankruptcy or the complete shutdown of operations.
How to Future Proof Your Business
There are several steps that businesses can take to protect themselves from extinction level events. The list below is by no means exhaustive, but these recommendations are a good place to begin:
- Develop a contingency plan: A contingency plan is a set of procedures that a business can follow in the event of a catastrophic event. This plan should outline the steps needed to protect employees, customers, and assets, and how to communicate with stakeholders and get operations back up and running as quickly as possible.
- Invest in insurance: Insurance can provide financial protection for a business in the event of an extinction level event. There are a few distinct types of insurance that businesses can consider, such as: property insurance, liability insurance, and business interruption insurance.
- Implement disaster recovery procedures: A disaster recovery plan outlines the steps that a business should take to recover from a catastrophic event. This may include backing up important data, establishing communication protocols, and identifying alternative sources of supplies and equipment.
- Implement security measures: Cyber-attacks and data breaches can be catastrophic for businesses, as they can lead to the loss of sensitive information and financial damage. Implementing strong security measures, such as: firewalls, antivirus software, and employee training programs. Each can help to protect against these ongoing threats.
- Diversify: Diversifying a business’s operations and sources of revenue can help to reduce the impact of an extinction level event. For example, if a business relies heavily on one customer or supplier, an event that affects that customer or supplier could have a significant impact on the business. Diversifying can help to mitigate this risk.
- Build strong relationships: Building strong relationships with key stakeholders, such as customers, suppliers, and employees, can be crucial in the event of an extinction level event. These relationships can provide a sense of stability and help to facilitate communication and cooperation during a crisis.
- Stay informed: Keeping up to date with industry developments and staying informed about potential risks can help businesses to identify potential extinction level events and take proactive steps to mitigate their impact. This may involve regularly reviewing and updating contingency plans and staying informed about new threats and opportunities.
By taking these steps, businesses can better protect themselves against extinction level events and increase their chances of surviving and thriving in the face of catastrophic events. SUURV Technologies can help you mitigate risks. Simply call (210) 874-5900 or fill out our contact form by clicking here.
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