The decision is a function of frequency and severity.

Mitigate risks that have a higher chance of occurrence, provided they are material. (Papercuts probably don’t qualify.) Create contingencies for risks that have a lower chance of occurrence and a material impact on business.

As risks evolve, our analysis should be updated. Usually, power outages would qualify as a contingency. We must have alternative measures in place to continue business for a short period of time or choose to suspend operations. We could let people work from home, have battery packs for laptops and connect on wifi hotspots at restaurants.

When we upgrade to loadshedding for 10 hours a day, it’s no longer contingency, it’s mitigation. We need to find a solution that allows the occurrence of the event not to affect us at all. For large businesses this is easy. Get a generator.

Smaller businesses are having a tougher time. It requires immense planning, all the while your customers are upset and underserviced. Time to get real creative, or start an alternative energy business.

Customers will be knocking down your door.

For the energy provider, loadshedding should be a contingency. It’s not a good mitigator to pass risks or their effects on to your customers.

Unless you have a monopoly of course. In a world of substitutes, monopolies are much harder to come by. Push your customers hard enough and inertia turns into momentum.

Matthew Henry

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