Dealing with the Unpredictable

As some of you may have heard, famed statistician Nate Silver released an analysis last week titled “Which City Has the Most Unpredictable Weather?” which can be found at .

The study revealed information most of us long knew. “Among the cities we tested, the one with the most unpredictable weather is … Rapid City, South Dakota. Congratulations, Rapid City! The ICAO code for Rapid City Regional Airport is KRAP. That’s also a good description of Rapid City’s weather. Its temperature might be 30 degrees in January — or just as easily -12. It’s snowy and windy and prone to big, unexpected winter storms. And it has a thunderstorm on almost 25 percent of days from July through September, more than the national average.”

While Silver may describe Rapid City’s weather as “krap,” its residents readily point out the location enjoys the mildest winters of all the Dakotas. While the Black Hills can make the weather a crap shoot, (an appropriate pun given the passage of Amendment Q?), it does make the city’s climate generally warmer in the winter.

Among the other top ten cities with the most unpredictable weather were Sioux Falls, Fargo, Bismarck, and Aberdeen.

While the rest of the country wonders how we do it, for most of us, it has just always been a way of life. While the weather can be downright dangerous at times, it can be managed around or managed with, by employing common sense.

While living in Pierre, one year I had to fly out to Washington DC in February as part of work. At the time, it was cold in Pierre, but there was no snow cover. Before I went to the airport, I grabbed a snow shovel and put it in my trunk, just in case things changed. When I flew back into Pierre later in the week, the area had been hit by a snow storm, and my car was snowed in at the Pierre airport. I was prepared, as all I had to do was open up my trunk, and I had access to a snow shovel so I could dig myself out!

This reminds me of what Lloyd Blankfein, the CEO of Goldman Sachs once said, "Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen."

Of course, that is all most business lending turns out to be, which is advanced contingency planning. Plan A is getting repaid the way you expect if everything works out as planned, but it behooves you to have a Plan B if something unexpected happens. Almost no business loan makes sense to do, unless you have a snow shovel in your trunk in case the “krap” hits.