October - 1999 - issue > Cover

In the game of chicken, the first to pull away from certain death is the “chicken,” and the one most willing to push his luck to the very edge is characterized as the brave hero. When it comes to the Y2K game of chicken, the game takes several forms. A particularly interesting one involves government agencies or regulatory bodies that must ultimately decide whether to shut down a noncompliant firm.

How long can the government agency wait before making such a decision? June 30? July 31? August 31? Apparently not: those dates have come and gone, and we know that there are banks, airlines, utilities, and other key firms that are not yet compliant. How about mid-November? Why not December 31? Recent examples have demonstrated that government organizations around the world are likely to wait until the last minute to announce appropriate sanctions against noncompliant firms. This is going to cause headaches for Y2K contingency planners.

Two recent examples illustrate this point. Notwithstanding its earlier deadlines of June 30 and August 31 for Y2K compliance of member brokerage firms, the Securities and Exchange Commission (SEC) has decided that November 15 is the “ultimate” deadline. As reported in the Washington Post, the SEC will go to court on the first of December to shut down brokerage firms that aren’t ready for the Y2K rollover. But how long will it take the courts to authorize such a shutdown? How long will it take to implement the shutdown and move the accounts within such firms to another compliant brokerage firm? Would you want to wake up on December 1 and discover that your brokerage firm was one of the noncompliant ones?

Similarly, the Nuclear Regulatory Agency has recently described its policy for regulatory actions associated with nuclear plants that are not “Y2K ready.” All 103 plants were supposed to have achieved this status by July 1, but it appears that 35 plants had not managed to do so by the deadline. Some have declared completion dates in October, November and December. It’s important to emphasize that all 103 plants had reported by July 1 that their plant safety systems were Y2K ready, but whatever work remains to be done on other systems is apparently important enough to require NRC monitoring.

Either the exercise is a PR stunt, or we’re involved in another game of chicken — at some point in November or December, the NRC could issue a shutdown order of some kind to one or more laggard nuclear utilities. If such an order is implemented, will it have an impact on the supply of electricity in your local region? And if so, will your company be prepared to implement its contingency plan if the decision is announced on the first of December?

How long will your suppliers and vendors wait to admit that they’re not quite ready for Y2K — assuming that they’re capable of determining their readiness status? The political and financial pressures to wait as long as possible are obvious; and when combined with the optimism that the work will somehow get done at the last moment, it means that we’re not likely to see the final “chicken” decisions until we’ve reached the very edge of the cliff.

What does this mean for the Y2K contingency planners? At the moment, not much: most organizations are still preparing their plans. They still have to finalize them, seek approval, and finally disseminate the information as well. But assuming that all of this work is somehow completed in time, organizations will have to be ready for some rapid, last-minute decision-making during the months of October, November and December. This will be a difficult experience for many large organizations, and the ones that can’t move fast enough are likely to go sailing right off the cliff. It’s something to think about.