41 pages • 1 hour read
The Fifth Risk
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Part 1Chapter Summaries & Analyses
Part 1 Summary: “Tail Risk”
The day after the election, the Department of Energy (DOE) prepared for about 30 people to come into the department, but no one showed up. Two weeks later, Trump appointed Thomas Pyle, the president of the American Energy Alliance (AEA), which Koch describes as a “propaganda machine” funded with money from ExxonMobil and the Koch Industries. Pyle met with current Secretary of Energy Ernest Moniz, Deputy Secretary Elizabeth Sherwood-Randall, and the DOE Chief of Staff Kevin Knobloch. After that, he never came back. Eventually, Rick Perry was nominated and confirmed as the Secretary of Energy.
Lewis meets with John MacWilliams in June of 2017, and together, they simulate what a conversation about transition could have looked like within the Department of Energy. He asks MacWilliams, who had been the chief risk officer, to outline the top risks that a new administration should be cognizant of within the DOE. MacWilliams lists five: an accident with nuclear weapons, North Korea, Iran, the electrical grid, and project management. The DOE has spent both a lot of time and money making sure that nuclear accidents don’t happen. MacWilliams tells Lewis about “broken arrows,” nuclear accidents that didn’t lead to nuclear wars. He also notes that the DOE funds a lot of energy innovations. The next two risks deal with the potential for an attack from North Korea and Iran’s desire to build or acquire a nuclear weapon.
After their conversation, Lewis drives through Portland, Oregon, near the Columbia River, which is responsible for 40% of the hydroelectric power in the United States. On two occasions, the electrical grid has come under attack: once in 2013, when a sniper took out 17 transformers, and again in 2016, when there were 500,000 cyberattacks on different parts of the grid. The DOE responded by trying to educate executives of utility companies about threats.
Lewis spends the last part of this section discussing the fifth risk: project management. He arrives in Hanford, Washington, the site of a decommissioned nuclear reactor built during World War II where the scientists who created plutonium for the atomic bomb dumped 120 million gallons of high-level waste and 444 billion gallons of other contaminated substances into the ground. When problems arose in 2017 due to this waste, the government instituted a quick fix rather than a long-term solution. One way to think about project management is to think of it as “the risk a society runs when it falls into the habit of responding to long-term risks with short-term solutions” (75). Secretary Moniz suggested doing a study of the risks at Hanford, but he was shot down because contractors, longtime DOE staffers, and even the people of Hanford themselves benefited from the short-term solutions, either through payment from the federal government or due to concerns about lawsuits about what would be uncovered.
Around this time in 2017, the Trump administration unveiled its budget for the DOE, which would eliminate a $70 billion loan program and research on climate change and would reduce funding for securing the electrical grid from attack or natural disaster. Lewis finishes this chapter by noting the Trump administration’s “willful ignorance” about the risks in the DOE and the science behind them (77). For example, the Advanced Research Projects Agency-Energy (ARPA-E) program was founded during the George W. Bush administration to offers grants to researchers for creative projects that may not be funded otherwise. The Trump administration’s initial budget proposed cutting this altogether.
Part 1 Analysis
“The Tail Risk” opens with a motif that appears in each portion of the book: the staff of a department ready to hand over transitional materials and to brief the incoming administration on what to expect. Lewis also introduces the idea that, when someone does finally show up, they’re concerned with the work that the department has been doing on climate change. This highly partisan move is in distinct contrast to the apolitical nature of the transition materials that were being prepared.
Thomas Pyle is also the first example of someone coming in who had a biased stake in the department. His work with AEA was funded by ExxonMobil and the Koch Industries, two organizations that had profits staked on DOE regulatory measures. Additionally, Rick Perry, the incoming Secretary of Energy, had once said that he wanted to eliminate the Energy department, though in his confirmation hearings, he insisted that he regretted doing so.
Also, because neither was willing to sit down and have a thorough briefing, Max Stier’s fears about a bad transition are realized. Their negligence also leads to issues with managing the staff that is there. One staffer tells Lewis: “It’s not hostility so much as a real sense of concern with sharing information with career employees. Because of that lack of communication, nothing is being done. All policy questions remain unanswered” (49).
Lewis’s conversation with John MacWilliams provides a template for what Lewis will present in the following two parts because it simulates exactly what wasn’t happening with the Trump administration: a conversation about transition in which Lewis takes Stier’s fears about a bad transition and its effect on productivity and combines it with the specificity of what could happen if the biggest risks in each department aren’t addressed. As with all figures he interviews, Lewis provides a background of MacWilliams to show his credibility and to discuss the experience that forms the foundation of his answers. We also learn more about the importance of scientific research in the government, which is a recurring theme.
Because MacWilliams speaks specifically about risks, Lewis also takes time to show some of the steps that Secretary Moniz took to addresses crises before they happened. Under him, the DOE started to imagine disasters that had never happened in order to prepare for them. Yet, Lewis cautions, “The risk we should most fear is not the risk we easily imagine. It is the risk that we don’t” (68).
Project Management, the “fifth risk,” also forms a crucial part of each section. Lewis will discuss different projects and the ways that they were managed in each department. He argues that long-term solutions come from investing in innovation and knowledge, an approach that is threatened by budget cuts to scientific research. He uses the Advanced Research Projects Agency-Energy (ARPA-E) program as an example; the Trump administration’s proposal to cut this altogether expressed a willingness to remain ignorant when advances could be made.
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