CIO — It’s so easy to forget the close calls. I was reminded of this while reading an article in a recent issue of The New Yorker, which looked back at one of the more terrifying international crises of recent years—the near war between India and Pakistan in 2002. That event marked the first time since the Cold War that two nations threatened to launch nuclear weapons at one another, and to this day it’s not clear either country has developed a realistic plan about how to manage their weapons responsibly. Even so, this danger is almost entirely ignored by the ever-growing number of companies that rely on work done in India.

Some readers will wonder why a war in India, even if nuclear, should concern the average CIO. But others will see the point immediately, which is that the detonation of even a single nuclear weapon in a modern capital would all but paralyze the flow of information, money, goods and people into and from that country. This of course means that any company that has, say, located key back-office capacity within that nation’s borders better have an airtight contingency plan that can be implemented immediately, using resources far from the affected lands. Yet as we all know, in a business environment shaped by intense global competition and shareholder pressure, such plans are increasingly rare.

Today’s interconnected world is full of risks with the potential to trigger catastrophic business shutdowns. Flu epidemics, natural disasters, terrorist attacks, political uprisings, war—the dangers are so varied that it’s only natural to feel a sort of paralysis when confronted with what might happen. Sometimes it seems the only option is simply to go about business as usual and pray that when the next disaster strikes, it won’t prove so devastating as to make recovery impossible.

Yet there are in fact many actions we can take to limit the risk, once we set our minds to the task. The catch? Well, actually there are two. First, any general fix will raise one’s cost of doing business, at least temporarily. Second, and far more important, the only way to guarantee a level playing field, to ensure that all companies will be willing to accept the higher costs, is for the government to regulate the process by demanding that all companies respond to the new landscape of risk. This is true not only in India but in any country that serves as a major link in the new global economy.

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