Nvidia and Microsoft meltdowns show us all that we must be more resilient in our everyday lives, says HAMISH MCRAE

If the past few days have taught us anything, it is that we have to be more resilient – in the way we communicate with each other, carry out our jobs, invest our savings – you could even say run our entire lives.

There were two events which have seismic global consequences. 

One was the resignation of Jensen Huang, chief executive of what was until recently the world’s most valuable company, Nvidia. 

The other was the collapse on Thursday evening of Microsoft’s Outlook email system, plus its various other services, including Teams, Copilot, OneDrive and so on.

Both have reverberated around the world. Nvidia is still worth $4trillion, but that’s 30 per cent down from the peak, so more than $1.5trillion of wealth has gone up the spout.

The Microsoft systems are gradually coming back, but in the UK police forces, courts, NHS hospitals, chemists, train operators and so on all had to go back to paper records. Similar organisations worldwide were equally hit.

Any enterprise led by a single charismatic person has an inherent fragility, says Hamish McRae

That’s just last week. Think of the string of other examples of over-dependence on technology in recent months and the disruption that results when something goes wrong, such as Heathrow Airport shutting for a day because one electricity substation caught fire. 

Then there was the series of failures of our air traffic control system because of software defects, and freezers in 700 supermarkets being hacked and the food ruined. The list goes on.

The incidents are all different, but the message is the same. You cannot rely on any single technology – or in the case of Nvidia, any key executive – and you have to have a backup for everything.

That applies to businesses, and I hope a lot of them have shot up the learning curve in the past week. But it also applies to us as individuals: how should we react?

Start with Nvidia. Any enterprise led by a single charismatic person has an inherent fragility.

That doesn’t mean you shouldn’t invest in it, but it does mean you must accept the risks.

In the case of Nvidia, I expect it will revert to being a perfectly successful specialist player in the artificial intelligence sector, but not the outstanding enterprise it seemed to many to be just a few weeks ago.

As for the whole AI boom, the recent reassessment is the start of a more rational, measured attitude among investors.

The message here is that you do not want to be over-dependent on any one company or any one market sector. 

This bull market for global equities may still have some way to run, and on any long view the shares of quoted companies are a better investment than bonds or cash.

But you need to be aware that all cycles, by definition eventually hit a peak and turn down.

Resilience is being ready for that. So you spread your risks, look for value, such as that which FTSE100 companies offer, and keep a cash balance so that you have some firepower to take advantage of the opportunities as and when the bear market comes.

As far as this Microsoft collapse – let’s not use that ugly word ‘outage’ – it’s very simple. There will be more of these technological failures, and we have to be prepared for them.

The Government has its ‘Be Ready’ emergency awareness plan, the details of which seem rather silly – a wind-up radio? – and have a tedious political spin. 

The security minister Dan Jarvis explained that the plan was ‘just the sort of community-focused campaign that needs to improve our resilience as a nation’. 

He added: ‘It will bring us into line with European counterparts, where advice like this is a normal part of everyday life.’

Let’s just hope we don’t have to show resilience in the face of the sort of riots that seem to have become a normal part of everyday life across France.

No, we should be resilient not because some politician tells us that we need to be resilient, but because it’s common sense.

So we need to have some cash when the electronic systems fail. We need some form of heating when the electricity goes off, as it may well do this winter.

And we need some basic food supplies – they are right about that. It’s also worth keeping half a tank of fuel in the car, and so on.

Anyone who can remember the pre-internet era will know exactly what to do. We just have to get on with it.

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