Risk management and the problem with intelligence estimates

On December 29, 2010, I discussed China's progress with its anti-ship ballistic missile and fifth-generation stealth fighter programs ("Is China's military a paper tiger or a real tiger?"). Yesterday, Vice Admiral Jack Dorsett, the U.S. Navy's intelligence director, admitted that he and his colleagues were taken by surprise with the pace of China's military research and development. "Their anti-ship missile - we underestimated when they would be competent and capable in delivering a technological weapon of that type," said Dorsett.

As for sudden appearance of the J-20 stealth fighter at a flight test center in Chengdu, it is hard to argue with Dorsett's assessment: "I think time will tell whether we've underestimated it."

Errors in intelligence estimating are inevitable and include both positive and negative surprises. The task of preparing for negative surprises is an exercise in risk management. Defense policymakers should attempt to maintain a margin of safety in their forces and capabilities in anticipation of the unexpected. They must balance this prudent desire with the pressure to economize. Today, Defense Secretary Robert Gates is to announce more cuts in Pentagon spending.

Regarding China and the protection of America's security interests in the Indo-Pacific region, are U.S. policymakers doing a good job of risk management? Yesterday, Joint Chiefs Chairman Admiral Michael Mullen released his strategic guidance for 2011. In the seven page document, China and America's interests in the Pacific region received a brief mention within one paragraph on page five.

Nothing follows.