Thursday, 25 October 2007

The Man who saved the world 45 years ago on Saturday

All of us need heroes and here is a story about someone who in an intolerable situation successfully managed a crisis which could have engulfed the planet. Remarkably it has got very little coverage.

On October 27th 1962, at the height of the Cuban missile crisis, a US warship was enforcing the quarantine of Cuba by depth charging a Russian submarine. To the Russian Captain, running out of oxygen and with temperatures on board around 100F and rising, they were under attack and were honour bound to retaliate regardless of the costs. He ordered that the nuclear weapons should be armed. Russian naval procedure required that the captain and two other officers had to agree to the firing. One second captain agreed, but the other, Second Captain Vasili Arkhipov, argued that the conditions for firing had not been reached, the hull had not been damaged and he succeeded in calming the situation.

The submarine's records are now public and at a Conference held in Havana on October 13th 2002 on the Cuban Missile Crisis, 40 years after the event, Robert MacNamara, the then US Defence Secretary, recognised how much closer to nuclear war we had been than anyone had imagined.

Amongst the lessons from this are:
You need robust processes for your strategy which are clearly understood when working under conditions of great stress and danger.
Moral courage to go ,if necessary, against the opinions of colleagues is essential.
Three heads are better than two in such situations.
The consequences need to be thought through. The US attendees at the Conference admitted that they had not done so thoroughly enough.

Sadly, Vasili Arkhipov died a few years ago, but he deserves a special place in risk and crisis management and in the relation of strategy to decision making.

I, for one, will toast Second Captain Arkhipov this coming Saturday, do you likewise - because of him, you can.

Thursday, 18 October 2007

Big Brother and your car

Every day in the UK 55,000,000 car numberplates are scanned and checked for road tax and insurance.

Every year 40,000 cars found not to have insurance are crushed. As these are mostly of the old banger variety the car stock is being improved by this cull, with the likely, but not proven ,benefits of fewer accidents. Perhaps it could be proved by checking insurance records to see if the number of accidents involving uninsured drivers has decreased over the 6 years since the Motor Insurance Database was set up to meet the requirements of the EU 4th Directive that in event of an accident involving a foreign national the insurer of the car could be immediately indentified.

The Motor Insurance Database has been a hugely successful IT project, carried out, not by the usual suspects - such as IBM or Siemens, but by a team assembled initially by the ABI, one of whom, Penny Coombs, was in charge of their motor insurance division. It required a huge effort by insurers and fleet owners to meet the reporting requirements of the database and because it didn't massively overrun its budget or fail to produce the goods it has vanished from the public's ken.

If it hadn't been created , in an age of international terrorism it would probably have had to have been and then we would have had the MOD creating the specifications. Not a pretty thought.

Tuesday, 16 October 2007

Recruitment without qualifications

Doris Lessing who won the Nobel Prize for Literature last week never attended University as an undergraduate. I am no big fan of academic qualifications , especially now everyone seems to get Upper Seconds, and I would like to celebrate the City's long tradition of giving people opportunities, regardless of where they were educated. The only criterion is can they make money.

The risk companies face now is that as they no longer need a post room, who would with all the postal strikes and the convenience of email, they are hard pressed to find entry points for street smart kids who could go on, like Martin Sullivan the CEO of AIG, to run the company.

Fear not though, just go round to your local coffee bar and chat to the staff who have come from all over the world to work in the City. Some of them have impressive qualifications, most of them have tremendous motivation. The HR departments should take note.

Thursday, 11 October 2007

In Japan after 90, they forget how to die.

Statistics are not all lies, but they need a healthy degree of scepticism, especially when they are projected forward 40 years or so. However every risk manager should take a look at the following UN website if they want to understand the trends that are likely with the ageing of the global population and to tease out the risks.

There is the astonishing fact that, due to the one child policy, the Chinese have 29 million more boys than girls under the age of 24. Then there is the projection that from having 600 million people over 60 in 2000, we will have 1,2 billion in 2025 and 2 billion in 2050, by which time , they estimate, there will be more people over 60 than under 14 on the planet for the first time ever. How will the taxpayers be able to afford all those senior citizen's travel passes, let alone find a car park space for the able bodied?

Of course some of these projections can be way out, but the trend to an older population is clear. In Japan where they have the greatest percentage of people older than 90 of any society in the world and still expect longevity to increase, they celebrate their centenarians' enthusiasm for life every week on what I cannot claim is a riveting TV show.

Have a look at the data from the UN it will raise a lot of questions, including how accurate some of it is.

Wednesday, 10 October 2007

No plan survives contact with the enemy

To illustrate risk management issues and their importance to good decisions you need good stories. Gordon Brown has provided us recently with a very clear example of the dangers of not thinking through the consequences by allowing his staff to talk up the possibility of a general election.

The two mistakes he made were to consider only the upside of what was being suggested - that it would damage the Tories, and set the scene for a successful early election - and he forgot von Moltke's maxim "no plan survives contact with the enemy."

In Brown's case his actions united the Tories, flushed out some of their most attractive policies regarding inheritance tax which turned the marginal seats in their favour, and made David Cameron a winner when he had been on a very bad losing streak. It was one of the most spectacular own goals in recent British political life.

Thursday, 4 October 2007

The largest industry in the global economy

The global Insurance Industry takes in $3.7 trillion in premiums a year and has $17 trillion of assets under management. This makes it , according to the United Nations, the largest industry in the global economy. The UN sees the industry's core competence as risk management. So now you know why you deserve to be so important.