Bulk of the passengers

There has been a great deal of comment recently about the Ryanair proposal, following a poll of their passengers,to charge very fat people extra for flying if they overlap their seat Unfortunately this is not turning into the public relations disaster they deserve for pandering to their passengers' prejudice. They are getting publicity and not many are criticising them.

However their ploy is doubly cynical because not only are fat people an easy target, but also, as was explained on the BBC this morning, there is a perfectly well known example of how to manage this risk sensitively. South West Airlines in the US indicate that if you think you might not fit into a seat then you should consider buying the one next to you. In the event of the plane not being full then South West refund the cost of the extra ticket.

South West's approach is ethical and compassionate and a good example of thinking about the risks from the point of view of not just the majority but also of those unfortunate not to fit the seat space. They exhibit far better risk management than Ryanair.

Who decides on the risk?

A Chief Executive and his Chief Financial Officer, faced with a deteriorating situation in their markets, decide on a drastic course of action, supported by their banker.

Under their governance rules they submit their plan to the risk management committees. The first risk management commitee, having talked through the proposals with the stakeholders refuses to support the plan, which almost causes an apoplectic fit from the Chief Financial Officer who is not used to such detailed risk management consideration of his proposals.

The second risk management committee, composed somewhat differently, then refines the plan, adds some additional controls and benefits and confirms their agreement with it.

It then remains for the first risk management committee to decide whether their concerns and those of the stakeholders have been sufficiently addressed.

Is this a model for future corporate governance and for putting the risk manager right in the centre of the risk management process at the point of the decision?

The hammer and the aircraft carrier

An American aircraft carrier set sail from San Diego after a re-fit with a number of fitters still working on board. Three hours out one of the fitters reported that he had lost a hammer in an area which was potentially dangerous to the ship's operation and its safety.

The Captain immediately ordered the ship back to port, where after a fairly extensive search the hammer was found.

The punishment for the fitter? To be decorated for having the guts to own up to a mistake which could have badly damaged the ship. A good example of Think Risk, Smarter Decisions.

I don't think this is apocryphal, but I can't remember the original source. Let me know if you do.

"Bungling,confusion,misplaced power"

Richard Overy in his remarkable book "Why the Allies won" describes how the Germans frittered their technical lead and their scarce resources away during World War 2 ;

"The German armed forces pursued technical excellence for its own sake..... The military domination of production had mixed effects. There is no dispute that Germany developed weapons of very high quality...but the pursuit of advanced weaponry came at a price. Instead of a core of proven designs produced on standard lines the German forces developed a bewildering array of projects. At one point in the war there were no fewer than 425 different aircraft models.

' Nobody could seriously believe that so much bungling, confusion, misplaced power, failure to recognise the truth and deviation from the reasonable could really exist.' complained a group of German engineers."

Well today we have news that the National Audit Office has discovered 8 Chinook helicopters which have been so specially modified to the requirements of the British military establishment that they are unsuitable for use seven years after original delivery, despite them being badly needed, and the modifications to bring them back to service will double their original cost.

In trying to get certainty you often miss achieving your objective.

Brown on uncertainty

In our blog of September 11th 2007 we reckoned that Gordon Brown would not call an election at that time and that he might live to regret it.

What has become clearer with every mini crisis is that Brown is very risk averse and that his instinct is always to try to reduce uncertainty to the minimum. This approach worked as Chancellor because he was able to focus on a narrow set of criteria and he had Blair to force through decisions when he did not have enough data for his comfort. As Prime Minister he has to make decisions without enough certainty and he has to accept that sometimes the decisions will go awry.


He is a good example of a manager playing to his strengths even when they are not appropriate for the situation. It is unlikely that he will be able to change and the electorate is starting to see the mismatch.

Accidents and Options

Imagine you are the owner of a company and you have an important guest on your premises. Naturally you supervise all the arrangements to ensure that everything is managed well and any risks to your guest are controlled with great care.

However, despite all your best efforts and those of your staff a terrible accident befalls the guest. You then discover that one of your staff was not fit for duty and his errors and your decisions have contributed to the accident.

Do you

1.accept that the fault lies with the decisions made by you and the culture of the company which you have set up and recognise that the guest's family may believe you culpably negligent and the authorites think that there is a corporate manslaughter case to answer with a very clear guiding mind( you) identified?

or
2. claim it was someone else's fault and cover up any traces of the unsuitability of your staff for having care of the guest?

If you chose 1. you run the risk of being prosecuted and sent to gaol , paying out huge damages and possibly losing your licence to run the business if it is one where the general public are involved.

If you chose 2. you should vigorously pursue other parties as being the cause of the accident and you may, even though your claims might be conclusively proved to be false, get away with deflecting the criticism of your organisation and your decisions

The authorities should make sure that 2 is not an option, at present it seems it is.

The Bottom Line at BA

Some are born in crisis, some achieve crisis and some have crisis thrust upon them.

Churchill was born in crisis when he took over as Prime Minister in 1940. Many chief executives are thrust into crisis through a disaster, think of those trying to carry on after 9/11 . Then there are those who through their own management style, or the culture of the company manage to achieve crisis because they do not pay enough attention.

Willie Walsh the CEO at BA has achieved crisis for his company. The opening of Terminal 5 was a well heralded event. The issues that had to be addressed were well understood and yet not enough attention was paid to them, because not only has a lot of baggage been lost and passengers severely inconvenienced but flights are having to be cancelled on a daily basis. It has been humiliating for the staff, the company and the wider community.

Walsh is a numbers' guy, he has not demonstrated any people skills in public that I am aware of and I would guess that his drive to ensure the bottom line is healthy is at the bottom of this mess. More time for training, fewer flights to start with so that the system and staff could be better able to cope, these would have been ruled out, in the fond hope that it will be all right on the night. In business continuity terms BA has been found wanting and their incompetence has affected many others - in future the best decision will be not to fly BA for if you do it could impact your business badly.

Will BA shareholders demand Walsh resigns because of the damage done to reputation and therefore the money earning capacity of the company? Probably not, they won't make the connection between reputation and share price and the culture that brought about the Terminal 5 fiasco, but they should.

Hoist by your own robot

The history of warfare is full of stories of people turning their enemies' weapons against them with disastrous results.Today's report from AFP that armed robots could be reprogrammed by terrorists to attack us should come as no surprise.

Prior to an address to the Royal United Services Institute, Sheffield University Professor Noel Sharkey is reported as saying " Military leaders are quite clear that they want autonomous robots as soon as possible, because they are more cost effective and give a risk-free war......The use of such devices by terrorists should be a serious concern."

It seems stating the obvious that if the robots can be turned against you then you do not have risk-free war.

"Terminator" style machines will eventually be developed. Will they make better , more precise decisions than troops on the ground who get confused, angry and scared? Probably. Will we feel safer, more secure, more willing to find a peaceful solution? Probably not.

Downhill Risk

Last week in the Daily Telegraph there was the obituary of a Richard Burton who died on January 6th 2008. Not the one who married Elizabeth Taylor twice, but the one who survived 65% burns in a racing car accident , married five times and employed Sarah Ferguson before she became Duchess of York. As my father would have said "He was quite a boy." He was also the direct descendant of Robert Burton who wrote "The Anatomy of Melancholy." Melancholy does not seem to have been a problem, rather an excess of joie de vivre.

One wonderful snippet went as follows " Burton married often and was a fount of knowledge on the art of making love; for example, he insisted that when doing so on a mountainside it was important to be facing downhill."

In the interest of think risk, smarter decisions I leave it to my readers to think through the possible consequences of Burton's downhill tryst.