The greatest risk manager of the ancient world?

Who was the greatest risk manager of the ancient world? Not easy to separate fact from fiction, but here is a possible nomination from Thucydides, the great ancient Greek historian who wrote that:



"Themistocles .. showed both the best grasp of an emergency situation at the shortest notice, and the most far-reaching appreciation of probable future developments,both for evil and for good."



Themistocles saw that Athens needed to develop as a maritime power, in order to expand as an empire, but also to protect itself against the superpower of the time, Persia. His strategy, realised eventually after 14 years , was to build a fleet of 200 galleys, train the Athenians to manoeuvre them effectively and to improve the harbous at Piraeus. In suggesting this course he was going against recent history for the Athenians had defeated the Persians on land at the battle of Marathon. Only by prolonged debate, culminating in a vote by the assembly of citizens which ostracized Aristides, his opponent who favoured developing the army, was he able to succeed.



In 480BC the Athenians with their allies destroyed the Persian fleet at Salamis and in doing so lifted the threat of Persian domination.



Themistocles was a master strategist in concept and implementation, who carried those who would man the galleys with his decision. It is extraordinary that such a fractious democracy could be persuaded to change from the military approach which had proved successful against the Persians.They were, after long debate, realistic enough to understand that infantry would not be sufficient to save them a second time because of the resources of the Persian Empire. Few victors prepare for the next war by such radical change. Beyond the genius of Themistocles it was a triumph for the messy business of democratic decisions.

Idiots and Risk

Rebecca West in her masterpiece "Grey Lamb and Black Falcon" observes that 'idiocy' is the female vice. She explains that the derivation of the word idiot comes from the Greek idiotes which means a private person and in her opinion women were more prone to just taking into account what immediately affects them and their families.



There are several newspapers, the Daily Mail for one, which focus their reporting not on the wider world and its issues but on those private stories which idiots, in the sense that Rebecca West meant, appreciate because they excite but do not threaten. This year the Maddy McKann disappearance has been just such a story and the current reappearance of Mr Darwin, presumed dead 5 years ago another one.



The Idiot's approach to risk tends to focus too much on the impact that risks could have and not enough on the probability that they will occur. Excessive concern over autism and the measles jab has meant the reduction of children being immunised and so the almost certain result of children dying of measles, a threat which had been almost wiped out, until the Idiot's focused on the personal rather than the bigger picture. In trying to protect their own children, parents have greatly increased the risk to all children, including theirs. My grandmother had exactly this view of risk. She was very proud of the fact that she had kept my father free of mumps as a child. When he contracted it from me he was aged 40 and as a consequence went deaf in one ear for the rest of his life.


United we stand, divided we fall when confronting the viral legions.

Fair shares

Bird flu represent a major risk for the world's population. It also is a big opportunity for the pharmaceutical company that develops a vaccine. The cost of such a vaccine is unlikely to be affordable by many affected countries, including Indonesia where most of the recent cases have occurred. Indonesia is not willing to share its samples with the World Health Organisation unless it gets vaccine plants in return.

The New Scientist in its editorial of 24.11.2007 on the subject suggests a way out of the stalemate

" The pandemics of TB and HIV may provide answers. Here public-private partnerships and other hybrid organisations are forming that are not driven by large profits. They are starting to organise R&D globally to develop drugs and vaccines cooperatively and to distribute them fairly.... everyone must start once again sharing viruses in test tubes before we are sharing them on the wind"

Sustainability

Sustainability is yet again the flavour of the month. A major broker was promoting its importance at a Conference in Sao Paolo two weeks back. 30 years ago my brother and I picked up a cheque for $10,000 in Houston for an essay on sustainability. We focused on what the UK should do with its North Sea Oil Resources and proposed a fund which would be used to develop sustainable alternatives when the oil runs out. Peter Walker, a key figure in the defeat of the miners' strike and a very successful entrepreneur/politician, told us that no government would take such a long term view.



In fact the UK did not blow the oil bonanza, it kept fuel taxes high, but it did not make the significant investments in alternative energy sources that we proposed. Now it needs to.



The prize that we won in 1977 was the George and Cynthia Mitchell Prize for Sustainable Development, sponsored by the Mitchell Energy and Development Corporation and supported by the University of Houston and the Club of Rome. It was awarded at a Conference in Houston on the subject of "Alternatives to Growth" at which Herman Kahn, Tip O'Neill and Jim Wright spoke. I remember that Jim Wright ,a Texan congressman who later succeeded Tip O'Neill as the Speaker of the House of Representatives, stated that there were "no alternatives to growth" - for some in Texas some things never change, but George and Cynthia Mitchell made an investment so that they could.

Is the market starting to harden?

For some time now the insurers have been gloomy about 2008 and have been bracing for a softening of premium rates. Just today I have heard the first counter to that , a possible increase of 5% in commerical lines and that several insurers are considering such an increase. This could be wishful thinking plus an attempt to talk up the market, but if one of the reasons for falling premium rates is an excess of capital available to underwrite risks then perhaps we can give more credence to this report. Clearly the impact of the subprime mortgage debacle has been to suck enormous volumes of capital out of the market . So even if insurers are not, so most of them say, seriously affected by the sub prime problems they are also not facing the old problems of excess capital from the banking system looking for a quick return which has the effect of lowering premiums.

Lucky General

In November1822 during the Brazilian war of independence from Portugal there was a battle at Piraja in Bahia province. The Brazilian army, although numerically superior were very poorly equipped. As the battle progressed the Brazilian general became concerned that his troops were about to be overwhelmed and ordered the bugler to sound the retreat.

The bugler, whether from fear of incompetence I do not know, did not sound the retreat but rather sounded the cavalry's advance. The Portuguese, who up until then assumed that there were no Brazilian cavalry, were so dismayed that they broke and ran. The Brazilians did not have any cavalry worth the name.

So the unintended consequence of the bugler ordered to sound the retreat was a victory and one that led to the ultimate expulsion of the Portuguese from Brazil. As Napoloeon said about a general, " I don't care how good he is, but is he lucky?"

Running out of puff

Asthma is on the increase. In the UK in 2001 it was estimate that 5,100,000 people had asthma of whom 1,100,000 were children under 10. The UK, along with Australia, New Zealand and Ireland has onbe of the highest rates of asthma in the world. The Swiss are up there too. Their most recent figures show 6% of the population has asthma, up from 2% 25 years ago.

It has massive impacts on business- in 2001 over 12,700,000 working days were lost through asthma in the UK.

The causes are very complex - Tristan da Cunha's population has a 50% incidence of asthma because of a genetic predisposition - poor people living close to cockroaches are thought to be more susceptible, pollution from cars and factories contribute.

One of the theories is that asthma is a disease of hygeine. Children in well cleaned homes do not come into contact so much with bacteria and so do not build up the resistance within their bodies. An unintended consequence of cleanliness is perhaps greater susceptibility to asthma. There is also some evidence that certain types of cleaning fluids may create problems, which might explain why there is an Anglo-Saxon cluster of asthma suffering countries on the top of this leader board. Cherchez the cleaning culture.

"What they did was priceless"

Although thinking through the risks and then managing them helps better decision making and implementation there are some decisions which do not seem to have any need of risk consideration, or do they?

One that came to mind today as I was in Aldermanbury in the City , where their action is commemorated by a bust and several inscriptions,was the decision by Henry Condell and John Heminge to collect and publish a set of plays. As they said "We have but collected them, and done an office to the dead....without ambition either of selfe profit,or fame, onely to keepe the memory of so worthy a friend and fellow alive."

In financial terms publishing the plays meant that Condell and Heminge gave away their rights to exclusive use of them.

The author had died 7 years previously and had shown no inclination to publish his plays, perhaps because he felt they were the company's property. Condell died 4 years after publication and Heminge 3 years later. Without their efforts the plays would have disappeared because none of the manuscripts have survived.

So after all there was a risk which was that without their action their worthy friend and fellow's memory would have died. Posterity owes them a debt of gratitude for their friend, as you will have guessed, was William Shakespeare.

Uncommon risk management

Bomb disposal by hand is extraordinarily high risk. Not only are the bombs meant to be lethal, they are unpredictable because of where they have fallen, the damage they have sustained, the environment they may be in and the unfamiliar techniques by which they may have been constructed.

One of the greatest of all bomb disposal experts , John Bridge, explained how he approached the challenge:

" The more you know about a situation and plan to overcome it, the better. When I had a difficult job,I always worked out a solution the night before,before I went to sleep. When it came to the crunch...,I knew every move and the sequence in which to do it. So I felt no hesitation when it came to it.It's not foolhardiness. You've got to have the best chances of survival."

This was the man who, supported by experienced divers and his team, went down 40 feet into Messina harbour 27 times over a three day period in order to disable over 207 depth charges which had been laid to make the harbour unusable . For this he was awarded the George Cross , later he received the George medal and bar for further exploits. He died in 2006 aged 91. His approach is similar to that of Catherine Destivelle before climbing solo on the North face of the Eiger.Professionalism,planning and attention to detail is the key to managing extraordinary risks.

The Story of John Bridge is taken from Gordon Brown's book"Wartime Courage" which is being serialised in the Daily Telegraph.

Doubt,search,decide

"Knowledge is power?

... Those who bank entirely on dogmatic,deterministic knowledge are outdone by those who apply dynamic knowledge. "Not knowing" does not mean "Knowing nothing", it means asking onself new questions at the right time in each new situation.

The motto Descartes espoused was " Doubt is where wisdom begins".

Doubt,search,decide

The above is taken from Munich Re's fascinating review called Chance:Risiko for a risk taking culture, published to celebrate their 125th anniversary. Risk Management is about making better decisions, those who have no decent doubt are accidents waiting to happen.