The Days After – NEVER AGAIN

How does a company react to a major setback or loss event?

In his book, The Survivor’s Club, Ben Sherwood talks of several common reactions that people have to a near death situation..

  1. Some want things to be like they were before.  They want the experience to be forgotten completely.
  2. Some are willing to accept some memory of the crisis, but do not want to remember the really bad parts – the uncertainty of survival, the struggle and the unpleasantness.  They want to white wash their memory.
  3. Others will always make it a joke – never allowing their crisis to be taken serious by anyone around them.
  4. Some turn the event into a heroic story, often painting themselves or sometimes another as the hero.
  5. Others consider themselves veterans of a war against adversity or perhaps graduates of a particularly difficult course from the school of hard knocks.

Many companies that were among the first wave of serious practitioners of ERM had survived a near death experience.  They had been over concentrated in one of the long list of major hits to the insurance and financial systems over the past 10 years.

At every single one of these firms, managers who lived through those days of uncertainty, when they were going through the darkest days and perhaps went home more than once not knowing if their employer would open again in the morning all have the exact same mantra “NEVER AGAIN“.

To these firms, there is no question about whether they will take ERM seriously the next time that things get tough.  That is because at these firms, ERM is not some sort of management buzz word, it is the logical path to accomplishing their key goal for the future “NEVER AGAIN“.

They do not struggle to develop an agenda for their Risk Committee meetings.  They know how to focus on the real risk and risk management issues that are life and death.  They will make sure that they are aware of their concentrations, that all of their risk mitigation strategies are working and if not they will not hesitate to make changes so that they will be effective.  They are always on the lookout for the next change in the environment that means that yesterday’s rules are out the window and are ready to take those actions that might put them enough ahead of the crowd to miss the next big loss event.  This is because they are clear about why they do all of this, “NEVER AGAIN“.

So these firms fall into the fifth group – the graduates of the school of hard knocks. What they learned is that risk management is really important.

Other firms went through those same events and did not have that near death experience.  Most of those firms had one of the other four reactions to their losses.  They want to forget about it as quickly as possible.  They create a whitewashed history.  They create a heroic story that has as its base the idea that they will always be the survivors.

They went to the school of hard knocks, passed the course and may not have really learned anything.

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Explore posts in the same categories: Enterprise Risk Management, ERM, Risk, Risk Learning, Risk Management

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