Joanna Makomaski

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

Column: Risk Management

Hoodies and Brandy

By: | September 14, 2016 • 5 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I recently returned from California where I had fabulous meetings with some fabulous companies. One meeting in particular stood out.

I was providing risk management advice to a rapidly growing technology company. When I arrived for the meeting, I was greeted by the CEO and chairman of the board. I confess I did a double-take: In front of me was a very young man, sporting a “man-bun,” wearing a grey hoodie and flips flops.

Maybe it was my East Coast corporate conservatism? Maybe I was not cool enough to fully appreciate the West Coast carefree attitude? Maybe I’ve been too conditioned to how a board chairman should appear?

Most of us have been groomed to think that once we served our time in a C-suite and near retirement that it is only then we get the time-honored privilege to join a board and coast through retirement imparting our vast knowledge and experience with a cigar and brandy in hand.

So when my new friend complained how old he felt to be the board chair at age 28, I couldn’t help but chuckle. Being years his senior it pained me to hear that.

But after hearing his company’s numbers, soon to be a $100 million in revenue company in only a few years, I felt less pain but much pride, proving that age and freshness can in fact be a great asset.

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It has been long argued that a lack of diversity on boards, long tenure and inadequate board composition create a risk that boards will lose independence from management.

The idea of diversity and inclusivity is very much part of our national discourse today. But what my encounter helped me frame was that we tend to think of diversity as a proper blend of gender, race and abilities.

We seem to speak less about having a mix of age groups representing us.

The fundamental purpose of a board is to guard investors’ and consumers’ interests. The board should reflect those who fuel and support your company — the customers and the society it serves.

Having too many like-minded people, the same age, who come from the same background, can lead to a blind groupthink that can fail to hold management accountable and ask tough, pertinent questions.

It was no surprise when I recently read a “Financial Times” analysis of data by the shareholder advisory group ISS Analytics that showed U.S. boards are “maler, staler and frailer” than their European counterparts.

The analysis said these directors, on average, are less independent-minded. It is no coincidence that shareholders of Chipotle Mexican Grill, recently plagued with a series of food safety problems, blamed a stale, insular board of directors for failing to move fast enough to address problems.

If I learned one thing from my recent meeting, it’s that 20 is the new 40. Push aside some of the brandy and cigars. Make room for the hoodies and flip flops.&

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Column: Risk Management

Hopemongering To Manage Risk

By: | August 31, 2016 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I read a book on behavioral risk management a few years back. It discussed human psychology and how as humans we yearn for risk but we also yearn to avert risk when we make decisions.

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When we make a decision a lot happens in our mind. We tussle with and negotiate deals with ourselves using basic needs as currency — innate needs like feeling security, potential and aspiration.

We need to feel secure and stable to alleviate fear. We also conversely have a need for potential to meet our need for hope, thrill and variation. Simply put, we need to feel certainty, but uncertainty too. We need low risk and the thrill of high risk to feel alive. We need to feel fear as well as hope.

Anyone who stokes a fear-fire or plays mind games to exploit fear for personal or political gain is no leader at all, but is only leading us down a path toward an unhealthily, unsustainable disequilibrium in our lives.

Just play in your mind how it would feel to bet a crisp $1,000 bill on black on the roulette table. Feeling sick or thrilled by it, or both?

We humans are a real paradox. To achieve quality of life, we can never only do things that prove always safe to alleviate fear. Doing the same low-risk, low-fear things every day would ultimately make one listless, bored, unsatisfied —  somewhat dead.

Fear is an essential protective feeling used to recognize imminent danger so that we can confront or flee, our fight or flight response.

But with feelings of prolonged fear however, we can become consumed by it, paralyzed, frozen. We can start seeing things that are not there. We can start fostering a false sense of reality. Fear like this can become contagious and can spread in our mind like a wildfire. I often think of this mnemonic acronym: F.E.A.R. — False Evidence Appearing Real.

With the ’round the clock news coverage of acts of terror and mass killings, it feels as though fear levels are rising. I am concerned about the effects of this prolonged fear. What is worse, I see this fear being exploited by some very public figures.

Anyone who stokes a fear-fire or plays mind games to exploit fear for personal or political gain is no leader at all, but is only leading us down a path toward an unhealthily, unsustainable disequilibrium in our lives.

Anyone who deliberately promotes fear should be considered a dangerous offender, stealing crucial quality of life. We need leaders who de-escalate fear and try to prevent a disastrous fear inferno.

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Risk managing fear involves active hope management. After putting in place reasonable safeguards against real and imminent dangers, we must also be inspired to tap into our individual resolve. We need to quash this excess fear to regain a vital balance. It is a matter of survival.

Hopemongering is not just a new urban term used for “someone who preaches optimism and hope for the world.” It is not just a nice creed and ideology. It is a very powerful risk management technique required for our very survival and fulfillment of life.

Knowing this, as Nelson Mandela said, “may your choices reflect your hopes, not your fears.” &

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Column: Risk Management

What Comes After Z?

By: | August 3, 2016 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I was at a dinner a few months ago with colleagues. At the table was a group of risk professionals ages 40 to 60 years young. We all had worked within organizations  identifying risks that could impact strategy.

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The dinner conversation turned to the future of our transportation systems. We tried to be prophetic about risks that faced the car industry, trains and taxi systems, Uber, and ride shares like Zip car or Auto-share.

One thing I found thought-provoking. We seemed to speak of risks mostly from our generation’s standpoint. We spoke of risks as we could imagine them.

So getting the key to a Gen Z’s psyche is vital. How do they see the world? How do they access the world? What is important to them? How do they perceive risk?

When the car buffs at the table digressed and shared their dreams of owning a new Maserati or a Tesla, certain assumptive statements caught my attention such as: “Every kid would love to own a Maserati? Why wouldn’t they?”

I challenged the group. Maybe the biggest risk is that we are not paying enough attention? Maybe we don’t understand or accept what the next generation of consumers want or need when it comes to transportation? Maybe our risk registers as a result don’t reflect future risks sufficiently?

Let’s think of a 15-year-old and all of their tween and teen friends. Meet Generation Z.

In a few short years, they shall be the retail disruptors of tomorrow.  Reports indicate that by 2020, this generation will translate to $3.2 trillion in purchasing power.

So getting the key to a Gen Z’s psyche is vital. How do they see the world? How do they access the world? What is important to them? How do they perceive risk?

A typical Gen Z was born around 2001. They were born with a smart phone in their hand but also their first memories were of economic doom, recessions, acts of terror and war shaped by events like 9/11 and Columbine.

Born witness to all this, Gen Zs are growing up fast and developing sensitivities beyond their years and with a strong sense of social justice and philanthropy.

Many have drawn parallels between Gen Zs and the “silent generation,” also known as Gen Zs’ grandma and grandpa, who also lived through the aftermath of the Great Depression. These kids are developing life skills, and forming personalities different than their older “millennial-Gen Y” siblings who seem to be struggling to leave home and secure jobs.

Studies show that Gen Zs are more financially conscientious. They are also more risk-averse. They worry about the economy, privacy, cyber crime, job security and terrorism.

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They think about cars differently too. For many, a car is no longer a status symbol but more of a symbol of greedy capitalism. Gen Zs live in a world where things move quickly. They are much less likely to attach themselves to a long-term obligation like a car that will only become obsolete. In fact, they are more likely to pool friends together to share a car or use public transport. For those who do end up buying a car, they would most likely choose a car for its environmental friendliness, modesty, affordability, practicality and safety. Sounds a lot like a car grandparents would buy, doesn’t it?

I guess it makes sense that if we are to talk of future strategic risks we need to hear more from the future. We need to stop guessing.

Invite our Gen Zs to our risk sessions. Invite them to our dinners. Have them teach us “baby boomers” and Gen Xers. &

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