Joanna Makomaski

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at riskletters@lrp.com.

Column: Risk Management

Survival 101

By: | March 2, 2015 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at riskletters@lrp.com.

I recently saw a riveting presentation by Michael Sjøberg. He is a hostage survival expert with the Human Advisor Group in Copenhagen, Denmark. Michael afforded me a glimpse into the world of kidnap and ransom that is sadly plaguing our reality today.

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My jaw dropped when I learned some statistics. Around 15,000 to 20,000 kidnapping, extortion and illegal detention incidents occur every year globally. That translates to 40 to 55 a day. In approximately 67 percent of kidnapping cases, ransom is paid with an average payment of $2 million. An estimated $1.5 billion is being paid to kidnappers annually. These numbers are staggering.

My exposure to the horrors of a kidnap and ransom situation have been limited, thankfully, to what I see on the news which seems to occur too often lately. As a risk manager, I have also explored and purchased kidnap and ransom (K&R) insurance policies for firms for whom I have worked. The policy mitigates financial risk where the insured is assured reimbursement of ransom under the policy.

Sjøberg’s talk was an eye-opener for me. His focus was on the kidnap victim, not the ransom. One of his specialties is helping people survive a kidnap and ransom event. When a person is kidnapped, it is a psychologically traumatic event. In seconds, a victim’s life transforms from ordinary to absolute terror. People instinctively react in variable ways. Some freeze, while others resist.

A kidnap victim’s sole focus should be not on escaping, but on survival — physical and psychological survival.

The first 30 minutes of a kidnapping event are known to be the most dangerous. This is when the kidnappers are most on edge and susceptible to violence. Sjøberg stressed that it is critical that the victim gain control over their emotions and react in ways that are calculated to increase their chance of survival.

A kidnap victim’s sole focus should be not on escaping, but on survival — physical and psychological survival.

Sjøberg shared an abduction story of a family of four with two small children. With training, the parents knew the psychological importance of maintaining the semblance of a daily routine while in captivity. Even though they had no toothbrushes, the children improvised brushing their teeth, maintained a routine sleep schedule and did schoolwork every day.

They also tried to establish a rapport with their abductors — engaging with them on universal subjects like family and sports. Their goal was to get the hostage-takers to see them as real people, a real family, rather than objects.

They also knew not to try to negotiate their own release. Much like trying to perform your own surgery, it is better to leave such skilled work to highly trained professionals.

Many “at-risk” organizations know little about kidnapping and what actually happens before, during and after a kidnapping takes place. This to me was the most alarming. Thousands of employees travel internationally to high-risk regions every day where kidnap and ransom is a genuine threat.

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Would your employees know what to do if they were kidnapped? Do your employees know what type of action the company will take to secure their release? Does your organization understand how they would respond? Does your organization work with trained security professionals to handle the situation? Is this discussed in your safe travel and risk management program?

Sjøberg strongly recommended employers put expatriate employees through a rigorous training program. Employees should be taught what to do and what not to do in the event they are kidnapped. It can mean the real difference to their survival.

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Column: Risk Management

Drawing the Line

By: | February 19, 2015 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at riskletters@lrp.com.

Very early in my career I had the privilege to lunch with H. Felix Kloman. Kloman is known to many of us in the risk management community as a long-time student and commentator of the risk management discipline. He was for 33 years the editor and publisher of Risk Management Reports.

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Over lunch, we exchanged new ideas on Enterprise Risk Management (ERM), its inherent challenges and novel methods. One thing is true about Kloman’s communication: he says it how it is. I have a lot of respect for him for that. It takes a lot of courage scribing your ideas — some popular, some not — for all to read and judge.

That day, he said something to me that was very powerful: “nothing becomes true until you write it down.” He then encouraged me to write throughout my career.
Often I think of what he said. I have come to hold in the highest regard the power of the written word.

I guess the challenge here is the risk identification and assessment of words that could incite harmful actions. It can be a complex equation with often sensitive cultural dynamics and paradigms.

Daily I am reminded of that power. As I write this column I am very conscious of the message I want to relate. I consider if my message will be deemed as educational or condescending.

Will my message be read as a rant? Will my message try to corroborate issues felt by others in my profession? Will my message provoke a debate with my readers? And most importantly to me, I consider if my message may offend unnecessarily?

The risk of writing became very real to me as I watched coverage of the horrific murders at the Charlie Hebdo offices in Paris. The event made me seriously reflect on the real risks inherent with freedom of speech.

The First Amendment of the Constitution protects the right to freedom of expression from government interference. Anyone who has an opinion has a right to voice it. People risk their lives and die for that right.

I consider the late Stéphane Charbonnier from Charlie Hebdo who said: “I prefer to die standing than living on my knees.”

Writing is risky. Ask any and all editors. Editorial decisions are made word by word, nuance by nuance, delicately assessing if a piece is a fair and honest commentary based on fact and not malice. Is the piece possibly defamatory or infringing? When it comes to matters of public interest, is the communication responsible?

Is being responsible with our words considered an infringement on our freedom of speech? Are we creating unnecessary risk by at times speaking irresponsibly?
In many ways as a society, we have already drawn the line when it comes to “free” speech. We’ve agreed to exceptions and bounds on our freedom of speech.

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Namely, we don’t have the right to say things that could “incite action to harm others or an immediate breach of the peace” — such as yelling “fire” in a crowded theater.

I guess the challenge here is the risk identification and assessment of words that could incite harmful actions. It can be a complex equation with often sensitive cultural dynamics and paradigms.

Here’s the question I struggle with: if we know that certain words have incited harm to others, do we or do we not draw a line? As they say, “the pen is mightier than the sword,” and “with such power comes responsibility.”

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Column: Risk Management

Beware of Buyers

By: | December 10, 2014 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at riskletters@lrp.com.

Let’s imagine we are looking to hire an entertainer for a children’s birthday party.

We have the infamous “Bobo the Clown,” who enjoys blowing up balloons and artfully making exotic animals from them. Then we have “Blade,” a skillful knife-thrower who performs high thrill acts of hurling knives at the perimeter of child volunteers, barely missing body parts.

Blade’s precision is near-perfect. The children are indifferent to who comes. They love Bobo and Blade equally.

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We ask both Bobo and Blade to give us their best price and contract wording for their services for an eight-hour day.

Bobo presents a colorful quote highlighting that he is adequately insured for third-party liability and is also trained in first aid.

For an eight-hour day, he would charge $1,000.

Blade presents a sharp looking quote as well. He too states he is well insured for third-party liability and knows first aid and CPR.

For an eight-hour day he would charge $500.

In the details of his contract wording, he explains that he also requires that his liability be capped at the value of his contracted services.

So who should we pick? Is it obvious?

The Latin term caveat emptor comes to mind — “let the buyer beware.”

In legal circles, it is a warning to buyers that the goods or services they are buying may be subject to “defects,” so without a warranty the buyer takes the risk.

In the corporate circuses that we work in, we see Bobos and Blades everywhere.

So why is it, with everything we know and all the near misses we experience, do I remain so frustrated?

And am I alone in this frustration?

I get it. Reducing cost is important to all organizations, but let’s do our cost accounting correctly, at least.

Too often, I see corporate procurement groups buying the services (or goods) from the Blades of our world.

Why? Why? Why?

Typical answer: because Blade was 50 percent cheaper. Really? Seriously?

Furthering my frustration is that by the time Blade’s deal reaches the hands of risk management, if at all, it is often too late.

The deal is done and now the organization must brace itself to pay for Blade’s handiwork and sliced body parts for years to come — less $500, of course. What a “great” deal.

All the while, our good-boy Bobo who did everything right is still trying to get his hat in the ring for some business.

I get it. Reducing cost is important to all organizations, but let’s do our cost accounting correctly, at least.

Purchasing organizations have to consider other decision drivers — like risk.

The key decision cost driver should always be the risk adjusted cost of having Bobo or Blade at the party.

Third-party risk is a rising concern for procurement departments.

But the focus tends to be with larger market-based risks caused by the increasingly globalized nature of supply chains or the rising use of outsourcing that could heighten business’ risk exposure.

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But I would like to see buyers sharpen their risk assessment pencils a bit more and procurement teams routinely account for product and professional liability risks when making purchasing decisions.

Quotes need to be calibrated to match all the caveats of vendors’ quotes and cost structures in order to increase transparency to the true cost before vendor selection.

Organizations that implement vendor risk management programs and evaluate third-party risk — where they can actively develop compensating controls or mitigations — are sure to help lessen the ugly business impacts potentially created by your Bobos and Blades.

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