It's not that business leaders and their risk managers aren't well-intentioned, because let's assume that for the most part they are. It's that the pace of technological and economic growth goes at such a rate that no one in this environment could adequately prepare for the next major catastrophe.
We humans marvel at our ingenuity, but in a curious blindness, we fail to comprehend the risks of what we ourselves create.Technology has moved to where data is stored and shared on what is essentially the same storage bin, where anyone with the right computer skills can get to it. The concept of a filing cabinet or safe, where propriety data is stored under a combination lock or lock and key no longer exists. Yet, as a society, we are still in a lot of denial about that dynamic, because all of us use this system, regardless of the risks.
A global reach for new markets has increased the breadth and reach of supply chains to the point where the management of that risk has eluded the grasp of seasoned risk managers. And why will it continue to elude them? Because time and commerce wait for no one.
If some risk manager could play king and order the world of commerce to stop for six months so the risk management community could get a grip on the true implications of global supply chains or massive data-storage spaces,one could begin to make up ground;one might have a glimmer of a chance of getting a grip on things.
But there is no time for that. One cannot freeze commerce, although many state and some federal governments have tried!
This is where insurance comes in. Talk to the underwriter, the catastrophe modelers, the global chiefs of property insurance, and you know what they start sounding like? Like well-backed gamblers who are watching a game of roulette unfold and standing there with stacks of chips in their hands.
"We shall place our bets, here and here and here, and in these amounts," they say. And, using models at their disposal, that is the best they can do. But commerce will always leap ahead.
In the past year or so, we have seen business leaders take aim at exploiting the Arctic, thawed by global warming. The drive for energy into Angola and Nigeria will continue to collide with more and more political risk.
The dangers from hydraulic fracking to the watersheds that hydrate Philadelphia and New York, a managed risk? I don't think so.
We continue to see digital social and business media innovations spring up as fast as others grow tired and fade. These are expanding risks, risks that no one has a grip on.
REYNOLDS is managing editor of Risk & Insurance®. He can be reached at email@example.com.
August 22, 2012
Copyright 2012© LRP Publications