Risks work together to threaten businesses in mysterious ways, and respect neither national boundaries nor past performance. To survive and thrive in such a world, organizations need to pay the subject its due. Three thought leaders from Zurich Insurance Group recently shared their ideas on seven critical keys to embracing the holistic risk management approach necessary to survive in the global spider web.
Analyzing risks individually can lead to seriously misleading conclusions.
“Take one thing at a time” might be good advice for children, but not for anyone trying to manage global risk. Our increasingly interconnected and complex world has made the domino effect commonplace—and increasingly global.
Examples of knock-on effects abound. A risk manager looking at Bangladesh’s Rana Plaza sees only the building’s inconsequential value … until it tragically collapses, with massive loss of life, as well as reputational damage to some of the world’s leading brands. Japan’s Fukushima Daiichi power plant disaster in the wake of the 2011 earthquake and tsunami leads to a change in German nuclear policy—half a world away … and more fossil fuel usage, with a corresponding impact on climate change. A large Swiss bank sets limits for credit default swaps for its various business units … but doesn’t consider the aggregation of those limits.
