Risk Scenario

The Revenge of Aamer Raza

An explosion shakes a retailer's business continuity. What is their next move?
By: | October 22, 2013 • 5 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Part One

His vision is blurred from sweat and a previous injury, but his hands are firm on the wheel of the rental van. Aamer Raza makes his way through the Downtown Chicago traffic. In the back of the van is a 500-pound bomb made from diesel fuel and fertilizer. He can see it there, shimmering in the Chicago heat, just three blocks away, the 33-story office building where he has worked as a busboy for the past six months.

These are the last moments of Aamer Raza’s young life. The same is true for many workers in that building.



In his village, Aamer Raza stood out, especially in sports. He wasn’t too tall, only 5-foot-7-inches. But with his powerful wrists and hands, Aamer, 17, was destined to play for a top-notch cricket team before too long.

Many of his family members worked at the American-owned O’Bannon chemical plant, the biggest employer in that province. That is, until the day that a natural gas leak at the plant ignited a tremendous explosion.

Aamer was walking back from school past the plant when the explosion happened, and the force of the blast tossed him into an irrigation ditch. When he emerged from the watery ditch, his vision was blurred. He initially thought it was the water and mud in his eyes.

But as it turned out, the explosion damaged Aamer’s vision — not to the point of blindness, but to the point where the macular hemorrhage he suffered ruined his chances as a cricket batsman.

The news got worse. Aamer’s beloved Uncle Hanif was one of those killed in the chemical plant blast. The villagers were outraged and grief-stricken, Aamer among them.


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In one afternoon, Aamer lost his uncle and his dream. Goaded by sadness and anger and by some of the more militant members of his community, for the first time in his life, Aamer’s thoughts turned violent. Eventually, those emotions hardened into a plan. After communicating for months with his cousin, Hanif’s bereft son, who was studying at an American university, Aamer decided to emigrate and to avenge his uncle’s death.


In the final block, Aamer gunned the engine of the van and made for the front door of his former employer. Out of the corner of his uninjured eye, Aamer could see people scattering in fear as he drove.

Seeing their horror, a flash of compassion strikes him. But Aamer is past the point of no return.

With an athlete’s precision and coordination, he succeeds in driving the van almost completely into the building before it explodes.

Aamer feels the concussive force of the explosion in the instant before his death. The force of the explosion tears off of the front wall of the building to the eighth floor.

Part Two

Occupying most of the first and second floors of the bomb-blasted building is the Midwestern flagship store of Pomegranate, a stylish urban decor and clothing company.


Pomegranate used a keen design sense married to functionality to gain a retail vice-grip on hip, educated urban women across the country. The company grew rapidly, going nationwide in 12 years. Chico Hearndon, Pomegranate’s regional vice president, oversaw operations in seven states. When Aamer’s bomb exploded, Chico was killed instantly, although it would be days before anyone in the company could confirm this.

Harvey Buck, Pomegranate’s risk manager, was sitting down to a breakfast of brioche and latte on Russian Hill in San Francisco on the morning of the explosion. The waitress was just leaving his table after delivering his coffee when Harvey looked down casually at the news feed on his Iphone.

“Good God,” Harvey said as the news of the explosion scrolled across his phone. Harvey, his hands now trembling, scrolled through the news again to make sure his eyes weren’t playing tricks on him.

Harvey started dialing, trying to reach the corporate office in New York. Sweat built up on his face, his phone growing slick in his hand as it continued to ring with no answer.

He tried the phone number of the CFO.

“Nothing!” Harvey said loudly, earning him sharp looks from the other patrons at the café.

“There’s been an explosion in Chicago!” Harvey said as he stood up, knocking over his coffee. People looked at him like he was crazy.

His hybrid bike was leaning next to a lamppost outside the café. Without paying his bill, Harvey grabbed his bike and started pedaling down to the Pomegranate store on Van Ness.


“Hey! Hey, mister!” Harvey heard the waitress calling to him as he pedaled away.

As distraught as he was, he nearly ran his bicycle wheel into one of the trolley track grooves on Jackson Street. He was in a complete lather by the time he parked his bike and walked in the front door of the Pomegranate store on Van Ness.

It occurred to him that he probably looked like a madman because the young woman at the customer service desk tried to ignore him when he approached her.

“There’s been an explosion in Chicago,” he told her.

“Okay … sure,” she said, not sure who Harvey was and doubting his mental state.

Eventually, Harvey convinced her that he was indeed the company’s risk manager. The store manager guided Harvey to an office where he could log into the company intranet and try to take stock of things.

Throughout a frustrating, painful morning and afternoon, Harvey made call after call to no avail.

He got one text from someone in accounting, who said as many as 10 Pomegranate employees could be dead and that regional manager Chico Hearndon and the CFO, Mike Buck, could be among them.

“What were they doing at the Chicago store?” Harvey asked himself.

He had no answer, and no one to give him one.

Part Three

A week after the blast, Harvey was called to a meeting in New York. The Pomegranate executives were trying to put the pieces of the company back in place. The meeting was dominated by a sense of chaos.


Mike Buck, who, as it turned out, was not at the Chicago store at the time of the explosion, had been tasked with pulling things back together.

“Priscilla, if you could just listen a minute,” Mike said to Priscilla Foreman, the head of purchasing. Priscilla lost two friends in the blast and was struggling to contain her grief.

“I will not listen a minute, not for a minute. Can anyone at this table tell me what I am supposed to do for materials if I can’t place any orders?”

“We’re still trying to get a count on how many people we lost, Priscilla,” offered Harvey, gently. “It’s going to be weeks before we can give you the OK to wade into the supply chain again.”

“Then we might as well shut down the company,” Priscilla said.

“Harvey’s right, Priscilla,” said Mike. “Our top priority is notification of the bereaved.”

“Don’t tell me about bereaved!” Priscilla said. “I have two friends that are dead!”

“We’re not shutting down the company,” Mike said.

“Might as well,” Priscilla said. “Because we are paralyzed.”

“Harvey, what can you tell us about the property claim?” Mike asked, trying to ignore Priscilla.

“Until I can get to the same table with Harry and Dave [the company’s CEO and COO], I don’t know what I can tell you,” Harvey said. “We’re probably two more weeks away from filing a claim.”

“Any idea …” Mike began.

“I really don’t know,” Harvey said, guessing what the question was.

“The property loss is probably around $3 million. With Chico … gone … [at which Priscilla let out a sniffle], I don’t know how I’m going to put the business interruption figures together.”

“Well maybe you and I can put our heads together on that,” Mike said.

“Good luck,” Priscilla said.

“Priscilla …” Mike began.

“Don’t worry. I’m leaving,” she said.

“But what about lunch?” Mike asked.

“Leaving the company,” Priscilla shot back. She rose from the table and walked out of the room.

It was three weeks until the surviving Pomegranate executives could confirm that seven employees and five customers had been killed in the blast, with thirteen employees and seven customers injured.

The company’s inability to quickly communicate with stakeholders was apparently going to have far-reaching financial and reputational consequences.

Six weeks after the deadly explosion, the elder sisters of an Illinois Tech student filed a lawsuit. The student had worked part-time at Pomegranate and was killed in the blast. The lawsuit claimed the company was too slow to notify them of their sister’s death, causing the family needless emotional pain.

“Do we have any sort of reputation coverage?” Mike asked Harvey as they slogged through another sleep-deprived 12-hour day, in the hopes of saving the flailing company.

A Chicago Daily News story about the lawsuit is blazoned across Mike’s computer monitor.

“We do, but it’s got a crisis management exclusion,” Harvey told Mike. “Based on our communications efforts after the bombing, I think I’d give us a ‘C-minus’ there,” he added.

“I’d give us about the same grade, maybe a ‘D’,” Mike replied.


Dozens are killed when a bomb explodes on a busy Chicago street. A national retailer loses customers and employees in the blast, including a key executive. Grief-stricken company executives are at a loss to communicate effectively in the wake of the explosion and key business decisions aren’t executed. Bad will builds up not only between the survivors of the deceased and the company, but also among surviving executives, who failed to execute a crisis response plan or take the necessary measures to insure business continuity.

1. Create true communication linkage: Pomegranate executives lose touch with each other after the explosion because the company lacks a communications system that can link key executives in the event of a crisis. Companies would be well advised to take advantage of existing technologies to create links between executives that can remain intact in the wake of any event.

2. Integrate technology with crisis communications: Pomegranate suffers irreparable reputational harm because it takes weeks to determine who precisely has been killed and injured in the blast and to notify next of kin to express its condolences. Having the technology to get accurate loss counts, not only of human lives but of property losses, is key in a situation like this.

3. Have a plan in place in the event of the loss of a key employee: The grief that Pomegranate employees are undergoing leaves them vulnerable to further dysfunction when the company apparently has no plan to pick up the pieces after a key employee is killed in the explosion. Business continuity plans should include not only provisions to reconnect supply lines and other business processes, but to link the necessary human talent after a team member has passed away.

4. Make a place for risk management: Although risk managers are not necessarily top of mind when it comes to denoting who are the most important company executives, they should have the resources they need to function in the event of any kind of loss.

5. Ask for more value in your insurance program: Carriers and other risk management consultants should be able to provide you with an umbrella of services, not just a promise to pay, when it comes to responding to a crisis. See what your broker and carrier can bring you in the form of ancillary crisis response services that can help your company better overcome an event such as that precipitated by Aamer Raza.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.


Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.

R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.


We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?


Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.


Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.


More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]