Game of Thrones May Have Something to Teach Us About Risk Management

By: | January 10, 2020

John (Jack) Hampton is a Professor of Business at St. Peter’s University, a core faculty member at the International School of Management (Paris), and a Risk Insider at Risk and Insurance magazine where he was named a 2018 All Star. He was Executive Director of the Risk and Insurance Management Society (RIMS), dean of the schools of business at Seton Hall and Connecticut State universities, and provost of the College of Insurance and SUNY Maritime College in New York City.

Each episode of HBO’s “Game of Thrones” opens with warnings of graphic adult material, violence, sexual content and nudity. If these items are not sufficient encouragement to view the full eight seasons, the 73 episodes also offer lessons about risk.

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Two risk managers are particularly worth mentioning.

Cersei, self-crowned Queen of the Seven Kingdoms, survives one potential disaster after another as she manipulates, tortures, poisons or beheads those who threaten her.

Daenerys, Khaleesi (i.e., queen) of the Dothraki, displays equal skill as she competes with Cersei and a host of others to sit on the Iron Throne.

In episode 72, Cersei and Daenerys finally confront each other.

Cersei has an army behind the strong walls of King’s Landing. She resides inside the Red Keep, an impregnable fortress that rises above the city.

She has a defensive risk management strategy.

Daenerys positions her army of warrior misfits outside the gate to the city. On her side are the Unsullied, highly-trained and heavily-armored eunuchs; the Dothraki, nomadic horse-mounted warriors; and an assortment of other armed fighters. Not to mention a fire-breathing dragon.

She has an offensive strategy.

Cersei’s strategy reminds us of modern oligarchs hiding behind reinforced walls. Such behavior fits three specific areas of risk management.

Enterprise Risk. In 2006, the American International Group was a stable insurance company. However, hidden in a London subsidiary were dragon’s eggs — obligations from speculating in non-insurance derivatives. When they hatched during the 2008 global financial crisis, they almost destroyed the entire company.

Cyber Risk. Sony had been warned of dragons but did not fear them. In 2006, its top security officer said Sony would not invest “$10 million to avoid a possible $1 million loss.”

In 2011, a hacker cracked Sony’s PlayStation and the company counter-attacked. Sitting in the wings was a dragon — the Anonymous hacktivists group. When the dragon blasted its fiery breath, Sony’s loss exceeded $2 billion.

Did Sony learn to watch out for dragons? Three years later, the company announced plans to release a comedy movie depicting the assassination of Kim Jong-un. North Korea, yet another dragon with extensive capability to hack sophisticated computer systems, objected. Hundreds of millions of dollars were incinerated as North Korea wiped out Sony’s computer infrastructure, released the movie free to the Internet, and compromised personal records.

Higher Education Risk. A thousand or so colleges and universities are on government and bank watch lists for financial instability. Are they facing dragons? What else could they be?

Has anybody noticed that schools such as South New Hampshire (SNHU), Western Governors (WGU), the University of Phoenix and Arizona State are scorching the landscape of higher education?

Student debt is doing the same thing to college students and their parents.

Is higher education doing enough to respond to the dragons of declining demographics, free tuition in community colleges and citizen anger on the cost and value of a college degree?

All of these risks encourage us to ask, “Are dragons just a make-believe threat from a fantasy TV series?”

Maybe we should ask this question to survivors of the demise of Enron, Lehman Brothers, Blockbuster or the many colleges that closed or merged in recent years.

Or maybe we should notice a Chinese trade war, Turks fighting Kurds, Brexit or the planet’s highest carbon dioxide level in the past 800,000 years.

Closer to home, fire-breathing creatures include a massive national debt, a non-working Congress and the de facto bankruptcy of the Social Security system.

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Dragons are real. Some have hatched and are growing. Some still incubating in cozy facilities created by technology, ignorance, inertia or whatever.

It will not be good news if these dragons get much larger.

So what happened in the confrontation between Cersei and Daenerys? Spoiler alert — when confronted by a dragon, it’s dangerous to ignore it. The dragon destroyed Cersei’s army, her city and Cersei herself in a cataclysmic episode of unmitigated violence.

Daenerys did not fare any better. As the Mother of Dragons, she had no fear whatsoever. Then, her lover stabbed and killed her as they were embracing.

Her death shows us that living in a world of dragons is never easy, even if a dragon is not the one who actually kills you. &

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