Opinion | Risk Managers: Just Because 2020 Was a Mess Doesn’t Mean Your Risk Management Program Is
The year 2020 summed up in one run-on sentence:
a global pandemic, earthquakes, locust swarms, murder hornets, raging wildfires, cyclones, asteroids near-missing our planet, every concert cancelled, toilet paper shortages, civil unrest, postponed Olympics, border closures, empty airports, no restaurant dining, charged elections, online everything – shopping, weddings, births, funerals, schooling, reading, work – professional sports shut-downs, chaotic money markets, unfathomable number of hours on the couch at home… and now, I stop to catch my breath.
My head spins into 2021 from just the thought. I ponder the simple fact that all these events happened in such short succession of each other. Bottom line, the year can be summed up by saying that if you could think it, it likely happened in 2020.
If any of these events happened in isolation at any other time or year, it would have been considered seriously consequential. But all together, I confess, I feel stunned and frozen.
This avalanche of risk has forced me to reflect and to re-examine my thinking on risk management.
As a risk manager, we are taught and trained to probe and prepare for all kinds of adverse events. We do our best to predict what we used to think was predictable and normal, and then work hard to create prevention and mitigation plans around them.
But the sheer volume and machine-gun-like speed of the events of 2020 truly humbled me. I can imagine it likely humbled us all as an industry.
A risk professional’s basic rule of thumb is always to consider or “expect the unexpected,” but in practice, we would invest more in preparing for risks that were most likely to happen, rather than overthinking such “outliers.”
I ask, could anyone in the industry have predicted this, expected this, considered this? And do we really know what to do when we are attacked by such a swarm of unexpected “outliers” all at once? What lesson could we learn from 2020? What can we do better in 2021? Are there new techniques we can apply to help our risk management community?
Based on my own observations so far, it appears that many organizations are operating as though they are in shock.
They have bare bones operations churning in survival mode. Moving ever so hesitantly, if even at all. They appear to be waiting, holding their breath for what will transpire next before applying risk management practices again. In many ways, it is understandable.
Almost overnight, everything changed for most of us. It feels like so many existing risk management practices became redundant in such unexpected ways. Why practice “evacuation plans” if no one is in the office? Why bother having certain insurance products or liability limits if no one is using the corporate fleet? And if they are, are they using the fleet for what it was originally intended?
This is not the time to lose faith in the steady discipline of risk management. It is in such stunning times, when things feel incredibly unstable, even upside down, that risk management is most needed. We can not let the introduction of unexpected elements blindly create new risks for organizations.
Let us catch our breath and not allow ourselves to forget what hurt us. But instead, let us steadfastly examine what it taught us. &