Funny Business

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

In the October 12 edition of the Economist, there is a short article titled
"Funny Business".  It highlights that humor not only helps to sell
products as in humorous advertisements, but it also helps to sell safety
messages.  "Jokes can make serious messages more effective" is a direct
quote from the article.  Goodness knows it is a worth a try, but has anyone
seen a risk manager with a sense of humor – ever


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Blogs

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

The worst part about writing a blog is "feeding the beast", or in other
words keeping new ideas flowing.   I have been writing this series of blogs
for about 5 years now, and admittedly ideas for new blogs come easier at some
times versus others.  (For example you can probably tell I am currently
struggling for new ideas by the mere fact I am writing this specific blog
…)

The best part about writing a blog is "feeding the beast", or in other
words keeping new ideas flowing.  Keeping a blog series going for 5 years
forces you to keep searching for ideas and new ways to present old ideas.

Perhaps risk reports should look more like blogs.  If nothing else it would
help to bring out the best and worst traits of risk reporting and hopefully
generate more ideas. 

(Another blog into the hopper.)


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Humans

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

As I write this I am watching an afternoon of college football.  A
commercial that seems to be in a pretty frequent loop is by an insurance
company.  The theme of the commercial is "humans".  Basically the
commercial shows some silly situations that humans get into that ultimately
require insurance.  The background music is "I'm only human" by The
Human League.  If you watch American college football I suspect you have
seen the commercial I am talking about.

The theme of the commercial – humans do silly things that lead to mishaps
– is something that all risk managers need to remember.  Meanwhile this
has to be a short blog.  The commercials are over and the game is getting
exciting.


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Rocky Horror Picture Show

*/By /**/Rick Nason, PhD, CFA/*
*/Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

Some of you of a certain age will remember going to see the Rocky Horror
Picture Show while you were in college.  I certainly do.  We dressed up,
packed up our newspapers, water squirters, burnt toast, confetti and of
course our outfits.  Those who know me, and are familiar with Rocky Horror
can probably guess quite easily which character I always went as.

Our daughters grew up in a household with a well worn and frequently watched
VHS of the movie.  As this past week was Halloween, there was of course a
midnight showing at the University.  My daughter in preparation for the show
asked me to sit with her and watch the show so she could get a refresher
course on all of the audience lines and antics.  After an upgrade of her
Rocky Horror education she was excited about going to the show.

However, it turned out there was a problem – none of her peers, and few in
the audience knew the audience participation protocols.  The audience was
too young.  They did not have the "institutional knowledge" of Rocky
Horror.  The experience was a bit of a letdown for my daughter.  Too bad
– Rocky Horror is great fun to see.

With the demographics being what they are in the corporate world, there is a
generational shift of a different kind occurring.  Lots of people talk about
demographic risk – namely that there is a huge roll-off of seasoned workers
who are baby-boomers who are starting to retire and the trend is going to
accelerate in the next few years.  Many corporations are trying to get
bodies into place to replace the retiring workers.  But what about making
sure the institutional knowledge gets transferred?  How many corporations
are going to become the equivalent of watching the Rocky Horror Picture Show
in a theatre where not enough of the audience knows the participation parts?

Rocky Horror Picture Show is a fun show to watch even without audience
participation – however it is a whole lot more fun with it.   How aware
is your organization of the various implications of demographic risk?


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Complicated Watches

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

Just finished reading one of those luxury magazines that you always find in
Airport lounges.  As usual there were lots of advertisements for
uber-expensive and uber-complicated watches.  I have to admit that I find
the technology behind these watches fascinating and the watches themselves a
marvel of engineering and craftsmanship.  However in this day and age do you
need a watch that tells you the moon cycle, has an anti-gravity correction
and one that tells you the day of the week?  I suspect that if you need a
watch to know what the day of the week is then you are not likely to be
bright enough to command enough of a salary to be able to afford such a
watch. 

The watches are fantastic engineering, but the bells and whistles have
virtually no practicality – the typical $300 smartphone can do a lot more
and do it a lot more efficiently.  In many cases though complicated watches
remind me of the risk management systems that many companies have – lots of
exotic complications, but subpar practical performance compared to simpler
more practical systems.  The same goes for techniques.

If the goal of a watch is to tell time then a $50 watch will do that for you
just fine.  However I realize that virtually everyone who buys and wears (as
opposed to buying them for a collection or as an investment) a watch that has
a cost in six figures is trying to make a statement. 

Is your risk management system for show, an attempt to make a statement? 
Does it have lots of bells and whistles, providing output that the typical
manager should understand in any case – the equivalent of a watch telling
the wearer the day of the week?  Or is your risk management system more
focused on the actual task at hand?


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Can Ethics Be Taught?

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

*/Follow us on Twitter/* [1]

* (Repost from May 2010)*

As a Business School Professor I am constantly being asked to incorporate
ethics training into my classes.  I refuse on the simple premise that to do
so would be to teach the stupid people how to cheat!  I suppose I should
explain.

The cry for the teaching of ethics in business school originates in the
assumed lack of ethics in business – and more specifically a lack of ethics
in finance.  As I will explain in several later blogs, I do not believe that
finance people are any more or less unethical than the general population
(more competitive yes, but being competitive is not necessarily unethical).

Ethics in business school has become the strict teaching of right from wrong
rather than the more traditional academic examination of moral dilemmas. 
Teaching people right from wrong is a fool's errand in business school. 
First off, by the time that someone has reached business school they already
know right from wrong.  Furthermore, a person's desire to act ethically
has probably already been set by the time they begin elementary school, much
less when they are twenty-something year's old.

The next time you see a major ethical breach, ask yourself these questions: 
(1) Did that person know what they were doing was wrong?  The answer is
always going to be yes.  Ethical breaches in finance are only extremely
rarely a case of moral ambiguity.  (2)  Would the perpetrator of the
ethical breach have undertaken their actions if they knew that they were
going to be caught?  The answer is always going to be no. 

Thus the teaching of ethics is not going to stop any of the breaches that we
observe in the market.  Ethical people will always strive to behave
ethically, and unethical people will always be finding ways to shortcut and
cheat the system.

Now, the cry for the teaching of ethics in business schools generally comes
down to developing case studies on what people did wrong in the past.  In my
opinion this is just stupid.  If all we focus on is how to cheat the system,
then all we are doing is teaching the stupid people (who are more likely to
behave unethically) how to cheat the system.  In other words, ethical
courses in b-school might very well be counterproductive.

Let's focus on creating cultures of Ethical Leadership (see May 21, 2010
blog); recruiting for characteristics of Ethical Leadership and the rest will
take care of itself.  Oh – and by the way – by doing so you will be
prevented from hiring stupid people!


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A Tale of Two Supermarkets

 

*/By Stephen McPhie, CA/*

*/Partner, RSD Solutions Inc./*

/(Repost of blog from January 24, 2011)/

Over the last couple of months I have heard two separate stories of customers
of two different large supermarkets being injured while shopping.  Both
customers happened to be elderly ladies. 

Lady A slipped and fell and twisted her ankle.  The injury was not serious
but the Supermarket arranged a cab home for her.  The store manager phoned
the next day to ask how she was getting on and promised to send a £25
shopping voucher, which he did.

Lady B was struck from behind by a large trolley used to replenish the
shelves and which was being pushed by an employee.  She was treated by the
store's first aid person and advised to go to hospital.  She did this and
required 5 stitches.  Her shoes were blood soaked and ruined.  She could
not wear shoes for a month and needed several follow doctor visits costing
cab fares each time.

Several letters from Lady B's family following no further communication
from the supermarket elicited only vague sympathy and the claim that the
employee pushing the trolley was pushed by another customer and thus denial
of liability.  They did eventually send a £25 shopping voucher as a
"gesture of good will" with the hope that the lady will not stop shopping
at their store.  The family are now engaging a compensation lawyer.

The prompt and caring action by the fist supermarket cost little and resulted
in a happy customer who will tell all her friends how nice the manager was to
phone and how well she was treated.

The story is not over yet for the second supermarket, but it faces not only
the possibility of significant compensation and legal costs, but also
potentially bad publicity.  There is also the risk that the bad publicity is
magnified if the media take up the story.

So what are the lessons for risk management?  They would seem obvious for
most, but in this case one large organisation appears to have been totally
blind to them.  Identifying the possibility (or, for supermarkets, the
likelihood) of such accidents and a protocol for dealing with them promptly
costs little but can turn the situation to their advantage.  There may be no
strict legal liability but even a few hundred dollars could prevent losing a
customer, possibly several, and bring positive publicity.

/UPDATE September 2013 – The supermarket in Lady B's case ended up
settling for several thousand pounds plus Lady B's legal fees.  Had they
offered something like £200 in the first case it probably would have been
accepted./