Monday, October 22, 2012


Apathy as risk

Like an uneventful hurricane season, U.S. insurers are suggesting that lack of aircraft accidents may be contributing to a lessening of safety consciousness.

According to an AP article in the Seattle (WA) News & World titled Long stretch without fatal airline crash is a paradox for safety (see,

It's been 43 months since the last deadly airline crash in the United States, the longest period without a fatal domestic accident since commercial aviation expanded after World War II. That sounds like unvarnished good news, but one consequence of having such a remarkable record is that it's difficult to justify imposing costly new safety rules on the economically fragile industry.

The article goes on

"The extraordinary safety record that has been achieved in the United States ironically could be the single biggest reason the (Federal Aviation Administration) isn't able to act proactively and ensure safety into the future," said Bill Voss, president of the industry-funded Flight Safety Foundation in Alexandria, Va., which promotes global airline safety. The past decade has been the airline industry's safest ever.

For an Enterprise Risk Management practitioner, good news-bad news reports are a constant concern.

Here in southeast Florida, we have escaped hurricane force winds despite already being ready to assign the letter "S" to the next tropical storm. (As this is written, a tropical wave with a high probability of becoming "Sandy" sits south of Cuba. If it does become a named storm, it is likely that it will brush - hopefully only brush, the state's Atlantic coast.) Only once this season - June 1 through November 31 - have hurricane shutters been closed.

People who have never experienced a storm, and one who experienced a "minor" Category 1 or 2 storm tend to forget about the Andrews and Ritas that occasionally come ashore. The insurance companies never forget, and even with a season of minimal storms such as the current season, continue to raise their rates despite, according to Advisen FPN, making higher profits.

As with airlines, the lack of headline incidents lulls everyone - in the case of the airlines, government, the airline operators, and passengers - into a feeling of "everything is OK as is."

As with airlines, Enterprise Risk Management practitioners know that "everything" never is 100% OK.

Security is 100% - until it is breached with a physical or computer attack.

Power is assured - until it fails for any number of reasons.

A critical vendor has a perfect performance record - until it doesn't.

There are sufficient personnel to staff all critical positions - until there are not.

The above are some "generic" risks that, as the last breach, power outage, vendor failure, or influenza outbreak occurs, are allowed to fade from memory.

Ask a 20-something, or even a 30-something what happened on December 7, 1941 and see what time does to memory. (It pays for the Enterprise Risk Management practitioner to be a bit of a historian.)

Fighting forgetfulness and ostrich-itis - it can't happen to me - are two on-going battles all practitioners face on a daily basis.

Equally as bad for the practitioner is when something does happen and "The Plan" protects the organization from loss. Unless the practitioner can show that loss was prevented directly by risk management efforts, the executive wing may decide that "we would have survived even without the plan; who needs risk management?"

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