Gallagher Bassett We Guide. We Guard. We Go Beyond.

This is the way the world ends,
This is the way the world ends,
This is the way the world ends,
Not with a bang but a whimper.*

A new report from The World Economic Forum, Regional Risks for Doing Business 2019, details a number of possible bangs and whimpers for each region of the globe. WEF’s report highlights the results from a survey of nearly 13,000 business leaders in more than 130 countries who were asked to select from a list of 30 global risks the five risks they believe to be of most concern for doing business in their country within the next 10 years. The results are eye-opening. The risks cited are at the top of the non-trivial charts and some are potentially existential.

NU Property/Casualty 360 has provided an excellent summary of the detailed WEF report, region by region:

Top business risks by region
(Source: World Economic Forum, Regional Risks for Doing Business 2019)

 
The sheer variety of major risks is intimidating, from water crises in SE Asia to profound social instability in Eurasia.

The purpose of surveys such as this (run with the help of Marsh and Zurich, we should note) is to assist all of us to keep focus on the big issues. Risk scurries around us everywhere, like cockroaches when you turn the light on in a neglected kitchen in the middle of the night. It’s easy to lose track of the more serious threats when a roach is running up your bare leg.

This report boils down the three Big Ones for those of us managing risk for large organizations, across all regions and industries: (1) cyber-attack, (2) data fraud/theft, and (3) terrorist attacks. That last one may seem remote to most US-based risk units, until you start reviewing recent headlines. How about a mentally unstable man with an SUV or even a kitchen knife? That’s all it takes nowadays. Assault rifles are optional.

This survey is not, of course, the last word, but reports like these are excellent devices for provoking useful thoughts and challenging your regional risk colleagues in your organization. If these are not the top of the list risk issues for your operations in these regions, well, what risks are? Read the full report, check out the thirty risk categories the WEF survey folks posed as a starting point, add a few more if you are so inclined, then make your own list, region by region. The lists you build out from this exercise could be a powerful tool for your ERM planning.

 
^{Our inspirational quote for this issue, with apologies to Mr. Buffet, our favorite philosopher.}

*Yes, T. S. Eliot, “The Hollow Men,” 1925

Define the Noun "Stranger"

Every year the Mystery Writers of America come together to publish an anthology of mystery stories. The theme for the 2020 anthology is "When a stranger comes to town*." By some divine coincidence, Malcolm Gladwell's new book is Talking to Strangers (find it on Amazon). His subject is what we need to know about the people we don't know - a matter at the very heart of risk management, corporate and individual.

For an excellent overview of the book and some thoughtful ruminations on what it tells us, check out Jack Hampton's article in Risk&Insurance. Gladwell makes a key point that sits right at the center of handling risk: "We lock down on first impressions if they're followed by consistent similar behavior. We change beliefs only when we finally encounter massive contradictory evidence. This is the situation for much of our risk management."

This is similar to the common fallacy of "anchoring" as described in the classic analysis of how common fallacies in our thinking process derail our ability to make sound decisions, Thinking Fast and Slow by Daniel Kahneman. Whoever is first to put a price on the table in a negotiation anchors the following discussion to that price point, even if it's well off the mark. Our brains have been trained by eons of evolution to work this way because most of the time - at least a million years ago out on the veldt when we were dealing with big cats, not venture capitalists - it worked fairly well.

Nowadays, things are different. How we deal with all the "strangers" we encounter in person, on the phone, on the web, just trying to get a day's work done has a major impact on how well we understand the real risks we're dealing with. As Hampton says, "This kind of reminds us of Gladwell's overarching encouragement, 'If I can convince you of one thing in this book, let it be this: Strangers are not easy.'"

Gladwell is a graceful, elegant writer. Get the book, kick back in your favorite reading chair, tell everyone you're working and not to be disturbed - and enjoy.

*May or may not include "The Boy in the Red Hat" by your humble correspondent; the editors at MWA have not made a decision as of this writing. Read that story and you'll never talk to a stranger again.

Quick Take 1:
IP!

What's the real issue between Xi and Trump? Not tariffs. It's intellectual property or IP. In a world economy where fortunes are made or lost on software or even vaporware and hardware exists simply to execute the commands of those programs, intellectual property is a core asset for any serious enterprise. How does IP figure in your risk program?

Copyrights and trademarks are the most obvious, can't walk across the room without tripping over them, examples of IP, yet, according to an excellent review in a recent R&I, less than 20% of those obvious targets are insured against theft or encroachment. Lee Lewis of AON sums it up nicely: As asset bases have shifted further towards the intangible, insurance protection hasn't remained in balance. The average organization only insures 16% of their intangible assets, compared to 60% of their property, plant, and equipment (PP&E).

Example? Try this: "Adidas lost a bid to protect its three-stripe trademark in June 2019 when the General Court of the European Union ruled the three parallel stripes applied in any direction is not a valid trademark." What's next? The Nike swoosh? The Mercedes three pointed star? Your humble correspondent is co-inventor on a pending patent for a new business process - we simply can't be too careful nowadays.

Does your company have a secret sauce or a swoosh of its own? Is it safe? Insured? Are you sure?

Quick Take 2:
Update Department

This all-seeing Journal pointed out sometime back that a number of lawsuits were in process concerning the use of/access to corporate websites by disabled individuals. We noted then that a determination that a website is the equivalent of a "public accommodation" will compel a great deal of rethinking and redesign. How do you make a website accessible to a blind person, for example?

We are past conjecture, as of Monday morning (10/07/19). The Supremes just brought down their collective gavel on Domino's Pizza v. Guillermo Robles, No. 18-1539. Mr. Robles noted in his original suit that he was unable to order a pizza, despite using screen-reading software. He sued under the ADA. The Ninth Circuit found in his favor. The Supremes just upheld that decision.

Yes, your website is now the equivalent of a public accommodation and must comply with the ADA and the ADAAA. There is sure to be residual wrangling over the details (some 2,000+ similar cases are in the legal pipeline as of today), but if your organization has been holding off on website redesign, awaiting a decision - get off your collective duff. The Supremes have delivered their ruling, hot and fresh, right to your door.