Well-run companies prepare for the risks they face and while those risks can be significant, they’re not always addressed successfully—think Deepwater Horizon, rogue securities traders, and explosions at chemical plants. The risk management function of a company generally helps it develop protocols and processes to anticipate, assess, and mitigate them, yet even a world-class risk management system can’t prepare a company for everything. Novel risks can arise from a trigger event or ‘black swan’ outside of your experience or geography; multiple interconnected breakdowns that together trigger a major failure or ‘tsunami risks’; failure to pick up on anomalies—things that just don’t make sense. As this article suggests, I agree that empowering a senior executive—a ‘chief worry officer’, so to speak, planning for and deploying a critical-incident team if necessary, and being brutally honest in communications are among the top suggestions we advise.
