Corporations have been advised a hundred times before that key persons to the success of our businesses must be protected. From the tragedy of the Busby Babes, to today’s announcement that we may have lost six of Australia’s top mining executives, all from one company, we are still ignoring that advice. Why?
As a risk professional it must be incredibly frustrating trying to convince organisations of the need to have policies and procedures to prevent key staff traveling together. It seems so straight forward and yet many don’t practice this. Thankfully, statistically these kinds of tragedies are few and far between but we rely too heavily on statistics and averages to make key decisions. Apart from the terrible human tragedy, what impact will this have on staff, suppliers, creditors, debtors, shareholders and even the industry itself?
Let’s all hope that all of the Sundance Resources executives and air crew are alive and well having survived a horrible ordeal. However, why is a group of such important people, traveling together on a charter flight in Cameroon? The normal response to key person risk is to insure the key executives but how can you insure against the incredible loss of skills, networks, experience and decision making that the business has lost?
Arguments like “this may never happen again” and “how can you spend good money now on the off-chance that something like this could happen?” are looking tired with today’s announcement.
We saw a statistic today that one third of all flight accidents in aviation history, occur in Africa. We’re not sure if that is correct but it would certainly not surprise us. Now, we’re not statisticians but we do believe that Sundance’s risk management division and advisors will surely have to look at themselves in the mirror and ask “how did we let this happen?”. The shareholders are likely to want to know the answer to that question too.
Are there any techniques outside insurance that could have prevented this? or at the very least reduced the impact.
Here are a few ideas we can think of:
Modern technology – telephone conferencing and video conferencing. Can business really be done over the airwaves? Did all these executives really need to travel? What drew all of them to one place at the same time?
Travel separately – taking multiple aeroplanes. How much extra would this have really cost given what was at stake? It has been widely publicised that Ken Talbot is a billionaire and could easily have chartered several flights from pocket change.
Older techniques – country security and risk management firms that specialise in “high risk” countries. They move people securely and assist with recovery and extraction when things do go wrong. How much would their services have cost?
It’s easy to sit here and write with the benefit of hindsight and preach better risk management. That is not our intention. It is our intention however, to highlight that for really, big, high impact risks like the loss of an entire management team, we really should pay attention to past experience for simple prevention measures.
We certainly don’t want to see a bunch of risk management ambulance chasers trying to cash in on this tragedy. What we do want to see organisations thinking about impacts rather than statistical chance of occurrence.
Our thoughts are with the friends and families of the missing and hopes that there is a happy ending to this story.
Tags: Australia, Australian, aviation, Better Risk Management, billionaire, billionaires, creditors, debtors, High Risk, Investor, Investors, Key Person, Key Persons, Managing Risk, Mining, Risk, Risk Management, shareholders, staff, Sundance, Sundance Resources, suppliers
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