A conversation with Mark Abkowitz about his new book, "Operational Risk Management: A Case Study Approach to Effective Planning and Response," published by John Wiley & Sons.
What motivated you to write this book?
It actually began with my development of a course on Operational Risk Management at Vanderbilt University. The intent was to review historical disasters from the standpoint of what went wrong, could the incident have been prevented, and what has been done so that history doesn’t repeat itself. In examining these cases, some natural disasters, others man-made accidents and the rest acts of terrorism, I was surprised by how remarkably similar they were in terms of the risk factors that led to each demise. It became a compelling story to tell.
What is the overarching message of the book?
That risks can be managed more successfully than the way we are doing it today. It is just a matter of approaching the situation in the right way, by taking a systematic, holistic view of the risks we encounter in our daily lives, establish priorities on which risks we need to try to control, and focus our resources on those risks in a practical and cost-effective manner. In doing so, we will no longer feel hostage to the anxiety and uncertainty that is limiting our quality of life.
How do you explain this message?
In the book, I introduce ten fundamental risk factors that when present, alone or in concert with one another, can produce the ingredients for a disaster. I use the case studies to illustrate how these problems come to life. Because hindsight is usually 20-20, it provides the luxury of looking back in time to learn how to better ourselves in the future. I purposely selected case studies that include natural disasters, man-made accidents and terrorist acts, also sprinkling in a couple of success stories…..situations that should have led to a catastrophe, but were avoided due to proper control of these risk factors.
Who is the book directed towards?
This book has the potential to appeal to several different audiences. First, it is directed towards risk professionals, people who typically manage risk or influence risk managers as key stakeholders. It is important for these individuals to have a firm grasp on relevant risks, an understanding of the factors contributing to these risks, and the ability to implement a highly effective risk management program. Risk professionals are resident in the public sector at all levels of government (local, regional, national) and in many industries (e.g., chemical, energy, transportation sectors). Other risk professionals who would find the book meaningful include attorneys, financial institutions and insurance providers.
The book can also serve as an important teaching tool for college students at both the undergraduate and graduate level. It can help introduce them to risk-related issues, whether from a management, assessment or communication perspective. The book will provide students with a better understanding of the real-world environment in which operational risk issues are encountered and perspective on how to address risk considerations in making informed decisions.
Finally, there is a portion of the general readership that has a fascination with historical events of epic proportions and finds case study narratives interesting to read and easy to understand. The appeal to this audience is also enhanced by a heightened awareness and sensitivity to safety, security and environmental risks as a result of recent events such as 9/11 and Hurricane Katrina. People are eager to gain additional information that improves their knowledge and awareness of risks that impact their daily lives.
How will it help them?
The more knowledge and awareness that you can bring to people with these concerns and who are in a position to do something positive about it, the better off we all are. It is my hope that the book offers a simple, practical explanation of how one can better manage the risks we should truly care about in a consistent and thoughtful manner. Armed with this information and perspective, people can make decisions that utilize this philosophy and approach.
What are some of the key lessons learned that you emphasize?
There are a variety of lessons learned that are described in the book. I suppose if you had to pin me down, I would point to the significance of communication, planning and preparedness as the fundamental building blocks of any risk management program that is worth its salt. I would also caution that one not underestimate the role of political agendas, and arrogance among individuals and organizations in creating high-risk situations.
A couple of years ago, following Hurricane Katrina, you not only cited some of the factors that led to the New Orleans disaster, but you also said that New Orleans should not be completely rebuilt. Do you still stand by that statement today?
Yes, I do. My point when I made it is that we must recognize when we have made poor decisions in the past, and one of those was to encourage the development of a major urban area in a spot that is located below sea level, exposed to major hurricanes and surrounded by water bodies that routinely experience flooding. If I came to you today with a desire to build a large city in a location with those characteristics, nobody would take me seriously. Yes, New Orleans should be rebuilt, but smaller in scale, on its higher ground and better protected against the risk factors that are prevalent in the area. That way, the history and tradition of the city can be preserved without the same degree of vulnerability as in the past.
It seems like weather patterns have been changing, with more frequent and violent tornadoes occurring, but also touching down in locations not previously known for such events. What does this mean from a risk management perspective?
A good risk management program is not a special project or a snapshot in time. It is a fundamental way of looking at your activities and surroundings, constantly mindful of changing circumstances that can affect the way you are able to operate. It does appear that climate changes are producing weather patterns that lend themselves to more severe events and, in some cases, affecting different places. For example, many believe that what has been historically known as tornado alley is moving north of its previous location. Where this is occurring, from a risk management perspective, these events should warrant greater attention and allocation of resources relative to what were previously considered to be priority threats to the region. However, this should not be done as a knee-jerk reaction, but rather as a systematic evaluation of the true extent to which circumstances have changed.
More than six years have passed since the September 11 attacks on the World Trade Center. What is your assessment of our efforts to improve homeland security since that disastrous event?
Overall, I do believe that homeland security has improved somewhat. Unfortunately, it took an event of mammoth proportions to gain our attention. Security efforts have become more effective in the gathering and sharing of intelligence, and in the hardening of critical infrastructure. However, there are some important chinks in the armor that remain. Much like terrorist acts that have been carried out on the London, Madrid and Tokyo transit systems, the U.S. is a likely target for a similar event, primarily because terrorists view this scenario as having a high likelihood of success and a significant impact in terms of casualties and damage. Either a foreign or domestic element could carry out such an attack. Another problem with our security efforts has been the unintended consequences of some of these initiatives. For example, it can be argued that the impact of Hurricane Katrina was magnified by the lack of response resources available, such as National Guard personnel, because they had been deployed to fight the war in Iraq. Under a more systematic and holistic risk management scenario, this tradeoff might have been recognized and more effectively addressed.
What about accidents caused by human error? In your book, you cite numerous events where this has had dramatic consequences in terms of human casualties and environmental damage? How do we avoid these problems in the future?
This is a tough nut to crack, because there are so many ways that unintentional missteps by humans pave the way to a catastrophic outcome. It can be due to lack of training, poor communication, inattention to detail, undocumented procedures, economic pressures, schedule constraints, fatigue or other considerations. The key is to have the right risk management processes in place with the proper oversight, both at the big picture and nuts-and-bolts levels.
Any closing thoughts?
While the focus of my message is to improve the way we manage the risks that affect us as individuals, communities, governments and businesses, equally important and often forgotten is a similar need to change the way that we perceive and react to risk. No matter how hard we may try to make our world safer and more secure, it is not humanly possible to create a risk-free world. While improving our risk management practices, we must also adjust our outlook and expectations about the level of protection we can realistically expect. We need to become more tolerant of certain risks and recognize that sometimes bad things will happen, even when we put our best foot forward…..and that is just a fact of life.
