Maginot Line, Part II

Lloyd’s recently released a new 360 Risk Insight report with the Economist Intelligence Unit titled “Global Business Leader Survey: Risk Priorities and Preparedness.” The authors state that “the report explores corporate risk attitudes around the world … and is based on worldwide survey of more than 570 board-level executives.”

All well and good.  Fairly extensive reach of executives and industries across the globe. Again, quoting from the report: “The respondents were asked to score a series of key risks within five categories in relation to the priority level for the risk in their organization and the degree of preparedness to manage it.”

Troubling

But here is my problem.

I direct the reader of this report to Chart 5: Global Risk Chart and ask you to consider at least the following seven risks:

  1. Corporate liability (ranked #8 on the chart)
  2. Reputational risk (#9)
  3. Fraud and corruption (#15)
  4. Information security breach (#16)
  5. Theft of assets / intellectual property (#18)
  6. Rapid technological change (#19)
  7. Cyber attacks (#20)

For each of these seven risks, these board-level executives have stated (of course, through the magic of weighted averages) that their company is prepared at a higher level than the risk priority. In other words, their companies are prepared to deal with these risks.

Oh really???

Can any customer – whether corporate or consumer – who really understands the pace and concomitant risks of the ever-quickening pace of the digital marketplace believe this is true? These corporations can deal with all these digital marketplace-related risks now in 2009? How many of these corporations understand the impact of social networking?  How many can accurately value their intangible assets flowing through their own digital value chains as well as the through the myriad streams and ponds of the web? How many of these corporations really know when their systems have been hacked and information stolen? Are they truly ready to leverage the ever-quickening rhythm of technological change?

Maginot Line (Original)

The French thought they learned a lesson from World War I.  So they built the Maginot Line to stop the Germans from advancing during World War II. Unfortunately the Germans took another route and conquered France anyway.

Lessons abound throughout history that using ideas from the past to compete successfully in the “now” or in the future will not work.

Circling Back

I fear most, if not all, of these executives are shaping their risk management practices by “fighting yesterday’s war.” They are ignoring the issues and implications of the digital marketplace on their businesses both today and tomorrow. They do not understand they are not truly prepared to face the changing risk landscape being significantly altered through the disruptive force of the web.

Am I wrong?

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Published in: on August 4, 2009 at 4:58 pm  Leave a Comment  
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