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LESSONS LEARNED: GAINING STRENGTH FROM A CAT5 HURRICANE

Hurricane Ivan: Gaining Strength from a Devastating Event

Excerpt from Gary S. Lynch, “At Your Own Risk: How the Risk-Conscious Culture Meets the Challenge of Business Change”, John Wiley & Sons, Chapter 6, Page 145-150.

What is a risk conscious culture and how does an organization go about establishing one? I begin our discussion with a real life story of how the actions by a group of business leaders, post a tragic event, created a ‘‘best practice’’ of how to build a risk conscious culture. At a tactical level, these leaders improved their disaster preparedness. However, the benefits went far beyond developing just a process. What occurred instead was a conta- gious awareness of the risks and appreciation of how it affects others.

The incident was a category three hurricane named Ivan, and the place was the Cayman Islands (the fifth largest banking center in the world). Ivan damaged more than 95% of the buildings1 and disrupted essential value chains such as food, water, shelter, supplies, communications, and energy and it’s core revenue generator—financial services processing. Everyone on the island had been affected both behaviorally and financially. However, after it was all over, the impact of Ivan then became the genesis for another great phenomenon. A risk conscious culture emerged born from the desire by the business leaders to proactively, rather than reactively, manage risk. In all my years working for/with hundreds of organizations, I had never witnessed such an example as the one I was exposed to in the Caymans. I have a profound respect for Gene Thompson and Paul Marchena for bringing together a set of diverse leaders for the purpose of learning and addressing those vulnerabilities that they could do something about. The result was improved preparedness, greater resiliency, increased participation by a much broader community of stakeholders, more effective alignment of risk investment with business priorities and most importantly—a risk con- scious, sensitive and responsive community of business leaders.

Several months after the devastating category-three Hurricane Ivan, a community of business and social leaders came together in what was originally a post-mortem meeting. Their individual frustrations motivated them to engage in a conversation about the economic and social impact of Ivan, and what could be done differently next time to reduce the exposure. After three meetings it was clear that the theme had shifted from a limited view of their own businesses to one of a communal economy. They recognized the need to begin a dialogue about risk issues long before an event could occur (e.g. hurricane, pandemic or other natural disasters). They realized that they had a symbiotic relationship, which had advantages and disadvantages.

With the help of Gene and Paul, the group rallied another dozen or so leaders to the first meeting. Prior to the group getting together, Gene requested that I survey some of the Executives in order to identify what worked, didn’t work, what close calls were avoided, and what their individual priorities were. What I discovered was that communication be- tween the government and business was a major issue, as well as between the business leaders, the general community and their international customers. I also found that the leaders behaved as if the storm only affected them, instead of harnessing the power of the interdependent community.

My assignment was to lead the research and facilitate the sessions. The leaders demanded action and they got it, a risk consciousness amongst the group emerged. They inventoried their competencies and capabilities, and then began to determine how they can benefit from each other. For example, satellite phones were made available so that the Executives could stay in touch with each other and their overseas customers, high ground was allo- cated for the storage of critical vehicles, special fuel delivery was pre-arranged, pre-arranged delivery of lumber was offered to critical sites, a web site was created, employees became more involved in the preparation, heavy duty transportation vehicles were identified, and emergency response procedures were shared. The group went as far as building a bunker so the leadership team did not have to evacuate the island during a crisis. When Hurricane Dean hit in 2007 these new capabilities were activated. Fortunately, the storm took a southerly turn and spared the island. Regardless, they were ready to manage the worst possible outcome. From my home in New Jersey I was able to watch the action first-hand via the security cameras mounted on one of the participant’s buildings in the Cay- mans. Remote monitoring was one of many improvements that was implemented and activated. The leaders listened to each other, understood the collective needs and

then agreed to who would contribute what to ensure economic and social resiliency. Fortunately, the CEOs and other Senior Leaders at the Thompson Development Group, Hurley’s Groups of Companies, Cayman Water Company, Cayman Utilities, Workplace Environments, A.L. Thompson’s, Brown’s Mobile Fueling, Fosters Food Fair Supermarkets, Marsh, and others have taken action and benefited from the lessons of Hurricane Ivan (ironically, the storm first made land on September 11, 2004). They are proactively managing risk both individually and as a community.

By Gary S Lynch

I am the Founder and CEO of The Risk Project, LLC a risk, uncertainty and opportunity advisory firm. As a management consultant, business developer and market analyst at Booz Allen Hamilton, Gartner Group and Marsh, I was responsible for defining market strategy, commericalizing capabilities, and developing businesses. I've helped dozens of organizations create new revenue streams. I've also held the position of Risk Executive, CISO and Global Leader - Office of Business Continuity at JPMorganChase, Prudential and Prudential Securities.

Throughout my career I worked with senior leadership from startups, academia and government agencies to life sciences, hi-tech and financial institutions. I was a founding member of the US Dept of Commerce's Advisory Committee on Supply Chain Competitiveness, Advisor to the WEF Global Risk Network and Sr. Research Fellow at the RH Smith School of Business, University of Maryland.

I've authored three business risk books and been a featured at the WEF, APEC, WCO, NIST, NACD, AIAG, RIMS, MIT CTL, Robert H. Smith School and the Desautels School of Management/McGill University.

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