Book Review of Mastering Catastrophic Risk: How Companies Are Coping with Disruption by Howard Kunreuther and Michael Useem, Oxford University Press, 2018
Reviewer: Edward Thomas, Esq; President of Natural Hazards Mitigation Association
This is a truly excellent book which explains through a combination of insightful analysis, based on their years of research; and real world examples, based on interviews with major corporate thought leaders, how major corporations are actually dealing with the ever changing and ever increasing foreseeable, unforeseeable and unforeseen risks to companies, their reputations and their employees. The authors, who have produced individually and as a team numerous other excellent books on risk management artfully weave their analysis together with these real world examples then produce action orientated and specific checklist of actions corporate managers can take to learn from the experiences of other companies in such a way as to protect their companies from future disruptions due to natural phenomena such as hurricanes and tsunamis as well as terrorist incidents.
Managing Catastrophic Risk does a particularly excellent job of showing how far huge, Fortune 500 type, European and United States corporations have come in Risk awareness and institutionalizing the internal corporate infrastructure to deal with risk management.
However, it is also quite clear from reading the book that those major corporations are just now beginning to get serious about truly facing the reality of changing and growing risks and preparing to deal with those risks; the authors do not discuss preparations by small businesses and government at any level. Kunreuther and Eseem suggest that one of the principal manners in which business can successfully deal with risk is moving from short sighted intuitive thinking to much longer term thoughtful deliberative thinking; including devoting the necessary time, attention and resources to think about long term risk. Such thought process may well be difficult for increasingly resource starved governments and for small businesses barely struggling to survive. When one considers that small businesses account for fully one half the employment in the United States, and since 1995 have created over sixty percent of the new jobs in our Nation, we need, as a Society, to be extremely concerned about how well these small businesses and local governments are going to perform in understanding risk and dealing with it.
I strongly recommend this book for both the casual reader who wishes a better understanding of how large businesses are dealing with risk, as well as for use by those who wish to begin a deep dive in Risk Management. Leadership in corporate excellence and those who wish to begin to understand the awesome challenge we have dealing with the mounting risk posed by natural and human casused disasters to our Nation and to the World.
For those of you who think they do not have time to read the book, the excellent news is that the authors were interviewed for a really fascinating discussion of the high points of the book on a Wharton School produced podcast. That 23 minute podcast is available [without charge] online at: http://knowledge.wharton.upenn.edu/article/companies-prep-natural-disasters/
If the podcast does not get you sufficiently interested to read the book, Wharton has also produced an excellent four page issue brief that quite neatly captures some, but by no means all the most important, actionable points of this excellent book. That four page Issue Brief is available on line at: https://riskcenter.wharton.upenn.edu/wp-content/uploads/2018/06/Mastering-Catastrophic-Risk_Kunreuther-and-Useem_summary_2018.pdf
The online magazine Working Capital Review has also produced a very short summary of the book, based on material from Oxford University Press. That short summary is available at: http://workingcapitalreview.com/2018/06/disasters-corporate-catastrophe-checklist/