Author Archives: Emily Holbrook

About Emily Holbrook

Emily Holbrook is a former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writing at EmilyHolbrook.com.
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Risk Management Staff Picks: Top 5 Books of 2012

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In each issue of Risk Management, we publish book reviews from the staff. Some books are easily forgettable, while others make us stop and think. They inspire us, teach us and may even end up on our bookshelves at home. The following are our picks for best business books of 2012:

The Wide Lens
When it comes to innovation, common sense dictates that if you develop a great product it will be successful. But history is littered with great products that never quite made it, from electric cars to inhalable insulin to any e-reader that came out before the Kindle. So why do some great innovations succeed while others fail? According to author Ron Adner in his book The Wide Lens, the reason doesn’t lie with the innovation itself. Instead, many companies overlook two important risks while taking an innovation from concept to reality, and these blind spots can doom the product before it even gets out of the gate.

 

Street Freak
Expensive scotch, $3,000 dinners, 80-hour workweeks, million-dollar trades, million-dollar paychecks and acute psychosis. It’s the life of a big bank trader. Or, at least it was for Jared Dillian, a Lehman Brothers index arbitrage trader from 2001 to 2008. In his energized memoir, Street Freak, Dillian recounts his days at what used to be one of the largest banks in the world, from his time as an associate assigned to work security when Lehman relocated to Jersey City after 9/11 to his rise to the firm’s head exchange-traded fund trader. In between were massive highs and lows, and a realization that Dillian was afflicted with bipolar and obsessive-compulsive disorders, conditions that almost cost him his life.

 

Learning from the Octopus
Since 9/11, the concept of national security has changed. The United States has not been attacked by terrorists since that day, so something must be working, but the general approach has been fundamentally flawed, according University of Arizona marine ecologist Rafe Sagarin in his new book Learning from the Octopus. To Sagarin, the general mentality to fight a “war on terrorism” — a war with a broad, reactionary strategy that can never be won—is misguided. “Fish don’t try to turn sharks into vegetarians,” writes Sagarin. “Living immersed in a world of constant risk forces the fish to develop multiple ways to live with risk, rather than try to eliminate it.”

 

Consent of the Networked
Many social uprisings in emerging countries have gained momentum via the internet. From the first, in Tunisia in 2002, to the 2011 ouster of Egyptian dictator Hosni Mubarak, an internet revolution has provided a platform for those without a voice. The power of the web to change history and turn political strife to personal freedom is documented with great detail in Consent of the Networked. But the internet’s power can also spread evil. Author Rebecca MacKinnon, a journalist and former CNN bureau chief in Beijing and Tokyo, uses China as one example. In possibly the best chapter in the book, the author details how Chinese internet crusaders are using the web to fight against, among other things, injustice within the legal system. “The internet enables ordinary Chinese people to speak truth to power and pursue justice in unprecedented ways,” writes MacKinnon. “At the same time, Chinese internet users have a manipulated and distorted view of their own country as well as the broader world.”

 

Into the Storm
The Sydney to Hobart Yacht Race is considered one of the most prestigious and difficult open water races in the world. Covering 628 nautical miles from Sydney, Australia, to Hobart, Tasmania, the race is known for challenging ocean conditions, blustery winds and frigid temperatures that can test even the most experienced sailors. Into the Storm tells the gripping story of how one of the smaller boats in the competition, the AFR Midnight Rambler, not only survived the race, but went on to win the prized Tattersall’s Cup, which is awarded to the winner. In the process, author Dennis Perkins, who also recounted Ernest Shackleton’s Antarctic expedition in Leading at the Edge, shares interesting lessons about the power of teamwork under the most extreme conditions.

 

The Risks of Social Media: Facebook Post Attracts SEC Action

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We’ve written about the perils of careless social media use time and time again on the Monitor and in Risk Management. And no matter how many company-wide memos are issued or how many training courses are thrust upon employees, as long as social media exists, there will be those that, whether intentionally or innocently, create a reputational or regulatory nightmare for their employer or another company.

Reed Hastings, the CEO of Netflix, is one of them. The active Facebook user commonly posts about the success of Netflix, often thanking users of the service for their loyal support, which sounds like the first line from a book on how to correctly promote a product using social media. But Hastings may have become a little too comfortable sharing certain aspects of the company’s information.

In July of this year, he posted to his 240,000+ Facebook subscribers that “Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.” That type of boastful post may seem like nothing more than a proud CEO to many, but to the Securities and Exchange Commission, it was quite possibly an illegal statement. On Wednesday, the SEC issued Netflix a Wells Notice, which means SEC staff will recommend that the SEC issue either a cease-and-desist action and/or a civil injunction against Netflix and Hastings over the alleged violation.

Hastings responds via, you guessed it, Facebook.

Did Hastings violate rules regarding selective disclosure? Should all companies, especially those the size of Netflix, have legal counsel review all social media posts representing the company’s views? Should every company employ a social media risk manager?

It seems we’re getting there.

Cavalcade of Risk #171

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Welcome to the newest edition of the Cavalcade of Risk. Below you will find pertinent blog posts by knowledgeable people in the risk management and insurance community. Let us know what you think in the comments section below.

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  • Insurance Claims and Issues: Dennis Wall writes about computer models and how they have been used to predict losses in support of premium rate increase requests by homeowners and other property insurance companies. Now, as Wall writes, they are being used to “predict” known losses after hurricanes, starting with Hurricane Sandy damage claims.
  • InsureBlog: Henry Stern explains why it can be mighty risky getting injured in the Land of Thor!
  • Workers Comp Insider: Julie Ferguson looks at the implications for employers with the newly enacted state marijuana initiatives in her post, “Marijuana: coming to a state near you – and probably sooner than you think.
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  • Work Comp Roundup: Michael Stack warns about workers comp advice you may find on the internet. Seeing should not always mean believing in this case.
  • The FCPA Blog: Russell Stamets pens a post about India’s new anti-corruption movement. Media savvy anti-corruption activist Arvind Kejriwal, who rocked the Indian political and business establishment over the past few weeks with dramatic accusations of corruption, has formally launched a political party.
  • The Healthcare Economist: As Jason Shafrin writes, the Affordable Care Act requires that plans that participate in the health insurance exchanges meet certain actuarial value guidelines. A newly-released tool, the Actuarial Value Calculator, will help insurers determine whether or not their plans meet the actuarial value regulatory requirement.

Don’t forget to check the next Cavalcade of Risk, hosted by the one and only team of Rebecca Shafer and Michael Stack of Work Comp Roundup.

Factory Fires Illustrate a Culture of Lax Safety Standards in South Asia

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Some have called the clothing and textile factories in South Asia “death traps.” And many would find it hard to argue otherwise, taking into account the region’s spate of factory fires in recent months.

In September, 289 people perished during a fire in a Pakistani textile factory complex. As is the case in many of these tragedies, workers were trapped behind locked doors and windows were barred. That same month, a fire at an India fireworks factory killed 34.

So what’s the deal with South Asia’s factories?

As Business Insider states:

Several factors combine to make death traps of factories across south Asia. In many instances, exits have been padlocked, basements used as store rooms for highly flammable raw materials and no fire escapes installed, while smoke alarms or sprinkler systems are unheard of.
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Adding to that is the fact that fire services in South Asia are not properly or comprehensively trained and resources are lacking. In addition, because of lax zoning requirements, factories are often erected and operated within crowded residential areas. In India, industrial zones and overcrowded slums combine to create a horrific fire hazard.

And let’s not forget corruption that is rampant among South Asian countries, an area where government inspectors are easily and often paid off.

There have been more than 600 factory fire deaths in Bangladesh over the last five years. The industry has been warned time and time again, but has taken no action to prevent future fires. As ABC News reports, the brands associated with the fatal fire include Faded Glory (Walmart), Sears clothing brands and a clothing company owned by Sean Combs, who is better known as rap mogul P. Diddy.

The Clean Clothes Campaign, an initiative dedicated to improving working conditions in the global garment industries, has called for immediate action from international brands.

“These brands have known for years that many of the factories they choose to work with are death traps,” said Ineke Zeldenrust from the Clean Clothes Campaign. “Their failure to take action amounts to criminal negligence.

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Though criminal negligence may be the worst charge against these brands, they also face severe reputational damage. But it begs the question — how many factory fires will it take to motivate regional governments to create a safer working environment in the region’s fabric and textile factories?

Note: This article has been edited to highlight that this is a regional problem not confined to India.