Poland’s shocking loss of life, leadership, and intellectual capital in a single catastrophic event is an astounding blow to the country and the world. The airplane crash on 10 April 2010 over Smolensk, Russia, in poor weather killed 96 people, 88 of whom were part of the Polish state delegation including President Lech Kaczyinski; the Army, Navy, and Air Force chiefs of staff; the head of the National Security Office; the central bank governor; as well as lawmakers, aides, and the head of Poland’s Olympic Committee, Piotr Nurowski.
Poland as a country will survive this leadership crisis, its democratic processes intact and its markets stable. However, this event has implications for the private sector and risk professionals in particular. Although a national government has been impacted rather than a private sector entity, those in the security and risk industry would do well to ask themselves: "If a similar event happened to my firm, would we survive?"
As risk professionals know all too well, tragedies – realized risk – must be teachable moments, be they the sudden crash of an airplane carrying senior leaders or a siege-style terrorist attack against luxury hotels. With no warning, an event listed deep in the index of crisis management plans and dismissed as “low-probability, high-impact” becomes certain and devastating.
While it is too soon to question the decisions of those who placed such a convergence of brain trust and experience on a single airplane, it can be noted that the twin issues of concentrating staff for travel purposes along with crisis management planning for the loss of executive life or a significant loss of staff from travel accidents are often overlooked in the contingency generating process, given the relative safety of air travel and the need for staff to travel from Shanghai to Lisbon or New York to Lima as quickly and conveniently as possible. However, if eight executives of a firm’s ten-person management board were on a flight that crashed, would that firm survive the inevitable loss of confidence that would necessarily follow? At what price?
Regardless of the next tier of talent and their readiness to assume senior positions, such an event would speak volumes to shareholders about a firm’s ability to plan for succession, guard those crucial to the vitality of the company, and ensure continuity in the face of realized risk. It is also not only an issue for senior management. In today’s economy, where many firms are chasing smaller profits, what would happen to your firm’s ability to compete if the majority of your sales team, en route to a convention in Bangkok, suffered a similar accident? This is a teachable moment for management and staff about the need to mitigate travel concentration risk and ensure that large groups of staff or board members travel separately so if tragedy strikes, the firm is not decapitated.
Travel concentration risk, or managing the risk of staff traveling together in significant numbers on a single mode of transportation, is one of the most difficult risks to mitigate for a number of reasons. First, the relative safety and convenience of air travel makes the small possibility of accidents fairly easy to dismiss. Two, the globalization of business travel means that staff may need to be in places where there is one flight in or out per day, if not fewer. Although markets are opening up for a number of industries across Africa, Central Asia, and parts of the Middle East, airlines have been slow to meet growing demand. Three, management rightly sees time with colleagues in the air, on a coach, or in a car as time to strategize for the next client meeting or catch up with staff. Finally, staggering staff travel to avoid travel concentration risk can mean additional hotel rooms, connecting flights, and more opportunities for delays or longer drives—all of which cost time and money. In the face of these considerations, the current practice is to have 30 staff members board a single inexpensive, direct flight from London to St. Petersburg, while risk professionals try not to think of the implications.