The Macro and the Micro of the Perfect Storm in Enterprise Risk Management

[vc_row][vc_column][vc_column_text]What does a perfect storm make you think of – natural catastrophes, perhaps, like the one portrayed in the film “The Perfect Storm”, the risks confronting the Korean economy, or simply a situation you would rather avoid in the interests of business continuity?[/vc_column_text][vc_single_image image=”5021″ img_size=”full” alignment=”center” image_hovers=”false” lazy_loading=”true”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Originally coined in connection with the 1991 storm that struck the North American Atlantic seaboard (and awarded first prize by Lake Superior State University in its 2007 list of overused words), a perfect storm has come to mean “a rare combination of events or circumstances creating an unusually bad situation”.

But would it surprise you to know that all the examples above have a bearing on enterprise risk management?

Surviving a storm at sea means having the right instruments to know what’s going on and deduce from that what action to take. In the film, “The Perfect Storm”, the crew of the fishing boat Andrea Gail underestimated the force of a storm, ignored warnings, and lost the boat’s radio antenna, a perfect storm of inadequate risk management.

Risk management isn’t just about having good instruments, either, but also about planning courses of action and navigating well before situations become difficult.

South Korea’s population of 50 million people is far larger than any commercial company. However, the South Korean economy is largely dependent on a few large, family owned (or family dominated) business conglomerates, the Chaebols.

Samsung, LG and Hyundai are examples. As the country faces a perfect storm of slow growth, increasing unemployment, and a fast-aging population, a perfect storm, these circumstances may directly affect the Chaebols and their risk management.

The South Korean economy and the Andrea Gail are at opposite ends of the scale in terms of size, but they are both reminders that whether at a macro or micro level, good enterprise risk management is crucial to long term success or even simply to survival.[/vc_column_text][/vc_column][/vc_row]