When the risk exceeds the money

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When the risk exceeds the money

A few months ago we had a client who wanted to go to Rwanda, which, because of its recent, but nominally-ended civil war (a misnomer: It was actually particularly uncivil) is a very dangerous place. How dangerous? Well, we think it is worse than Mexico City or Bogotá but better than Beirut. It was, in fine, the kind of place about which prudent business travelers call us before going.

In operational terms there was no real problem in providing security: We had the appropriate people, plus, as it happened, the appropriate contacts on the ground. There was only one problem: We really couldn’t see any good reason why our client should put himself – and therefore our people – in that kind of danger. While it is not our option to make go/no go business decisions, it is our job to help assess risk, with risk, as ever, being the product of probability and cost. Put bluntly, we had to force the client to weigh the benefit of the trip, if it were successful, against the risk of going.

The trip was cancelled.

More recently, we were called and asked if we could provide some guidance to an associate who was going someplace that sounded, to our client, dangerous. As it happened, it turned out that we were once again talking about Rwanda. The difference here was that the new traveler was not only not our client, but that, even had he been our client, the money being paid to go on the trip was not enough to cover the cost of a security team, even if we made no profit whatsoever. We recommended several alternatives to bringing in a protective team.

The first possibility, of course, was not to go (or to send someone else). The second was to have the local government – for whom the work was being done – provide security. If the local government provided a low profile security driver and a competent security person, there was some hope that an adequate level of security might be achieved.

The third possibility – at least on the relatively short initial visit – was to arrange to at least have a reputable and pre-identified driver do the initial and final airport pickup and drop-off, and whatever travel between hotel and offices was necessary, with no touring in between: Either they were at the hotel, at a meeting, or in transit. In this scenario the traveler is trusting that probability would keep them safe. And that their life insurance would cover them there.

It is important to remember that there are some very dangerous places in the world, and that if you go to these places you are at risk. Sure, we can protect you, and give you very good protection indeed. But you pay a hefty price for this, and, frankly, sometimes the cost is simply not worth the risk.

Risk management is about managing risk, which means taking action to minimize either the likelihood or the consequence, transferring the risk (generally through insurance), or living with the risk. Doing things when there is both a high probability of failure and a high cost for failure should make you think very carefully about whether or not they should be done.

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