Managing Risk in Extreme Environments, by Duncan Martin – Not a Book Review

Managing Risk in Extreme Environments: Front-Line Business Lessons for Corporates and Financial Institutions” has been on the bookshelves in our office since it was published in 2008 but, for some reason, I have only just got around to looking through it.  Given that

  • The book is 12 years old, and
  • I have not read it thoroughly;

This is definitely not a book review (there are a number of proper reviews on the Amazon website).  However, reflecting on some of the content of the book with the benefit of hindsight, I felt compelled to put pen to paper (so to speak).

The first point of interest is the delicious irony of the book being written by a senior credit risk manager at RBS.  Even as the book was published, catastrophic problems at RBS were being ruthlessly exposed by the credit crunch.  Over the course of 2008, the bank lost 87% of its value and ended up being bailed out by UK taxpayers.  Whilst not suggesting for a moment that the author bears any responsibility for this outcome, it would appear that RBS’s overall approach to credit risk management was not that good.

The second observation is around quotations from two members of the London Fire Brigade (LFB), talking about responding to the 7 July bombings of 2005 in Chapter 3.  A Crew Manager on the ground at the Aldgate explosion stated that “…our interaction with other agencies was spot on, it was the slickest rescue operation I’d ever seen.”  Meanwhile, LFB’s Head of Strategic Risk Management is quoted as saying “We plan for much worse events than 7/7.  That was just like training.”  Reflecting on these comments with the knowledge of what emerged in Phase One of the Grenfell Inquiry, one wonders if LFB were somewhat overconfident in their ability to manage truly complex incidents.

Finally, I was very struck by the discussion of pandemic planning in Chapter 1.  The then Head of Emergency Preparedness for the UK National Health Service explains:

The worst-case scenario…would infect 24 to 30 million people and leave close to 1 million dead.  We might consider draconian measures such as closing schools and sealing borders.

Obviously this did not come to pass in the 2009 ‘flu pandemic: is that one of the reasons why the UK was so poorly prepared for Covid-19?

Underlying these three observations is a common theme.  Based on:

  • RBS’s success at managing credit risk in the benign environment of the mid 2000s;
  • LFB’s success in responding to 7/7; and
  • The UK Government’s success in dealing with the 2009 ‘flu pandemic

Each of these organisations appears to have inferred a greater ability to deal with more complex and disruptive challenges than was truly justified.  As we recover from the nightmare of Covid-19, organisations must carefully guard against the tendency to assume that if they have survived this then they can survive anything.  Covid presents a significant but very specific challenge: surviving it does not, in itself, guarantee that an organisation will deal successfully with the disruptions of the future.

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