I came across a fascinating article recently by Andrew Healy and Neil Malhotra entitled “Myopic Voters and Natural Disaster Policy”. The authors reconciled local data from across the US on government spending on various aspects of disaster preparedness and disaster relief, with election results in each area. Their key finding was that politicians were rewarded, in electoral terms, for spending money on disaster relief; but not rewarded for spending money on disaster preparedness. This is even more striking as the research also estimates that $1 spent on disaster preparedness saves $15 of spending on disaster relief.
The authors also go on to discuss a variety of reasons why this, seemingly irrational, behaviour by voters may be observed; but the more interesting thing for me is the parallels with business continuity management. How often do we see this same “myopic” approach to managing risks at the organisational level? One suspects that, like the politicians, executives are not generally rewarded for investing in resilience. The question then is how can we mobilise directors and shareholders to address this imbalance? Any suggestions greatly appreciated!
