US News and World Report had a recent feature “20 Companies that Cratered in 2010“.
Reading their article, I can only come up with four reasons why the 20 firms went bankrupt:
Fully 95%, 19 out of 20 of these bankruptcies are caused by business risks.
Meanwhile, risk managers in the insurance industry are off building risk management systems that assure that there is no more than a 1/200 chance of a loss large enough to cause a bankruptcy.
But Business Risk is not on the list of risks that are being considered in the Solvency II or Basel III regimes.
Fully 95% of these high profile US bankruptcies in 2010 were caused by business risks. Does that mean that we are building a system that assures that we are 99.5% safe from 5% of the risks?
Does this give risk managers a hint as to why top management may only want to devote a small amount of their attention to the management of those 5% risks?
Are top management spending their time paying attention to those pesky risks of Competition, Products and Resilience?