Risk management recognizes that you need a “Plan B.” You can’t eliminate risk. With a good “Plan A” you can do your best to prevent something bad from happening. But not always.
A good Plan B mitigates the consequences when plan A fails. Plan B prepares for the inevitable, creating resilience to deal with the shock of a negative event.
This abstract concept was made very real to me this week. I was a passenger in a car that collided with a large deer on a remote section of a freeway. It was late Sunday night. The weather was good, the four lane highway was clear with an average amount of traffic. Suddenly, we saw a white flash as a deer jumped in front of our vehicle. There was no time for reaction. The crumpling of the hood seemed to happen in slow motion compared to the split-second between the time we saw the flash and felt the thud of the collision.
My consciousness of what actually happened lagged behind the events. I had no inkling that the collision had written off both the car and the deer in an instant. My colleague and I were unhurt. When we got out of the car and surveyed the damage, we felt lucky to have emerged unscathed.
Deer-car collisions are not unusual. Road safety experts have created a remarkable, integrated system for mitigating the consequences such crashes as part of their road safety strategies. What followed our collision was a demonstration of how the system worked with marvellous effectiveness and efficiency to keep us from suffering further consequences.
- The car absorbed the crash. It even determined that it was not necessary to inflate the airbags.
- The vehicle had an OnStar emergency response system and we had cell phones. Calls to 911 are free and the phone is programmed to stay in 911 mode until the phone is manually powered down.
- Highway location markers made it easy for us to tell the 911 operator our exact location.
- The highway was designed to give the car enough room to stop; there were no secondary crash objects to worry about.
- Police and a tow truck arrived at the scene quickly. The officer helped us determine the best towing option. We dismissed one truck in favour of another that suited our purposes better (and was less expensive).
- As it was late at night and our location remote, the police officer took us and our luggage to our hotel in Ottawa.
- Finally, insurance shared this risk. It reduced the financial consequences of losing our vehicle and paid for a rental car.
This is a remarkably plan B system. Imagine the consequences if any one element of this system failed. Yes, we were inconvenienced but the inconvenience was minor. We could have suffered personal injury from the crash. We could have suffered hypothermia if the we were unable to contact the police–it was very cold. Without insurance, the economic loss would have been quite significant, etc.
The risk management perspective on this looks at the consequences from the injured party’s perspective. Creating a system that supports the injured party and allows them to be resilient when they “suffer the slings and arrows of outrageous fortune” is a real challenge. This example illustrates how much of a challenge. Just consider how many different regulatory jurisdictions are involved. Risk management provides the methodology and tools for addressing these kinds of challenges.