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The 2007 Wharton Economic Summit ::
Panels
| Interdependent Security in an Uncertain World |
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Sponsor: Sponsored by the Wharton Risk Management Center Moderator: Howard Kunreuther, Cecilia Yen Koo Professor; Professor of Decision Sciences and Business and Public Policy; Co-Director, Risk Management and Decision Processes Center Moderator: Robert Meyer, Gayfryd Steinberg Professor; Professor of Marketing; Chairperson, Marketing Department; Co-Director, Risk Management and Decision Processes Center Panelists: Sean M. Cleary, Stephen E. Flynn, Geoffrey Heal |
| Thursday, April 12 - 3:00 p.m.-4:15 p.m. :: Full Summit Schedule |
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What are the consequences of failing to invest in protection due to interdependencies? Consider the possible bankruptcy of a firm due to a catastrophic loss to one of its plants or divisions. An example would be a Bhopal-like accident to a chemical plant where the losses are so large that they cause bankruptcy of the entire operation. Recently, Arthur Andersen worldwide was sent into bankruptcy by the actions of its Houston branch. Similarly, several years ago, Barings was likewise destroyed by the actions of a single trader in its Singapore division. These failures resulted from a breakdown in an interdependent security (IDS) setting, where each individual or organization must decide independently whether to adopt protective strategies. Such strategies can reduce the risk of a direct loss, but they can not protect against the damage that can be caused by others who do not adopt similar measures. These protective strategies can be direct risk-reducing measures as well as information-gathering and preparedness strategies. Examples of IDS situations are whether or not to invest in protective measures against terrorism, natural disasters or diseases; whether a plant or division in a firm wants to invest in measures to reduce the risk of a catastrophe; and weak links in the supply chain or power grid causing massive failures to the larger system. The economic incentive of any decision-maker to invest in protective actions depends on whether it expects others to follow suit. This panel of experts will explore how this dynamic plays out in the marketplace and discuss the ramifications of failing to act within an IDS setting. |
| Panelists |
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:: Sean M. Cleary
World Economic ForumSeán Cleary is chairman of Strategic Concepts (Pty) Ltd, managing director of the Centre for Advanced Governance, chairman of Atlantic Holdings (Pty) Ltd, vice chairman of Meridian Worldwide LLC, a member of the Advisory Board of Abraaj Capital Limited and a director of companies. He served in the South African Navy on the staff of the Commander Maritime Defence before commencing a diplomatic career in the Middle East, USA and Namibia. As chief director in Namibia in the mid-1980s, he initiated negotiations between all political parties, the release of political prisoners and the adoption of a Bill of Rights, paving the way for independence. He is a member of the faculty of the Parmenides Foundation and lectures on global corporate strategy at the University of the Witwatersrand, the Graduate Institute of Management and Technology, Henley Management College, the Gordon Institute of Business Science of the University of Pretoria, and the International Centre for Management Development. He also lectures on conflict resolution, the challenges of globalization and development economics at a number of US and European universities and institutes. Mr. Cleary is a lecturer on the National Security Management Course at the South African Defence Staff College, a research associate of the South African Institute of International Affairs, a fellow of the World Economic Forum and strategic adviser to the chairman, a member of the WEF's African Task Force, a trustee of the South African Foundation for Conciliation, an EXCO member of the NEPAD (New Programme for Africa's Development) Business Steering Group and senior adviser to the Arab Business Council. He was a member of the facilitating and preparatory committees of the South African Peace Accord and chairman of the working group on the Code of Conduct for Political Parties and Organizations, and served on national advisory committees in Namibia. He is a recipient of academic and public service awards and has been published in South African, German, Portuguese and U.S. journals. Mr. Cleary studied social sciences and law at the University of South Africa, the University of Cape Town and Pahlavi University in Iran, and holds an MBA from Henley Management College at Brunel University in the United Kingdom. |
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:: Stephen E. Flynn
Jeane J. Kirkpatrick Senior Fellow for National Security StudiesCouncil on Foreign Relations |
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:: Geoffrey Heal , WG'87
Professor of Finance and EconomicsColumbia Business School |
