Research

Effective Leadership Practices in Catastrophe Risk Management

 

PI/Project Contacts

Advisory Board Chair:

  • Jay Fishman, CEO, The Travelers Companies, Inc.

Advisory Board:

  • Bank of America
  • IBM
  • Merck & Co. Inc.
  • Tom Ridge, U.S. Secretary of Homeland Security, 2003-05
  • Simpson Thacher & Bartlett LLP
  • Swiss Reinsurance Company
  • Travelers Companies, Inc.

Research Advisor:

  • Paul Slovic, President, Decision Research

Project Description:

Launched in 2010, the Travelers-Wharton Partnership for Research on Risk Management and Leadership is a research initiative in the areas of risk management and leadership. The project is a joint venture between the Travelers Companies, the Wharton Risk Management and Decision Processes Center and the Wharton Center for Leadership and Change Management.

The principle study, Effective Practices in Risk Management and Leadership Governance, explores effective practices in organizational leadership and governance. The central focus will be to identify leadership and governance practices that are particularly effective in detecting and preparing for exceptionally adverse events prior to their occurrence. This multi-year project will identify large U.S. companies or international corporations with a large operation in the United States that are considered to have well-developed leadership and successful governance practices for addressing issues of catastrophic risk. It will study the roles that their executives and directors play in building and sustaining those practices. The project’s outcomes will include both basic research analysis and practical policy guidelines for leading and governing large companies facing extreme hazards. The study is guided by an advisory panel familiar with the practices of company preparation for low-probability high-consequence events.

Catastrophic risks as defined by the Travelers-Wharton project on Effective Practices in Risk Management and Leadership Governance include both natural hazards and created threats, such as financial risks, disease pandemics, flawed governance, and disruptive technologies. The research project is intended to help identify and understand effective company governance and executive practices in the private sector for preparing for catastrophic risks and responding to large-scale disasters.

The study will:

  • Develop strategies to enable decision-makers to think strategically and plan for the long term
  • Create protocols for effective preparedness of company leadership
  • Fashion standards for enterprise risk management
  • Fashion standards for the role of the company’s chief risk officer
  • Identify steps for engaging the board of directors in catastrophic risk preparation
  • Draw out the implications for government policies and regulations of companies

Project Overview: 
Effective Corporate Leadership and Governance Practices in Catastrophic Risk Management

Recommended Reading: 

Leading the Company When Disaster Strikes, Knowledge@Wharton, May 20, 2014
To analyze ways companies are responding to disasters, Wharton brought together close to 100 leaders from S&P 500 companies to facilitate discussion on “Corporate Strategies for Managing Catastrophic Risks."

Overcoming Myopia -- Learning From the BP Oil Spill and Other Catastrophes
by Howard C. Kunreuther and Erwann O. Michel-Kerjan (2010) The Milken Institute Review, Fourth Quarter. pp 49-57. http://opim.wharton.upenn.edu/risk/library/J2010Milken_OvercomingMyopia.pdf.

The Collapse of Compassion
by Erwann Michel-Kerjan and Paul Slovic, Huffington Post, October 7, 2010.
 http://www.huffingtonpost.com/erwann-michelkerjan/pakistan-the-collapse-of-_b_751192.html