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Lessons from an Olympic Champion

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DENVER—When RIMS keynote speaker Bonnie St. John was five years old her right leg was amputated below the knee because of a medical condition. For most people, it would have been a devastating disability, but St.John was not most people. Instead she became, of all things, a competitive skier. As a member of the 1984 U.S. Paralympic team, she was the first African-American to win an Olympic medal as a ski racer, taking home bronzes for slalom and giant slalom and a silver for overall performance. In effect, she said that made her the second fastest woman on one leg that year.

It was an impressive achievement to say the least and her thoughts on the experience were even featured on a Starbucks cup that read, “I was ahead in the slalom. But in the second run, everyone fell on a dangerous spot. I was beaten by a woman that got up faster than I did. I learned that people fall down, winners get up, and gold medal winners just get up faster.”

St. John said that, for her, a normal life wasn’t an option, but “normal is overrated.” Rather, she challenged risk managers in the audience to follow her example and aim higher in their careers. “Be you,” she said. “Be extraordinary.”

St. John expressed a lot of admiration for risk management’s ability to prevent disasters, thanking them for all the things that didn’t happen last year. But after reviewing a list of the past year’s risk events, understandably wondered if risk managers were just “incredible pessimists” given all the bad things they have to deal with. Upon further reflection, though, she said she came to the fitting conclusion that risk managers “practice a special brand of optimistic pessimism.” They know bad things will happen but they are also confident that they can take steps to prevent disaster, which seems to be as accurate a description of a risk manager’s mentality as any I’ve ever heard.

But as valuable as she thought risk managers were, St. John thought that there was still room for them to become world class by taking advantage of expertise of their peers, something she called a “community of champions.” By becoming more “helpable” and receptive to learning and growth opportunities, risk managers could achieve even greater success. “What’s possible for you is more than you can imagine.”

Coming from a one-legged ski champion, it was a lesson that was hard to ignore.

Risk Management Lessons from the Olympics

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This came to my inbox Friday and I found it entertaining and insightful. Written by Donald Mango, chief actuary at Guy Carpenter, this fun read explores the risk management lessons from the recent winter Olympics.

We were all thrilled with the spectacle of the just-completed 2010 Olympic Winter Games from Vancouver. Winter sports are known for their inherent high levels of riskiness, so it should not be too surprising that some valuable lessons related to “personal risk management behavior” can be drawn from the way the athletes make decisions and how the competitions are conducted and judged. As risk professionals, when we watch the action on the snowy mountains and icy rinks, we can get another view on the choices made in the taking of risk or in mitigating risk. Here are just a few lessons that offer additional insights:

  • Risk reward tradeoff in men’s figure skating. The most notable example being the quadruple jump. The new scoring system provides more points for a successful quadruple jump than, for example, a triple axel. The number of additional points, however, is marginal. Most skaters felt the additional reward did not match the increased risk of failing to execute the more difficult jump. Gold medalist Evan Lysacek opted not to do it, much to the chagrin of silver medalist Evgeni Plushenko, who did put in a quad. The lesson here: the scoring system drives behavior.
  • Peer pressure leading to excessive risk taking in freestyle ski moguls and downhill ski. In order to contend for a medal in moguls, skiers needed to balance high speeds, precise turns and spectacular jumps. One skier’s results could lead subsequent skiers to modify jump choices or speed based on what they perceived to be necessary to win a medal. We also saw this in the women’s downhill, where eventual gold medalist Lindsey Vonn’s impressive time had two knock-on effects. First, many of the skiers who followed her crashed in their effort to match her time. Then the final skier, Maria Riesch of Germany, a gold medal favorite, was so intimidated by the crashes that she skied tentatively to an eighth place finish. The lesson: peer behavior can lead to excessive risk taking.
  • Judging risk-based performance in freestyle ski moguls. Judges need to essentially quantify the qualitative. Judgment decisions are based on a combination of speed measurement (objective), turning quality (subjective), and aerials (subjective and objective).
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    Assessment of aerials is based on the execution of the chosen trick. Each trick has an assigned degree of difficulty, and the overall weighting among the three categories is set beforehand. This provides a good framework for making risk preference / appetite decisions. Choose a set of independent factors, measure what can be measured (speed) or adopt a scale. For scaled factors, use multiple assessments (judges) and hedge against outliers (average the scores of multiple judges). Also, regularly review the scoring to ensure appropriateness and get feedback.

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    The lesson: we CAN develop a scientific system for making decisions using expert judgment.

Sports provide us with benchmarks, analogues and evidence to illuminate the way the human mind deals with risk and reward. Applying this understanding to the rationale for companies’ risk decisions demonstrates that some actions may not be in the companies’ best interests. They may be driven by pressures to “perform” and to “follow the pack.

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” We were all thrilled with the spectacle of the just-completed 2010 Olympic Winter Games from Vancouver.

Risk reward tradeoff in men’s figure skating.  The most notable example being the quadruple jump.  The new scoring system provides more points for a successful quadruple jump than, for example, a triple axel. The number of additional points, however, is marginal.  Most skaters felt the additional reward did not match the increased risk of failing to execute the more difficult jump.  Gold medalist Evan Lysacek opted not to do it, much to the chagrin of silver medalist Evgeni Plushenko, who did put in a quad.  The lesson here: the scoring system drives behavior.
Peer pressure leading to excessive risk taking in freestyle ski moguls and downhill ski.     In order to contend for a medal in moguls, skiers needed to balance high speeds, precise turns and spectacular jumps.  One skier’s results could lead subsequent skiers to modify jump choices or speed based on what they perceived to be necessary to win a medal.  We also saw this in the women’s downhill, where eventual gold medalist Lindsey Vonn’s impressive time had two knock-on effects.  First, many of the skiers who followed her crashed in their effort to match her time.  Then the final skier, Maria Riesch of Germany, a gold medal favorite, was so intimidated by the crashes that she skied tentatively to an eighth place finish.  The lesson: peer behavior can lead to excessive risk taking.
Judging risk-based performance in freestyle ski moguls.  Judges need to essentially quantify the qualitative.  Judgment decisions are based on a combination of speed measurement (objective), turning quality (subjective), and aerials (subjective and objective).  Assessment of aerials is based on the execution of the chosen trick.  Each trick has an assigned degree of difficulty, and the overall weighting among the three categories is set beforehand.  This provides a good framework for making risk preference / appetite decisions.  Choose a set of independent factors, measure what can be measured (speed) or adopt a scale.  For scaled factors, use multiple assessments (judges) and hedge against outliers (average the scores of multiple judges).  Also, regularly review the scoring to ensure appropriateness and get feedback.  The lesson: we CAN develop a scientific system for making decisions using expert judgment.
Sports provide us with benchmarks, analogues and evidence to illuminate the way the human mind deals with risk and reward.  Applying this understanding to the rationale for companies’ risk decisions demonstrates that some actions may not be in the companies’ best interests.  They may be driven by pressures to “perform” and to “follow the pack.”

freestyle skiing

Can Rio Hold a Safe Olympics?

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This weekend, a fierce gun battle between two drug gangs in Rio de Janeiro’s “Monkey Hill” slum left some ten suspected gang members dead and entire neighborhoods fearing for their lives as the sound of automatic fire could be heard all day long. At one point, a police helicopter, loitering over the area to direct anti-gang police measures, was hit by gunfire, caught fire and crashed, killing two police on board and injuring several others.

The drug violence of Rio’s favelas is nothing new. But the helicopter shoot-down was shocking, just as it was to hear of such incredible violence in a city that just a month before had been tapped over contenders such as Chicago and Tokyo to host the 2016 Summer Olympics.

In light of the recent gun battle, Brazilian officials have sent thousands of extra police into the slum to crack down on the violence and lawlessness there, but clearly, they face an uphill struggle. Even though the Olympics are several years away, the level of the security problem in the city will surely cast as much of a shadow over the coming games as terrorism fears did over the 2004 Olympics in Athens. At the moment, the U.S. State Department notes that Rio is a fairly dangerous city, crimewise, and that all of Brazil has a crime rate that is quadruple that of the United States. The Overseas Security Advisory Council echoes the State Department’s assessment of things, noting that the “Government of Brazil (GoB) is locked in an intense struggle against drug gangs for control of large areas of the Rio de Janeiro metropolitan area.” After this weekend’s carnage, even that assessment seems to be putting things mildly.

Hopefully, Brazil can marshall the resources and the will needed to address the security problem in a permanent fashion, rather than temporarily suppressing it or displacing it elsewhere. The Olympics have a nasty habit of costing its host cities far more in the long run than they bring in, revenue-wise. After this weekend’s Monkey Hill bloodbath, it might be tempting to wonder if money spent on stadiums and athlete villages should be first spent on keeping the poor sections of town free of machinegun fire.