In a novel called Ninety-Three by Victor Hugo (best known for Les Misérables and Notre Dame de Paris), he relates a story of great courage borne out of negligent failure.
The story is set in 1793 – the ‘year of the Terror’ in France – during which a monarchist insurrection led by the Marquis de Lantenac was attempting to open the door for an invasion by England. De Lantenac was a formidable character smuggled into the country on a boat from England. Whilst commanding a ship called the Claymore, a loose cannon was being tossed around the deck – damaging the ship and endangering the lives of all on board. At this point, a young ensign risks his life to secure the cannon and save the ship. As a result of his bravery, de Lantenac acknowledges his actions and gives the sailor the highest award… following which he has him executed!!! The point being, that despite the young man’s bravery, it was his responsibility to have ensured the cannon was secure in the first place and so he had caused the situation that prompted his heroism.
We are now in the throes of a more modern ‘year of terror’ and perhaps there are some interesting parallels… We have a financial crisis that has been caused by a negligent ignorance of the need for proper risk assessment and of a failure to apply proper restraint against the actions and inaction that can cause danger and damage.
A range of individuals and organisations (companies and Governments) are – like the ensign – guilty of a failure of duty and so endangered the economy that is our ship. Some of these people are now claiming to be heroes in saving us from sinking! However, unlike the consequences for the ensign, there is – as yet – no sign that the original failure to identify and control the risks will now be punished! Proper Board and Governmental ‘governance’ is essential and whilst I accept the phrase ‘if you immunise yourself against risk, you immunise yourself against reward’ this must be put in the context of identifying what the risk is, what is understood by those it could affect, knowing what is acceptable and ensuring that it is being managed and controlled. ‘Independent’ non Executive Directors (NEDs) should act as a ‘check and balance’ for Boards and management. However, if they feel that they do not have the authority to challenge and/or are fearful of being displaced for voicing concerns, then their value will be relegated to being a ‘bum on a seat’! However, used properly, NEDs can be a ‘fresh pair of eyes’ that can identify new opportunities and options as well as act as a ‘voice of reason’.
On a lighter note, the causes of the Credit Crisis are quite well explained by Messr’s Bird and Fortune in a clip on YouTube!
