Far more efficient risk management could help to save lives
Very often, people think about risk management only when disasters have happened, either financially or physically, and have had serious repercussion on people’s livelihoods.
The Lehman Brothers minibonds saga in 2008 made people realise the risks involved in making investments in what had previously been regarded as safe products. The inadequacy of investor education, protection and the financial regulatory systems was also exposed.
Some lack of risk management can have tragic consequences. Following the Grenfell Tower blaze in London, it was revealed that an action group had warned that only a catastrophic fire would finally force the tower’s management to address fire precaution issues and the maintenance of fire-related systems. Sadly, it was a very prescient warning.
The building’s exterior cladding, which provided thermal insulation and smartened the building’s appearance, was of a material believed to have intensified the fire. Great attention is now being paid to the fire-risk and fire-protection qualities of cladding.
In Hong Kong, we were reminded of the need for comprehensive risk management with the collapse of a green rooftop at City University last year. In the wake of that incident, many educational institutions have had their green roofs inspected to ensure they are safe.
It was thought that risk management was a well-established concept in the financial sector to protect investors; yet, the Lehman Brothers collapse happened. With construction and renovation projects, we assume all the necessary statutory requirements, regulations and procedures have been observed; and then there is a tragedy like Grenfell Tower.
We must do a better job of learning the right lessons promptly so that risks can be identified early, solutions can be found and appropriate action is taken. We should not just undertake risk management after a disaster has happened; particularly when human lives are involved.
Tony Leung, Kwai Chung