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Learn the key ideas of the book by Michael Useem , Howard Kunreuther

Mastering Catastrophic Risk

How to successfully tackle business issues

Mastering Catastrophic Risk addresses the issue of catastrophic risks that companies are increasingly faced with. Natural disasters, human errors and terrorist attacks are just a few examples of events that can have enormous consequences for an activity. Knowing the risks, preparing management and response plans, and knowing how to implement them in times of need are essential requirements for any business. We will discover how large companies have faced crisis that otherwise would have destroyed them, and we will learn how these experiences can help any company prepare for the worst. It's not about if it will happen, it's about when.

Mastering Catastrophic Risk
Read in 11 min.
Listen in 14 min.

Many useful tips to:

  • Understand how catastrophic events, such as earthquakes or terrorist attacks, can put a company in crisis.
  • Understand what strategies and approaches companies can adopt to predict, and when required, to manage these problems.
  • Hear the direct experiences of large companies that have faced catastrophic crises, and discover how their experiences can help other companies.

The author of the book:

Michael Useem is Professor of Management, Director of the Center for Leadership and Change Management, and Faculty Director for the McNulty Leadership Program at the Wharton School of the University of Pennsylvania. His courses include Masters in leadership and change, governance and decision-making. His books include The Leadership Moment, Investor Capitalism and The Leader's Checklist.

Howard Kunreuther is a professor of Decision Sciences at the Wharton School of the University of Pennsylvania, and co-director of the Wharton Risk Management and Decision Process Center. For years he has managed low probability / high impact events related to technological problems and natural disasters. His books include The Ostrich Paradox, Insurance and Behavioral Economics and Leadership Dispatches.


The catastrophic events represented in the acronym DISRUPT

In recent years, more and more companies have had to deal with catastrophic events, and consequently they are changing their approach to the risk of business interruptions.

There are six main factors that have brought risk management to the fore. These factors are often summarized by the acronym DISRUPT:


  • Interdependencies – a denser network of interdependence between companies and services, of which an interruption risks affecting the entire supply chain;
  • Short-term focus – the reduction of the timing of business cycles, which leads to a mindset that is more focused on the present;
  • Regulatory compliance – state risk prevention laws become increasingly specific and comprehensive;
  • Urban concentration – urbanization goes hand in hand with the growth of some companies, and this increases the risks associated with their activities;
  • Greater Probability of shocks – what appear to be minor risks tend to accumulate in the long run;
  • Pressure for Transparency – companies are increasingly subject to scrutiny by the media and the public, and therefore interruptions also tend to play an increasingly important role in their public image.

Responsibility for a company's readiness often falls on CEOs and managers , who are increasingly required to deal with risk planning and management.

If your organization has not yet faced a serious disruption or crisis, the question to ask is not whether it will happen, but when.

Catastrophes such as the terrorist attacks of 2001, Hurricane Katrina of 2005, the financial crisis of 2008-2009, and the earthquake in Japan of 2011 have led many companies to work more on predicting catastrophic risks, and to build more robust risk management programs, ready to be implemented in case of need.

Companies must be ready to imagine the unimaginable, plan response strategies, and prepare to face the worst.


The key ideas of "Mastering Catastrophic Risk"

The catastrophic events represented in the acronym DISRUPT
Entrepreneurial decisions to manage interruptions effectively
What companies affected by a crisis do
How companies are changing the way they approach risk
Take-home message

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