Top priority in an unpredictable age

Takeo Inokuchi Chairmen of Committee on Economic Statistics, Keidanren Chairman and CEO, Mitsui Sumitomo Insurance Co., Ltd.

Certainly, one of the effects of the September 11^th terrorist attacks in the United States, is that the risks surrounding business and society are now perceived to be huge and complicated. Even formerly, various events vividly underscored the need for an emphasis on proper crisis and risk management in running corporate enterprises. But the attacks have shown us that the conventional logic of following precedent practices merely because they worked in the past will no long hold any water.

Over the coming years, these huge and complicated risks are bound to become even more serious matters of management. Unfortunately, however, the Japanese generally tend to be unskilled at managing risks; in Japan, people take safety, like drinking water, for granted, and are typically averse to taking a close look even at risks clearly confronting them, on the grounds that thinking about ill contingencies may make them realities. In addition, efforts of solid risk management are apt to cause an increase in man-hours and otherwise run counter to the ends of greater simplicity and convenience as well as lower costs. It is also ironically true that, when risks are properly managed and problems have not surfaced, risk management itself is liable to appear wasteful.

It goes without saying that the most crucial prerequisites for rigorous in-house management of risks are firm resolve and forceful leadership at the top. First and foremost, corporate executives must acquire a fresh appreciation of the fact that the company is situated in an unstable environment posing various risks and that management of these risks is indispensable for the maximization of the company's long-term gain and assurance of its continual advancement.

Our ancestors had the sayings "sonae areba urei nashi" (providing is preventing) and "wazawai wo tenjite fuku to nasu" (turning bane into boon), and one cannot help but be impressed anew at how perfectly they capture the essence of risk management. I submit that all of us taking a hand in management must once again ponder their meaning - and the prospect of losing our future should we act along the lines of another, i.e.: "nodomoto sugireba atsusa wasureru" (the storm over and the danger forgotten).