At first glance, it seems like an eerie coincidence. Three decades ago, a board game featuring the BP
Amazingly, BP seemed completely unprepared for the gusher in the Gulf. Its prevention, repair, and cleanup plans now seem woefully inadequate. Despite the obvious risks, the company didn't seem to take the real chance of disaster seriously.
BP's not the only one to succumb to this flaw. We often ignore or underestimate risks ourselves. Overconfidence and arrogance can kill investing returns or entire companies with equal ease. Smart investors plan for as many dire scenarios as possible -- and the very best companies usually do likewise.
Dealing with disasters
Airlines all have plans for when tragedy strikes. When Air France flight 447 disappeared last year, the airline swung into action immediately, using dedicated phone lines to dispense updates to relatives directly (in several languages), making trained counselors and doctors available, and updating its website's main page to dispense information and express sorrow instead of welcoming new business.
On 9/11, the headquarters of the stock market now known as Nasdaq OMX Group
Johnson & Johnson
Good preparation and responsiveness can minimize damage, and even enhance a company's image. In contrast, BP's frequent downplaying of the severity of the spill, and its CEO's occasionally regrettable comments, only made matters worse for the company.
Quiet success
Interestingly, we never hear about many of the companies that deal best with risks, because they successfully prevent disasters from ever happening. Amazon.com
Catastrophe can't always be stopped
Company management can't put its collective head in the sand when inevitable calamities strike. It's hard to imagine that the big brains at companies such as Citigroup
When you study a company, look for signs that it's facing its risks responsibly, and that it's ready to deal with disaster. A board game where you're trying to avoid oil spills is one thing, but in the real world, real lives -- and dollars -- are at stake. Great companies are both responsible and responsive.
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