Apologies for the long gap since the last post. Apparently, there is a general opinion that blogging about ideas should not displace my real work, which involves processing 3-sentence emails.
Aside from not keeping up this blog, busy people like me become addicted to the flatteringly-named ‘executive summary’. In fact, I’d venture to say that you can define the rise towards leadership by the ability to take decisions based on a greater and greater abstraction (i.e., ignorance of the actual situation). Anyway, someone recently sent me a report from Insecurity Insight. They crunch data on the kidnapping and death of humanitarian workers. Kudos: most of their analysis seems like actual science. Meaning: it reads like a foreign language to me. I’m more at home in a world of authoritatively-delivered opinion dressed as fact.
Knowing I don’t read, the friend who sent me the article copied out the key conclusions. A surprise: their analysis questioned “risk transfer”. This term refers to a vitally important discussion, one we humanitarian organizations need to get right, and one which will require far greater data and analysis than currently available. In short, there is concern that the rising numbers of national staff victims in security incidents may indicate a risk transfer; that we agencies are disproportionately pulling expat staff out of harm’s way, leaving national staff to run programs in situations.
Risk transfer is far from my area of expertise, so allow me to rush forward with a few unsubstantiated opinions. First, this is sensitive stuff. The pressure to keep projects running and the pressure of insecurity upon those projects have never been greater. Second, it is uncomfortable for Western agencies to think of themselves as engaging in a strategy which passes risk from one party who does not wish to shoulder the risk to another party who takes it on. If you don’t recognize that arrangement in another guise, it’s called insurance. In the insurance biz, of course, the insured party pays a premium to the insurer to take on the burden. Insurers do so willingly and knowingly and to great profit. So we good Samaritans squirm at the prospect that the salaries we dispense, so vital to our staff and local partners, may equate to an involuntary premium to absorb risk; a deal they don’t feel empowered to challenge or refuse.
(Clever folk that we are, rationalization allows us to justify risk transfer: we do it for the beneficiaries (of course). Compared to national staff, the impact on programs of the death or kidnapping of an expat is more serious. Western agencies are forced to make greater changes. Perhaps programs will close or scale down across an entire region, and not just with the affected NGO. Or, an even more fishy driver of NGO decisions – funders may pull the plug. And that doesn’t even broach the increasingly likely threat of litigation back home. So it is clear, isn’t it, we need to protect expats in order to save the beneficiaries?).
As I said, murky waters. So you can well imagine the collective sigh of relief at Insecurity Insight’s bold-printed announcement that our guilty fretting over risk transfer may not be necessary at all. Their research announces that the phenomenon is questionable. Busy, I almost stopped reading there. Very glad I didn’t.
However, it is questionable whether this reflects a conscious decision to transfer risk from one category to another. Rather, this pattern more likely reflects an increasing reluctance to place international staff (who may be more exposed than local staff) in danger, as well as considerations regarding the cost and effectiveness of national staff who receive lower salaries and are assumed to have greater local acceptance.
Read it a few times. In the annals of reporting across the sector, that may be the top piece of sophistry I’ve ever spotted. Let me get this straight. Their analysis is that there is no conscious decision to transfer risk to national staff because that is a mere by-product of being reluctant to place expats in danger. Isn’t Insecurity Insight confusing the absence of intention with a get-out-of-jail-free card? Their report suggests a complete abdication of responsibility for the direct and predictable consequences of decisions. Let’s paraphrase: “It is questionable whether Biff’s driving reflects a conscious decision to run over baby prams. Rather, his accidents more likely reflect Biff’s increasing reluctance to drive at slow speed.”
It’s good to see that the pressures of running an NGO haven’t blocked your ability to channel PG Wodehouse.
With reinsurance, the insurer can issue policies with higher limits than would otherwise be allowed, thus being able to take on more risk because some of that risk is now transferred to the reinsurer. The reason for this is the number of insurers that have suffered significant losses and become financially impaired. Over the years there has been a tendency for reinsurance to become a science rather than an art: thus reinsurers have become much more reliant on actuarial models and on tight review of the companies they are willing to reinsure. They review their financials closely, examine the experience of the proposed business to be reinsured, review the underwriters that will write that business, review their rates, and much more. Almost all reinsurers now visit the insurance company and review underwriting and claim files and more.