Tag Archives: Decision Making

Elephant Risk Management & Technology Innovations

With dwindling habitats and large appetites, Elephants are increasingly dangerous in countries like India. Elephants are increasingly entering cities, killing people and eating crops of coconuts, ginger and other valuables.  On December 29th, for example, they entered the Indian city of Bhubaneswar, attacking a honking car and injuring six people reports The Times of India.  This video of an Elephant rampage in Sri Lanka shows how hard they are to control.  This elephant plays with a minivan like it’s a toy.

[YouTube=http://www.youtube.com/watch?v=qnOkbVJNaYc]

If you’re a farmer, or just live in a city with a forest that contains wild Elephants, they represent a special kind of
Enterprise Risks to your business, not unlike the Monkey Marauders noted in a previous blog entry.

But in the case of Elephants, several noteworthy options are being tested for efficacy in thwarting the Elephant menace:

1) The man honking his horn was hoping to scare away the elephant, and that strategy backfired

2) Forest officials in Mochapallam brought two trained elephants to drive a wild herd of 13 elephants back to the forest.  They successfully persuaded 12 to follow, but one got away and chased officials and local citizens.

3) The officials in Mochapallam ultimately were successful in getting the remaining renegade Elephant to retreat to the forest by lighting firecrackers.

4) A Bengali inventor, Amunuddin Ahmed, invented an “Elephant Repellent“, that combines sirens, bulbs and wires connected to a battery, or solar power.

Each of these examples, is a real option – the investment, or partial investment, with an uncertain payoff.  In one case, there was not only no payoff – but the strategy backfired.

I’m continuously fascinated by the range of risks that need to be considered by different industries in different countries.  Clearly Elephant rampages are rare, but so are Enron scandals and both have terrible outcomes. Are you considering all the risks to your operations, even if they’re not as exotic as Elephants?  Do you understand your options, and what they’re worth to you?

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Monkey Risk Managers as Real Options

Langur Monkeys Fighting

Langur Monkeys Fighting

Did you ever think your risk management investments might include a Monkey Squad?  In Mysore (Mysuru), India, the local government funds a Monkey Squad, a Cow Squad, a Dog Squad, and even a “Special Gang” during mango season, according to this report on their website (page 39).

At first, I found this humorous, but the more I investigated it, it is actually a cross-cultural example of a special form of operational risk that is unique to locations with violent mammals.   In October, 2007, for example, the BBC reported that the deputy mayor of the Indian capital Delhi died after being attacked by a horde of wild monkeys.  In response, Delhi’s government hired a langur monkey trainer to frighten off other monkeys from boarding trains and hurting people.

It’s an unusual example of an organization purchasing a real option – a group of people (and Langurs) skilled in managing monkey menaces – to mitigate risk.  These particular governments felt it was worth hiring, in Mysore’s case, 5 people who dedicate their careers to anticipating and addressing monkey violence when needed.  Real Options is a new approach to managerial finance in which risk and uncertainty are considered alongside cost and value creation.  It allows a leader to make partial investments immediately, and allow uncertainty such as monkey attacks) to resolve itself before either exercizing an option, or letting it expire without action.

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