Wharton professors' book explains how to 'learn from catastrophes'

In the wake of the disaster in Haiti, academic leaders are contemplating preventative and responsive measures for dealing with catastrophes.

Two such academics are Wharton professors Mike Useem and Howard Kunreuther, who released a book about the subject in November.

Following the meeting of the World Economic Forum’s Global Agenda Council on Mitigation of Natural Disasters last year, Useem and Kunreuther decided to put together Learning from Catastrophes — a book they hoped would address the many issues surrounding natural disasters.

According to Useem, it occurred to him and Kunreuther that they had a “brain trust of really smart people in the room who knew about hurricanes, floods, other pandemics and systemic financial risk.”

“All the intelligence and experience in the room was only as good as the vehicle to get it to people,” Useem added. “Hence, the book.”

Geared towards the World Economic Forum recently held in Davos, Switzerland, the book consists of fifteen chapters. They deal with a wide variety of topics ranging from risk management to financial crisis and malignancy, and they are each written by a member of a different Global Agenda Council.

According to Kunreuther, these varied topics are unified by seven guiding principles outlined early in the work.

The main topics the book tries to address, he said, are how to assess risks and develop appropriate risk management strategies for low-probability but high-consequence events.

“People think very myopically,” he said, referring to the “not in my term of office” analogy that he uses to describe this way of thinking.

“It’s about getting people to think long term rather than worrying about the short run.”

The common theme of the methods described in the book, according to Useem, is an underlying belief in the optimism of human reasoning and the power of leadership to make a difference.

“As the authors speak, they’re doing it in a fashion intended to influence people in business and politics, who with these ideas can prevent what we’ve seen in such devastating fashion in Haiti from happening if an earthquake of that scale hits again,” Useem said.

In his own chapter, he explores the collapse of AIG, focusing on the lack of “active listening” and governance failures that led to its demise.

Useem said he hopes that having such examples in mind of the catastrophic failures brought on in the absence of active listening will help people stay vigilant and better prepare for catastrophes.

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