Michael Useem, Howard Kunreuther, Erwann Michel-Kerjan

Leadership Dispatches

Chile's Extraordinary Comeback from Disaster

• Gebundenes Buch

Produktbeschreibung

Michael Useem is William and Jaclyn Egan Professor of Management at The Wharton School, where he is also Director of the Center for Leadership and Change Management. His previous books include The India Way, The Go Point, Leading Up, The Leadership Moment, and Boards that Lead.Howard Kunreuther is James G. Dinan Professor of Decision Sciences and Public Policy at The Wharton School. He is Co-Director of the Wharton Risk Management and Decision Processes Center, a Fellow of the American Association for the Advancement of Science, and Distinguished Fellow of the Society for Risk Analysis.Erwann Michel-Kerjan is Executive Director of the Wharton Risk Management and Decision Processes Center and Chair of the OECD Secretary-General Board on Financial Management of Catastrophes.

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Produktdetails

• Verlag: Stanford University Press
• Seitenzahl: 296
• Erscheinungstermin: 11. März 2015
• Englisch
• Abmessung: 232mm x 170mm x 21mm
• Gewicht: 535g
• ISBN-13: 9780804793872
• ISBN-10: 0804793875
• Artikelnr.: 41754434

Autorenporträt

Michael Useem is William and Jaclyn Egan Professor of Management at The Wharton School, where he is also Director of the Center for Leadership and Change Management. His previous books include The India Way, The Go Point, Leading Up, The Leadership Moment, and Boards that Lead. Howard Kunreuther is James G. Dinan Professor of Decision Sciences and Public Policy at The Wharton School. He is Co-Director of the Wharton Risk Management and Decision Processes Center, a Fellow of the American Association for the Advancement of Science, and Distinguished Fellow of the Society for Risk Analysis. Erwann Michel-Kerjan is Executive Director of the Wharton Risk Management and Decision Processes Center and Chair of the OECD Secretary-General Board on Financial Management of Catastrophes.

Inhaltsangabe

Contents and Abstracts
1Twelve Days Before Entering the Presidential Office
chapter abstract
Chile's great earthquake of 2010 was the sixth greatest earthquake ever
recorded. Chile's president-elect, Sebastián Piñera, decided to embrace two
orders of business, one well in hand from his campaign for the presidency,
the other forced by the natural calamity. He would pursue what had been
promised before the earthquake - but now also what had been required by the
earthquake. In formulating both a near-term plan and long-term strategy for
overcoming and then transcending the calamity, the new administration's
actions offer an instructive look at how those with greatest responsibility
for a country, company, or community can best attack the extraordinary
challenges of coming fully back from calamity and instituting more
safeguards against future disasters than had existed at the pre-catastrophe
moment.
2One of the Most Intense Events Ever Recorded
chapter abstract
When the 8.8-magnitude earthquake devastated Chile, world attention was
still riveted on recovery from the massive earthquake that had shattered
Haiti on January 12. That 7.0 magnitude event had flattened the capital,
Port-au-Prince. Then, just six weeks later, the far stronger event rocked
Chile for 100 seconds. The epicenter was just 65 miles off Concepción, the
country's third largest urban concentration, and 210 miles southwest of its
capital, Santiago. The Haitian event released energy the equivalent of 480
kilotons of TNT, enormous itself, but the Chilean quake released the
equivalent of 240 megatons, 500 times more energy. It was felt by 12
million inhabitants of the nation's 17 million. The earthquake was so
massive that it moved the country, and even the planet. Santiago shifted 10
inches to the west, Chile's coastline rose, its central valley sank, and
the Earth's axis tilted 3 inches.
3First Order of Business
chapter abstract
After focusing on emergency matters, the new administration set public
health as an immediate priority, and it reopened all public schools -
albeit some in improvised quarters - within six weeks of the disaster.
Chile's president said his government would use determination, speed, and
readiness to cut through bureaucratic cobwebs, and he set forward an
ambitious four-year plan whose goals would supersede what the country
already had in place before the moment of calamity. Even during the year of
the earthquake, Chile managed to grow its GDP by 5.7 percent, and the
following year by 5.8 percent, outperforming most of its neighbors who had
suffered no comparable disaster. Rather than soaring, unemployment
plummeted. Exports sagged momentarily but came back strongly, and the stock
market and credit ratings never sagged at all.
4Frameworks for Action
chapter abstract
Learning from the recovery of others has become more vital as more
countries and organizations have found themselves in the unwanted territory
of catastrophic events, whether stemming from natural or person-made
sources. Extreme events by their very definition exceed what a country's
leaders or institutions have come to expect or have had to face in the
past. For any head of state or organization, it is always better to learn
from others' experiences prior to suffering a disaster of one's own. After
noting the world's growing losses from natural catastrophes, this chapter
identifies a set of principles for examining leadership decisions in the
face of risk and uncertainty. It also proposes a related set of principles
for making strategic choices under conditions of risk and uncertainty.
5Presidential Leadership
chapter abstract
At the defining center of Chile's readiness and resilience was the
country's newly elected president, Sebastián Piñera, and the decisions that
he and his lieutenants would make in the days that followed. They took
advantage of the discretionary spectrum that they had suddenly been given
"We are committed 100-percent," the president pledged, "to replace within
four years what was destroyed," and "urgency" of action would be "key."
When the inauguration itself was rocked by a 6.9 magnitude aftershock, the
just installed president immediately warned the country of a tsunami,
cancelled a luncheon, flew to the earthquake region, and finally entered
the presidential palace as its new resident only after a long day devoted
to crisis leadership in the field. A day that was to have been one of
ceremony and celebration had instead been given to presidential action.
6Tiered Leadership
chapter abstract
As an extension of his own leadership style, the new president created a
take-action tier below him, recruiting two dozen lieutenants who were
versed in making tough and timely calls. A majority of his cabinet members
came as independents without party label but plenty of management
experience; two-thirds had served as business managers, entrepreneurs,
engineers or consultants. The president prioritized the immediate focus:
search and rescue, food and water, civil order and public services. For
long-term reconstruction, he set forth a detailed plan for his ministers to
be completed by time he left office on March 11, 2014. The president also
imposed overarching principles that would make for a more comprehensive but
also a more complex and costly comeback. Reconstruction, he instructed,
would protect the "dignity and freedom" and "social heritage" of the most
affected regions, and it would better secure the country against future
calamities.
7Financing Recovery
chapter abstract
Financing the comeback would prove an enormous challenge since the
earthquake came with a price tag of $30 billion, the equivalent of $2.7
trillion in the U.S. A cost of that magnitude had not been anticipated nor
were reserves available to cover it. Through deft management of the
country's budget, the finance minister drew on a portfolio of actions,
including temporary tax revenues, budget reallocations, and utilization of
a national copper fund. Markedly absent was significant new indebtedness,
in contrast to the ways the U.S. government has financed its most recent
disaster recoveries. Chile's international credit rating did not suffer,
unlike the downgrades that Standard and Poor's and Moody's had imposed on
Japan's after its 2011 earthquake and tsunami. Chile's financial management
of the disaster received high marks from a host of international watchdogs.
8Insurance Payouts for Recovery
chapter abstract
Fundamental to Chile's swift comeback was a separate but parallel financing
by private insurers backed by reinsurers (the insurers of insurers) outside
of Chile. Their market penetration and rapid payout provided a swift influx
of capital to stimulate recovery and push national growth. In the end, a
third of the cost of Chile's recovery was borne entirely by private
insurers, more than the fraction covered by private insurers in the U.S.
after Hurricane Sandy in 2012.
9Private Giving for Recovery
chapter abstract
A set of major companies, foreign governments, and international agencies
also stepped forward with significant in-kind or cash contributions. Though
estimated to be less than $1 billion in total value, and though relatively
modest against the $30 billion damage to the country, we find that these
outside sources provided important supplements to funds provided by public
agencies and private insurers in Chile.
10Execution and Expectations
chapter abstract
With the solid financial footing for the comeback, a take-charge attitude
cascaded through the administration's ranks, but it also came with an
unanticipated cost. With limited public experience in the cabinet, the
nation's leadership produced soaring hopes for near-term timetables that it
could not meet.
11Vulnerability and Readiness
chapter abstract
Chile faces exceptionally high risks of natural disasters, but it was also
far more ready than most countries to respond to such events according to
several studies comparing it with other nations. Though one of the world's
countries most exposed to calamities because of its perch along the
Pacific's ring of fire, Chile had also built a set of institutional
practices that facilitated recovery from disasters whatever the source.
Emphasizing effectiveness, execution, and fairness, those practices would
prove invaluable, and combined with the nation's take-charge leadership,
they facilitated the country's swift and comprehensive comeback from the
devastating earthquake of 2010. Both national leadership and institutional
practices proved important, and neither would have been sufficient without
the other.
12Civil Action
chapter abstract
The state typically takes first responsibility in crisis management and
recovery efforts, and Chile was no exception. President Piñera and his
cabinet mobilized swiftly, yet the government was not the only first
responder. Volunteers and non-profit organizations also stepped forward in
large numbers, initially providing temporary relief during the emergency
period, then engaging in reconstruction to aid the recovery effort. Often
at great expense to themselves, they complemented the state's actions,
doing what the latter could not. One private group, for instance, assumed
sole responsibility for temporary housing in one of Chile's most afflicted
regions, and another took complete charge of rebuilding public schools in
another region. When resources are stretched to the extreme in the wake of
a national catastrophe, public agencies and civil actors can fill in for
one another, furnishing more than either can provide alone.
13Long-Term Disaster Recovery
chapter abstract
A relatively short window of opportunity is available in the immediate wake
of a disaster for public leaders to devise plans for addressing short-run
needs. One way to achieve these objectives is specifying short-run
achievable goals which reflect intuitive rather than deliberative thinking.
President Piñera insistence on reopening all schools within six weeks was
one of the most visible cases in point. At the same time, given the
heightened public interest in better preparing for future disasters than
had been the case before Chile's earthquake, country leaders can also
specify measures that have long-term significance such as more effective
early warning systems and better construction standards. These actions may
require significant upfront costs but they promise to reduce fatalities and
damage when the next disaster strikes. This form of deliberative thinking
also characterized the actions of the president and his ministers in the
months after the earthquake.
14Rescuing 33 Miners
chapter abstract
An early application of what the nation's leaders had learned from the F27
event came just five months later. A cave-in had trapped 33 miners some
2,000 feet below the surface in northern Chile, attracting the world
media's attention for weeks this time. Sebastián Piñera and his cabinet
would be tested yet again, though now with the first months' learning from
the F27 experience under their belts. They were already steeped in
strategic thinking and deliberative decision making even though complete
recovery from the earthquake still had several years to go. Here we find
that the joint leadership of the president and minister of mines would make
the ultimate difference for the lost miners trapped for more than two
months. We witness many of the same leadership capacities that accounted
for the 2010 earthquake comeback, further underscoring the actions required
for taking charge whatever the disaster or crisis.
15Leadership Dispatches
chapter abstract
We identify the most enduring ideas and principles that have emerged from
the account that can prove useful in entirely different settings.
Conceptual thinking about risk and response is essential for those most
responsible for risk management in companies, communities, and countries.
Chile and the Piñera administration have furnished a compelling test and
illustration of what can really matter in the wake of a calamity. We
conclude with a set of leadership principles from their experience for
those who are facing large-scale hazards of all types and who seek to forge
far-reaching recoveries when extreme threats become a terrible reality.