Akzonobel a magazine 6 internet tcm19 50546 by AkzoNobel

Helping our customers replace environmentally risky NPEs before they have to

Landmark sustainability agreement We understand the importance of wood stewardship and the risk of not looking after our natural resources. Which is why we recently signed a landmark agreement with the Forest Stewardship Council. It means AkzoNobel is the FSC’s first global partner outside of products that are FSC certified. Both parties are cooperating to increase understanding of the organization’s work in promoting responsible forest management, and boost awareness of FSC certification being a label for wood and paper from wellmanaged forests.

Introducing Berol® 609, an alcohol ethoxylate blend designed by AkzoNobel Surface Chemistry to provide a safe, readily biodegradable alternative to nonylphenol ethoxylates (NPEs) typically used in industrial cleaners and detergents – while performing just as effectively. And Berol® 609 exceeds the degreasing power of leading NPE replacements.

The agreement will see our woodcare brands – Cuprinol, Pinotex, Xyladecor, CetaBever, Sparlack, Flood and Sadolin – work closely with the FSC to promote forest stewardship and drive demand for responsible products.

NPEs are targeted for phase-out by government agencies and the industrial cleaning industry alike. With Berol® 609, you might say we’re keeping our customers ahead of their time.

A global partnership fund is also being set up with the FSC to support agreed social policy projects and educate customers about the FSC and its objectives. Developing partnerships such as the one we have agreed with the FSC is a clear illustration of our willingness to achieve transformational change, take positive action and help to protect the source of wood for future generations.

Learn more at akzonobel.com/sc.

WELCOME Professor Glynis Breakwell Welcome to the latest issue of A Magazine, which focuses on risk in its many and varied guises. I would argue that risk is now the hottest topic for all of us. As individuals, we find ourselves surrounded by risks from so many sources and of so many types that we barely know where to turn. In organizations, if we misunderstand our risk profile (whether technical, financial or personnel) we can expect to be seriously threatened or compromised, if not doomed. In thinking about risk, it is often useful to consider whether it is something we chose or is something thatâ&#x20AC;&#x2122;s imposed upon us. The way we think about risk in these two contexts is quite different. It is good to see that the features in this issue have as an underlying theme this distinction and how it plays out in decisions about job choice, investment, innovation and sustainability. The risks that we face often come about because the world is changing. So the innovation which drives our success and prosperity comes with attached risks. The interview with Steven Pemberton (see page 28) about the risks involved in using the internet and the increasing reliance on digital data speaks intriguingly to this problem. If risk is hot, then risk management is the burning issue. The centrality of effective risk management processes to good leadership is now understood. However, the range of skills needed to manage risk is vast. The key factor that makes it so difficult is that risk is not only determined by objective or material factors, it is a product of subjective and social factors. The risk manager has to take into account how people will perceive and react to the hazard in planning a response. Moreover, it is necessary to consider not just those immediately involved, but also the broader multiplier effects it has upon the international societal and economic fabric within which the organization resides. You have only to look at the implications for BP of the Deepwater Horizon drilling rig explosion in the Gulf of Mexico in April (see page 52) to know that this is true. Professor Glynis Breakwell is Vice Chancellor of the University of Bath in England and author of The Psychology of Risk, published by Cambridge University Press, 2007

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The A team Chief Editor David Lichtneker AkzoNobel Design and Art Direction Pepe Vargas AkzoNobel Design Consultancy Angus Hyland Pentagram Corporate Director Communications John McLaren AkzoNobel Head of Corporate Branding Berry Oonk AkzoNobel Traffic Manager Sarah Roozendaal AkzoNobel Publisher Akzo Nobel N.V. The Netherlands Editorial address A Magazine AkzoNobel Corporate Communications PO Box 75730 1070 AS Amsterdam The Netherlands Printing Tesink, Zutphen The Netherlands Additional imagery Allon Wechsler, David Lichtneker, Liam Bailey, Getty Images, NBCU Photo Bank Awards Art Directors Club Bronze Cube (2009) European Excellence Award (2009) SABRE Awards Certificate of Excellence (2009)

Cover image: Contrary to popular belief, sharks are more at risk from humans than we are from them. More than 100 million sharks are deliberately killed annually, while less than 25 people die each year from shark attacks. Out of more than 360 shark species, only four have been involved in a significant number of fatal unprovoked attacks on humans. A personâ&#x20AC;&#x2122;s chance of getting killed by a shark is less than 1 in 264.1 million. Thirty percent of shark species are threatened or near-threatened with extinction. Photography: Chris Fallows/apexpredators.com

Opinions in this magazine do not necessarily represent those of AkzoNobel, and AkzoNobel accepts no responsibility for these opinions. While the information in this publication is intended to be accurate, no representation of accuracy or completeness is made.

Hurricane in the Drake Passage, Southern Ocean. Photography: Andreas Kadi

Contents 6 Trucking hell An interview with ice road trucker and reality TV star Alex Debogorski. 12 Eyes on the prize Formula One racing superstar Lewis Hamilton talks about the risks of his profession. 18 Making your mind up Professor and author Glynis Breakwell looks at the biases that affect how people make decisions about risk. 20 War and peace How far has safety come since the days when Alfred Nobel was experimenting with explosives? 28 The risks of using the internet As the internet becomes ever more important, are the inherent dangers also increasing? 34 Get smart Taking chances isn’t always advisable, but in R&D, the risk of not taking enough risks can be disastrous. 36 Decide and conquer What would happen if six risk managers sat down to play a game of Risk? 40 Don’t let our heritage turn sour A report on the efforts being made to protect some of the world’s oldest and most treasured buildings and structures. 48 The eye of the storm An insight into the challenges of doing business in Pakistan. 52 The heat is on We look at the role our coatings can play in the hazardous oil and gas industries. 56 A thirst for answers As mankind continues to put severe demands on natural resources, what kind of threat do we pose to the planet? 60 Crimestoppers They’d been taken for a ride by an ex-employee. He was a real tough palooka. It was time to nail the schmuck. That’s when they called me.

trucking

hell WORDS David Lichtneker

Every job, no matter what it is, involves some sort of potential risk. Only a few careers, however, take this level of risk to the extreme. Buckle up as we hurtle into the pulse-pounding, nerve-shredding world of the ice road trucker.

Photography: ÂŠ2007 AETM/John Marian

ong haul trucking may seem fairly straightforward. seasons to date and is now destined for the big screen, with Some might even call it monotonous. But when the John Moore set to direct. road beneath you is made of ice, getting bored could Viewers first met devout Christian Debogorski during seaget you killed. sons one and two, when he was on fragile but familiar ground There aren’t many jobs that involve dodging avalanches, in Canada’s Northwest Territories, delivering supplies and being blinded by whiteouts and working in temperatures as hauling equipment to the diamond mines. The only way in by low as minus 60° Celsius (-76º F), but when you’re an ice road truck? Across hundreds of miles of flat, frozen lake. As if that trucker, it goes with the territory. wasn’t challenging enough, seasons three and four raised the Regarded as one of the most hazardous jobs in the world, stakes. He took on Alaska’s dreaded Dalton Highway. During a guiding 18-wheelers over the frozen lakes, rivers and road- 12-week weather window, the 500-mile (805km) long road of ways of North America’s furthermost reaches is fraught with ice that becomes the Dalton provides a lifeline to the Prudhoe danger. But for three months of the year, the freezing tem- Bay oil fields, somewhat appropriately located near Deadperatures around the Arctic Circle open up an extra supply horse. Boasting the 4,000 feet (1,220 meters) high Attigan route for the region’s mines, oil installations and remote settle- Pass and the white knuckle ride known as the Rollercoaster, ments. For this brief window of time, massive loads can be running this gauntlet of terror takes a special breed of trucker. transported along the treacherous temporary roadways, with They say it’s not if you wreck, but when you wreck. The fact just a few meters of ice separating drivers from the potentially that there’s “a dead man for every mile” being sure to send a lethal depths. chill down the spine, even if the weather doesn’t. It’s an occupation which requires nerves of steel – the unholy So how do you survive the Dalton and what kind of risks sound of the ice cracking rarely goes away – but the potential are involved when tackling such a notorious and deadly stretch dangers aren’t a deterrent to the thousands of drivers who of road? “The most important thing about the Dalton is that risk their lives every year. Some may well be adrenaline junk- you have to concentrate,” says Debogorski, who first starties, unable to resist the extreme nature of the job. The rest are ed driving trucks back in 1972. “You have to maintain a high undoubtedly attracted by the money (ice road trucking pays degree of concentration because of the curves, the ditches, well). Very well if you get the right loads and manage to survive the hills, the truck traffic and the different terrain. Sometimes, the season. No surprise then that it has become known as the during the journey from Fairbanks to Prudhoe Bay, you can dash for the cash. go through four different weather patterns. You can leave in That now legendary phrase was coined by 30-year ice temperatures around 10° Celsius (50º F) and arrive in temperaroad veteran and reality TV star Alex Debogorski. A native of tures of 40 below. The journey time can also vary, depending Yellowknife – one of Canada’s coldest cities – Debogorski has on the conditions and the company you’re driving for, because become one of the best-loved characters on top-rated History some of them prefer you to drive slower, usually between 39 Channel series Ice Road Truckers, which has racked up four and 42 miles an hour.”

Top: Avalanches happen regularly on the Dalton, especially around Attigan Pass. They say there’s a dead man for every mile. Photography: ©2009 AETM/John Burcham Above: As a 30-year ice road veteran, Alex Debgorski has learned the importance of patience and respecting the conditions. Photography: ©2010 AETM/Rick Gershon Left: It may look spectacular, but the Dalton Highway in Alaska is a treacherous supply route. Photography: ©2009 AETM/John Burcham

A round-trip along the Dalton can take anything up to 18 hours, so fatigue inevitably becomes a factor, even though there are strict rules governing driving time and rest periods and a log has to be filled in after every trip. “Between being tired and being mesmerized by the snow, you do find yourself in situations where you can’t see the road,” he continues. “You’re only going 15 or 20 mph for perhaps eight hours straight and a lot of guys just can’t hack going at those speeds for so long. Then you go into a storm and it’s blowing, and you’re not asleep, but with all that snow and the fact you’ve been driving so slowly for so long, you end up in a daze. The white just keeps coming. You’ll be going along and all of a sudden you realize that you can’t see anything. You haven’t been able to see anything for the last five minutes in fact and it didn’t bother you. But now it’s bothering you. You were fine until you started thinking about it.” Debogorski is no stranger to danger. During his youth, he admits that he engaged in foolish behavior, including driving far too fast and, on one fateful day, colliding with a train. He lived to tell the tale, however, and now – as a father of 11 with ten grandchildren – he’s so familiar with the perils and risks involved in ice road trucking that he’s learned to just get on with it. “A truck driver goes out, picks up his load, secures it, deals with all the challenges of driving and everything that happens on the road, gets the load delivered and once that load’s in the bank, he forgets about it,” he explains. “He has a sleep and then goes to get the next load. If truck drivers say they don’t do a dangerous job, that’s because they have forgotten. You forget about the last trip, because you’re thinking about this trip. Take the Dalton for example. I saw a preview for the fourth series of Ice Road Truckers on TV in the US which showed me sliding down a hill backwards in the truck. I didn’t remember it. I had to watch that particular episode because I didn’t remember doing it.” You could argue that risk-taking and an ability to stare danger in the face is part of Debogorski’s DNA. His father was a paratrooper in the Free Polish Brigade who took part in the Allied Arnhem landings during World War II’s Operation Market Garden. One of his grandfathers, meanwhile, was a Major in the Polish infantry and was shot by firing squad in Auschwitz for moving Jews out of Poland. “I look at my family now and it looks like half of us were meant for war,” he jokes, filling the air with one of his trademark raucous laughs. “I see some of my kids doing what I consider to be some high risk stuff, although not as high risk as I did. Fortunately, I quickly became more concerned about staying alive.” His faith also plays an important role, highlighted during season two of the TV show when he was hospitalized after a blood clot entered his lung. “I feel sorry for people who don’t have faith in God because then they don’t have anyone to turn to,” adds the 57-year-old, who had both himself and his truck blessed at the beginning of season four. “We’ve had lots of trauma in our family. I lost my mum when I was young, two dogs almost killed one of my daughters when she was three. She had to be air-lifted to hospital and have 100 stitches in her head. They could see her jugular vein and her spinal cord. One of my sons also had his thumb pulled off by some construction equipment. So, like my father always said, it’s my faith that gets me through.” While he acknowledges that ice road trucking does have its dangers, Debogorski – whose first book, King of the Road: True Tales From a Legendary Ice Road Trucker, has just been published – argues that “every job is dangerous, they’re just different.” He also suggests that truck drivers as a whole do not really receive the credit they deserve for the risks they take and the responsibility they carry. “I spend a lot of time traveling

in the US. Now I don’t know the statistics in Europe, but in the US – where there are between 350 and 400 million people – around 40,000 people die on the highways every year, that’s around 110 every day. Even NATO doesn’t lose that many troops on a daily basis. So you could say these guys who are driving trucks are driving in their own war zone. I remember a lady came up to me once and said: ‘I didn’t realize that truck driving was so much work. We only see you get into the truck and get out of it. We never see what you do in-between.’ So when truck drivers come up to me and say they could never do what I do, I say that basically they are doing 90 percent of it already. We just have more extreme terrain and temperatures to deal with.” But is there something to be said for truckers who, like Debogorski, are brought up in the harsh environment of the Northwest Territories? Where they become hardened to a more extreme way of life. Are they almost bred for risk? “Well,” replies Debogorski, “a friend of mine has eyes like a cat. His pupils aren’t round, they run up and down. I asked him once if he can see better at night and he said he didn’t know because he’s always had the same eyes. So whether that means we are bred for risk I don’t know. I’ve always lived there so it’s hard for me to tell. I have nothing to compare it with to be honest.” As unlikely as it may seem, Debogorski has now become a celebrity, thanks to the huge worldwide ratings success of the Ice Road Truckers reality series. Often seen signing autographs, chatting to fans and posing for photographs at trucking events in Europe and North America, he has his own website, is currently publicizing his book and even features in a spin-off TV show, Extreme Trucking. “We made a show in India, but things went a little sideways for me,” he explains. “We were in the Himalayas and New Delhi and I’ve never seen traffic like it. Nobody has any mirrors because they’ve all been knocked off and those that do have them folded in. Horns blow all the time, all the buses are dented, there are cattle and buffalo pulling carts, people on bicycles everywhere. You’ve never seen a commotion like it in your life. There were plenty of challenges, that’s for sure.” Yet despite his new-found fame, retiring isn’t an option, and he has some useful advice for anyone who is thinking about following in his tire tracks. “I’ve never thought about packing it all in. I have had the odd disaster, but I always come home, so my family doesn’t really worry too much. What I’d say to anyone who is thinking of heading up to the ice roads is trucking is patience. You have to be patient with yourself, with other vehicles on the road and with your family because you’re away from them. Long haul on the ice is learning to be patient with the dispatcher, with other drivers and the weather. It’s the only way you’re going to save your life.”

eyes on

prize

the

WORDS David Lichtneker PHOTOGRAPHY JĂźrgen Tap

Few jobs involve the pressure of making split-second decisions while traveling at spectacularly high speeds. Given the circumstances, youâ&#x20AC;&#x2122;d think that taking chances would be out of the question. Well think again.

aking risks as a child might well be part of growing up, but for Lewis Hamilton, the ones he took when he was young weren’t of the falling out of trees and grazing your knees variety. More often than not, you’d find him hurtling around the race track, laying down the foundations for the dazzling motorsport career which lay ahead. While most boys were kicking a football around or playing video games, back in 1993, an eight-year-old Hamilton was already behind the wheel, competing in the British Karting Championship – which he won for the first time two years later (a further four titles followed in 1996 and 1997). His success not only underlined the faith his parents had shown in his ability, but was also satisfying reward for the financial risks they had taken to support his fledgling career. Fast forward to 2010 and his rise through the ranks has almost been as fast as the Vodafone McLaren Mercedes MP4-25 he now drives (looking resplendent in an eye-catching livery applied using AkzoNobel paint). Today he is a global sporting superstar. The youngest ever world champion in Formula One history, his nail-biting championship victory in 2008 was arguably the sport’s most exciting climax ever. Just in case anyone needs reminding, it was only sealed on the last corner, of the last lap, of the last race of the season. In order to be certain of the title, Hamilton only had to finish fifth in that Brazilian Grand Prix. Which meant doing something alien for an F1 driver – not taking any risks. He simply had to play it safe. Stay out of trouble and make sure he finished in the top five. It meant opting for a conservative race strategy, an approach which goes against the natural instincts of most people involved in the sport. But then again, Hamilton doesn’t regard what he does for a living as being risky, even though he regularly catapults himself around the world’s toughest circuits at speeds of up to 220mph (360kph). “I think all racing drivers are the same, we love to compete and we love to win. It’s that intensity that makes us so competitive. The adrenalin rush you get in Formula One simply comes from driving the car itself, not by taking risks in the cockpit. Every time I come to a racetrack and get strapped into the car for the first time that weekend, you just feel a buzz, you feel like you’re in your perfect, natural environment. Of course the actual race itself is even more stimulating and satisfying, but risk? I don’t really think of it in that way.” By the very nature of the sport, however, being a Formula One driver is a hazardous occupation. After all, there aren’t many jobs where things can change so dramatically in the blink of an eye, evidenced by the tragedy which befell the brilliant Ayrton Senna in San Marino in 1994. Hamilton, though, insists that the sport is safer than ever, even if danger is the last thing you think of when you’re caught up in the gripping tension and excitement of a grand prix. “Formula One – for better or worse – learns a lot through accidents,” he says. “Senna’s death was the moment that really woke up the campaign for safety and made sure we

Driving at speeds of up to 220mph (360kph), Formula One drivers have just a fraction of a second to make critical decisions.

wouldn’t be complacent. We can now study accidents very closely to understand their causes and take measures to ensure those risks are minimized. That’s how we work together to improve safety. When you’re racing, you don’t really think about the dangers, because to be honest, the sport is extremely safe nowadays. The work done by the drivers, the teams, the circuits and the FIA has made sure that we’re never complacent about safety – it’s always a work in progress. We’re always focusing on making the sport less dangerous for everybody, whether that’s the drivers, the mechanics in the pit lane, the marshals or spectators around the circuit. One of the crucial factors during any race is decisionmaking – and there are countless decisions to be made. Most of them can be decided by the team – strategy, pit stops and so on – but as the race evolves, the real pressure is on the driver. Often, the outcome can rest on a split-second decision. Do I risk that maneuver or not? Being naturally fearless, Hamilton claims that those situations don’t arise too often. “The truth is that you go into a race not wanting to take risks. If you have a clean race, say if you start from pole position and are able to stay in front and drive home, then you probably wouldn’t take any risks. But in most general situations, whether it’s putting the car on the limit through a fast corner, getting closer to the wall than you’d like, trying to find the grip on a damp surface, or just passing another car when the grip from the tires is just about to run out, there’s maybe only a maximum of two or three of those in a race. Equally, you can go into a race feeling fired up, with a

car that’s not quick enough, and you want to win, and you can be taking risks on every lap. I’ve had all of those experiences during my F1 career.” Still only 25, Hamilton – who admits to being “adventurous” – has made no secret of the fact that he wants to go down in history as being one of the best ever F1 drivers. Time is on his side, of course, but it’s not just about the glory. He also appreciates the responsibility he has to help make the sport as safe as possible. “As drivers, it’s not for us to recommend changes to the governing body, but we can comment upon and help the rule-makers to understand and get a feeling for what it’s like in the cockpit. Over the last decade or so, it has really been about making incremental changes to the cars to ensure that they’re not allowed to develop too quickly, or that the speeds suddenly make them unmanageable for the circuits they race on. For example, some of the recent accidents, even though they’ve fortunately not been fatal, would likely have been far more serious ten years ago. “I think probably the most recognizable improvement we’ve made to driver safety in recent years has been the introduction, in 2008, of the lateral cockpit supports that protect the drivers in the event of another car sliding over the top of a driver. We’d seen a couple of near-misses before, so it made a lot of sense to introduce higher lateral protection areas around the driver’s head to make him safer in the car. It’s a good example of how we’re always looking at making subtle improvements in our constant quest for improved safety.”

Safety at all costs

Taking risks in your job is generally frowned upon, especially when the stakes are as high as those faced by the likes of F1 driver Lewis Hamilton and ice road trucker Alex Debogorski. But sometimes risk-taking is acceptable – even necessary – it just depends on the circumstances. “It’s OK for people to take risks in their jobs, you just have to identify who exactly is allowed to take those risks,” notes AkzoNobel’s Rob Frohn, who is the company’s Board member responsible for the Specialty Chemicals business. “Risk is most often associated with safety or environmental issues, especially in our industry, so we must take a very disciplined approach. If people working at our production plants aren’t fully aware of the consequences of their actions, then they shouldn’t be there. It’s that simple.” Frohn’s forthright views sum up the no-nonsense approach to safety which AkzoNobel implements at all its locations around the world. In an effort to eliminate risk as much as possible, the highest possible standards are in force, often exceeding levels stipulated by local and national laws. Not only is this in keeping with the philosophy that safety is the number one priority, but it also supports the company’s strategy to become top quartile in safety performance. “Safety is number one in terms of our people, our products and our processes,” continues Frohn. “All our operational procedures are designed to minimize the risk that something could go wrong. All employees at our sites receive proper training, especially with regard to the materials they are

dealing with. They also need to fully understand all the relevant personal protection equipment, whether that is simple items such as gloves, goggles and steel-toed shoes, or full body suits and gas masks. Also, everybody who enters one of our plants has to first watch a safety video and receives safety instruction so they know exactly what to do just in case there is an alarm. That’s standard procedure.” When working with chemicals, risk typically starts with the handling of hazardous materials. This gains extra significance when dealing with large quantities in one place. But is the safe handling of these chemicals impossible? Not, says Frohn, if the correct procedures are in place and people follow them properly. “We encourage people to think about risky situations and look at what could influence our operations and our safety. We try to learn from that. We also try to learn from any accidents and incidents that do happen at our sites. We share those experiences and try to mitigate risk somewhere else. Risk is always around us – and that goes for everyone in every industry. What we try to do is deal with it properly.” This approach involves ensuring that all employees at the company’s sites around the world are fully conversant with the proper safety regulations and follow them to the letter, particularly at manufacturing locations. Various safety programs are in operation at AkzoNobel’s businesses, with behavior-based safety (BBS) having been in place in various parts of the company for the last ten years. Within Specialty Chemicals, however,

almost every employee has now completed the BBS program. “BBS is all about awareness, so everybody speaks the same language,” Frohn explains. “The behavioral aspect is very important because if you have people in the organization with the right safety mindset, then they start to avoid potentially unsafe situations and prevent things from happening. By observing what goes on in the plant, they will also help others and make them aware of potentially unsafe situations. And this doesn’t just apply to our plants. It’s also about paying attention to safety when our products are being transported to and from sites and from our suppliers to our customers. We have an obligation, not only to our shareholders, but also to the general public, to be a safe and professional company. After all, reputation is built up slowly and ruined in a split second.” Safety is so important to AkzoNobel that it forms an integral part of the company’s strategic ambitions. The aim is to reach the top quartile in terms of safety performance within the next five years. “Unfortunately our safety record is not top quartile at the moment, so our ambition in the next few years is to take a big step forward and become one of the best performers in the industry,” adds Frohn. “We believe safety leadership is an inherent part of being an excellent company. So we’re looking to improve all the time, because we believe that every incident is one too many. Experience has also taught me that you simply can’t pay enough attention to safety, even to the point where it takes precedence over profit.”

making yourmind

WORDS Professor Glynis Breakwell

We make hundreds of decisions every day. Some of them consciously, some sub-consciously. But what factors come into play when we start the complex process of deciding which option to choose?

ost people can vividly remember occasions when they took a decision to do something they knew would potentially have a really bad result. Equally, they remember failing to do things that would have resulted in tremendous gains. Decision-making is a hazardous business. As a psychologist, I am interested in what factors come into play when people think about the risks associated with their decisions. If one thing is clear from all the research that has been done on the psychology of risk perception and risk taking, it’s that when it comes to risk, people do not make purely rational decisions, driven by the information available and derived from statistically recognizable probabilities. They will exaggerate the risk of hazards that are spectacular, rare, new, unfamiliar, sudden, or immediate. They will accentuate those that are externally imposed or intentionally man-made. They will overestimate those that are morally offensive or entirely without redeeming features. They inflate the likelihood or severity of those that might affect them and particularly those directed against their children. In contrast, risks are downplayed if they are well understood or

familiar, not a topic of public debate, long-term in their impact or slowly evolving, from an anonymous source, originating in natural processes, associated with corollary benefits, or directed against other people. When faced with a risk, people are prey to certain well-established biases in the way they think – what are called “cognitive” biases, but are more like rules of thumb. Two are particularly interesting: the optimistic bias and the hindsight bias. The optimistic bias refers to the tendency that people have to assume that they will be less at risk from a hazard than other people. So, if you ask a person who smokes: “Are you more or less likely than the average smoker to contract a smoking-related illness?” the majority will say that they are less likely than the average smoker to fall ill. The risk as it applies to themselves is downplayed. This phenomenon is also sometimes called the subjective immunity delusion. People know what they do – perhaps racing cars or working in the stock market – is risk-laden, but they feel that they are somehow untouchable, special, or immune. Sometimes, people will explain this in terms of some particular personal quality (like skill, knowledge, or genetic resilience).

Encounter, by M.C. Escher

However, the key point here is that the optimistic bias affects us all and in all areas of our lives. It is not based on a realistic assessment of our personal characteristics. It arises because it is a way of allowing us to tolerate higher levels of risk than we would otherwise be able to handle. We tell ourselves we are better than others because that allows us to carry on doing what we want to do. The fact that other people are telling themselves the same fiction does not deter us at all. There is, of course, a downside to this self-protection mechanism – it can, and often does, result in people engaging in patterns of behavior that are very dangerous to themselves and others. The hindsight bias is the inclination to see events that have occurred as more predictable than they were before they took place. For instance, people are more likely to remember their predictions of future events if they turn out to be correct. You will note that this bias is likely to affirm the individual in the belief that they are good at calculating risks – even when they are incredibly bad at it. Bad predictions – which are in effect poor assessments of the risk – are likely to be forgotten. In addition, even if they did not actually make a prediction, presented with the outcome, often people will report that they could have (or did) predict it. For example, after the event, there were vast

numbers of people who reported that they had never believed that computers would crash as we moved into the year 2000 (the Millennium Bug), even many of those who had been to the fore in preparing against it. Optimistic and hindsight bias are only two of a complex network of factors that come into play to shape the perception of risk. Emotions are also important. The way people think about anything is imbued with emotional connotations. Attention to the emotional tone of a thing is thought to allow speedy judgments about it, even when information is scarce. The basic proposition here is that if you like something (if it makes you feel good), you will estimate it to have lower risk levels. The significance of affect seems to be greater when there is less time for data-based evaluation of the hazard. However, affect can influence the extent to which people choose to search for information about the hazard. If they feel happy about a thing, they will be less inclined to look for information that might undermine that feeling. There is still a lot to learn about risk perception and risk taking, but the work has started. Knowing about this work will be useful to both organizations and individuals.

warand peace WORDS Brian Guest PHOTOGRAPHY AkzoNobel Archive

He’s one of history’s most baffling contradictions. How did the man whose name is now synonymous with peace end up leaving us with another far more explosive legacy?

22 Below: Nitro Nobelâ&#x20AC;&#x2122;s offices in the Aspudden area of Stockholm, Sweden, during the 1960s. Previous spread: Alfred Nobel in 1885. He allowed himself to be photographed only with great reluctance.

ne of the most frightening edge-of-the-seat moments in 1955 French thriller The Wages of Fear – a breathless tale about a group of desperate men transporting two truckloads of nitroglycerin over a rocky mountain – is a nightmare sequence in which one of the vehicles has to be driven through a pool of thick oil. As the New York Times reviewer wrote at the time: “The excitement derives entirely from the awareness of nitroglycerin and the gingerly, breathless handling of it. You sit there waiting for the theater to explode.” The attraction of explosives and pyrotechnics clearly touches a chord in many of us. Perhaps the answer lies in the old adage about the difference between the men and the boys being the price of their toys. Few in their right minds would argue differently. No New Year’s celebration around the world, Independence Day in the US, or just about any wedding in the Middle East and Asia would be the same without a cacophony of exploding gunpowder and the lingering acrid smell of sulfur. Celebration means fireworks, and we all know that men – both young and old – love nothing more than going out into the street and making the biggest bang possible. Fortunately, these days the millions of crackers, rockets and bangers sold over the counter have to comply with increasingly stringent safety and environmental requirements. But fireworks are just the tip of the incendiary iceberg. Because when it

comes to the professional explosives used in engineering, construction, mining and quarrying, the volumes become mindboggling. And that’s leaving aside the military and industrial uses. Yet despite the inherent risks, these dangerous materials are handled safely with very few accidents. What would the granddaddy of it all, Alfred Nobel, have made of it? Cruelly dubbed the Lord of Dynamite and the Merchant of Death by his many detractors, Nobel – who died in 1896 – remains one of history’s most baffling contradictions. Essentially a pacifist at heart, his name has become synonymous with peace and the establishment of the world’s most prestigious prizes for services rendered to humanity. His inventive genius also forms part of our own heritage and his memory lives on in the name of our company. But it is often quietly forgotten that he made his vast fortune from the destructive power of dynamite and other explosives. Not that he saw it that way. In August 1892, he met his friend Baroness Bertha von Suttner –a founder of the European anti-war movement – after she had just attended the fourth World Peace Conference in Bern. During their conversation, he’s reputed to have said: “Perhaps my factories will put an end to war even sooner than your congresses. On the day when two army corps may mutually annihilate each other in a second, probably all civilized nations will recoil with horror and disband their troops.”

It was not out of character for the paradoxical Swede. A friend of the French romantic writer Victor Hugo and with friends in literary circles, Nobel’s highly complex character meant that he was an enigma to contemporaries. He was widely believed by many to be a socialist and a socialite leading the high life in Paris. Yet in reality, Nobel led a reclusive life as a bachelor who held contradictory and controversial opinions about democracy and women’s rights and who worried about the effects his inventions would have on shaping world events. Yet on another level, as a businessman and inventor, Nobel – who was fluent in French, German, English and Russian – was in his element. He transformed his father’s moribund business by inventing dynamite, a safer explosive to handle than nitroglycerin, while his invention of the blasting cap established his name worldwide and made him millions. Even so, there was tragedy along the way in his quest to find a “safe” explosive. The material used, nitroglycerin, was highly unstable and difficult to transport. This resulted in a number of accidents, including a massive blast that destroyed one of his factories in Heleneborg in Sweden in 1864. The explosion killed his brother, Emil, and several other people. But despite the setbacks, he remained undaunted and by the 1880s had built a network of factories manufacturing the new dynamite, before expanding the company by diversifying into armaments with Bofors. Nobel’s fascination with explosives and his gung-ho attitude to taking risks to improve the manufacture, transport and handling of an unstable and highly explosive material may sound like the stuff of schoolboy legend. But it has no place in today’s safety-driven industrial climate, according to Richard Bollen, who works for AkzoNobel’s Safety Research Laboratory in Deventer, the Netherlands. “After 1945, the chemicals and plastics industries really took off and safety became a big issue,” he explains. “Initially, here in Deventer we were conducting research and carrying out testing for the company’s organic peroxides business. However, we soon realized after some tough times in the 1970s that it was not just the products we had to look into, but also our own processes and by extension our customers’ operations and processes. And that is where we are today.”

Alfred Nobel’s laboratory in San Remo, Italy. He also had his own laboratory at Björkborn in Bofors, Sweden.

Employing 20 experts working in product and process safety testing – who also work as consultants for the company’s businesses – most of the testing at the Safety Laboratory is conducted in 14 fully enclosed concrete cells, which have windows that allow the experiments to be safely observed from outside. The Deventer site’s piece de resistance, however, is the TOCO (total containment) testing facility. An enormous 55 cubic meter steel tank, it is capable of withstanding pressures in excess of 20 bar and temperatures of 200° Celsius. The tank is used to carry out explosions that in another setting would require observers to stand a safe distance of 100 meters away. Which is a far cry from some of Nobel’s earliest experiments with nitroglycerin – they were staged on a boat on a Swedish lake. Bollen says that for the most part, the safety culture in the chemicals industry has been a gradual process. But much like the airline industry, it has been shaped by a relatively small number of cataclysmic events that made such an impact on the public psyche they have served to galvanize legislators and the industry alike to move on to the next level. These include the disasters at a Swiss refinery in Basle in 1986, at Seveso in Italy in the 1970s (when dioxins were released into the environment) and the Toulouse and Enschede explosions in 2001. “Things have moved on out of all recognition since the pioneering days of Alfred Nobel when innovation often could mean risking life and limb,” continues Bollen. “Today, while we honor his innovative spirit, safety is our top priority and we work to the strictest standards when it comes to handling hazardous substances and risks. It doesn’t matter whether it’s solvents, dealing with static electricity, or whatever. We have to be constantly on our guard and build first-rate safety behavior into everything we do as a company.” Once described as “Europe’s richest vagabond”, by the time he died, Nobel had 355 patents. He took countless risks along the way, but at the beginning of October every year, we are reminded of his lasting legacy to reward those who, like 2010 Peace Prize recipient Liu Xiaobo, risk everything by standing up for what they believe in.

Above: AkzoNobel’s TOCO (total containment) testing facility in Deventer, the Netherlands. Left: Alfred Nobel as a young man in 1853. Alfred was a mature, unusually intelligent youth, but he was also a dreamer and an introvert who preferred to be by himself.

The internet is essentially still in its embryonic stages, but it is developing at breakneck speed and has achieved a stratospheric level of global success which nobody saw coming. WORDS David Lichtneker PHOTOGRAPHY Branislav Kropilak

tudies into internet use and the increasing risk of “As the internet has evolved, it has become something of a exposure to nefarious activities make for frightening rearguard action trying to catch up with the bad guys as they reading. If we’re not being told that a million computer discover new ways of fooling people,” he says. “If people at viruses were infecting machines in 2008, then we’re the time had imagined that it would become as big as it has, finding out that companies were drained of more than $8 billion I think they would have put more thought into creating certain in lost efficiency in 2003 due to recreational workplace web safeguards. For example, something as simple as ensuring surfing (more than 70 percent of porn sites are visited during that when you receive an e-mail, you can see that it really is working hours). from that person, and not from someone pretending to be Meanwhile, statistics released by the Internet Crime that person. When the internet was being developed, nobody Complaint Center in the US (a partnership between the FBI thought about doing that.” and the National White Collar Crime Center) revealed that Pemberton is well qualified to talk about the internet and they received 336,655 complaints in 2009, with losses linked its inherent risks. He was at the CWI when they set up the to reported online fraud that year totaling $559.7 million. Even very first non-military internet site in Europe, and when they sending or receiving a simple e-mail is rife with possible established the internet in the Netherlands and Europe. He was dangers, due to the increasing prevalence of scams, identity also involved in designing HTML, CSS and XHTML at the World theft, phishing attacks and data hijacking. The UK even named Wide Web Consortium (W3C). So what advice can he offer to attacks on computer networks as one of the biggest threats individuals to help them cope with an ever-growing barrage of to security in its recently published National Security Strategy. online risks? “From a personal perspective, you’re obviously at It’s enough to put some people off going anywhere near a risk of getting a virus, which means someone has got inside your computer. Yet in many ways, the internet has become a victim machine. To try and prevent that, you need basic safeguards of its own success. It’s essentially still in its embryonic stages, such as anti-virus programs and a firewall – which should work but it is developing at breakneck speed and has achieved a in both directions to stop unwanted programs getting in, and stratospheric level of global success which nobody saw coming. unwanted data getting out. So having the basic safeguards at Even a man who was there at the very beginning admits that the computer level is important. no one thought it would become the all-conquering digital deity “Conventional wisdom also suggests that you should that it is today. password protect your wireless access point, but I think that “The internet was built without the idea that it would ever gives a false sense of security without any real advantages. become as big as it is,” explains Steven Pemberton, who I deliberately have my wireless access point open. Because if you has been a researcher at CWI, the Dutch National Research think that’s giving you any protection, then you risk not protecting Institute for Mathematics and Computer Science, since 1982. your machine properly. You need the protection at the level of “I certainly don’t think anyone imagined that it would end up the machine, so that’s where my protection is. If people come in in everybody’s home. We knew it would become big, but we on my wireless, they’re not going to get through to my computer didn’t realize just how big.” Back in those early days, Pemberton anyway. The worst they could do is take some of my bandwidth. was researching user interfaces for computer systems and People should therefore be wary of talk which leads to a false helped to design something which, if we saw it today, we’d call sense of security.” He adds that while society is learning to deal a browser. But at that time, nobody had the slightest inkling of with these issues, not enough is being done to solve them, with the risks that would slowly begin to creep in. the e-mail identification problem being arguably of most concern.

Policing cyberspace

The unstoppable rise of the internet and ever-changing world of digital technology has seen companies develop the need for vital in-house IT expertise. Not only do these departments offer routine technical support, but they are often tasked with policing the vast expanse of cyberspace that organizations inhabit. At AkzoNobel, the man in charge of overseeing the company’s systems, services, connections, data storage and communication links is Pieter Schoehuijs, the Corporate Director of Information Management. Security and data protection are obviously high on his agenda. But he’s also faced with a growing list of issues which, given the nature of the digital domain, is constantly evolving. “The thing on top of everyone’s list lately is the whole discussion around social media,” he says. “You can’t control everything yourself because a lot of employees are hitching rides on channels such as Facebook and Twitter. On the one hand they’re great sources of information, especially if you deal with consumers. You can find out what the current trends are, or what’s going on in your industry or country, as well as finding out what people are thinking and saying about your products and competitors. It’s not moderated or managed for the most part, it’s just full of people who all have a natural inclination to share and engage with each other.

“Now, the concept of all of these people – including your own employees – communicating and doing stuff which in some way reflects on your organization is relatively new and is one that a lot of companies are struggling with. They want to try and figure out how much they can, but more importantly how much they want to, manage this process. How do you make sure that people don’t put information out on these websites that is misconstrued as being talking on the company’s behalf, or expose details that you don’t want exposed?” In terms of firewalls, he adds that the company has all the proper systems in place. But the solid barrier provided by firewalls is slowly crumbling. “A good recent example is the use of mobile devices,” explains Schoehuijs. “We used to have the BlackBerry, which is supplied and managed by the company. Now we’re exploring how to deal with devices coming in that people want to have such as the iPhone and iPad. It requires a different concept of looking at your security, no longer having a big wall, but being a little bit more granular.” Mobile devices also require employees to be more diligent. “Of course people have been able to walk around with hard copies, floppy disks and USB sticks for a long time. So in that respect things haven’t really changed. But with everything going digital and people carrying vast amounts of data in their bags, it

has become so much easier to lose a stick, or send someone something by accident, or post something somewhere inappropriate. The dependency on a particular individual to do the right thing is becoming more important.” What Schoehuijs and his team have to ensure is that the proper contingencies are built in to try and eliminate the risk of anything happening and minimize the impact if it does. “What people don’t tend to be very good at, and that’s partly due to human nature, is throwing things away and archiving. The amount of data that we have in data centers and our intranet is exploding and will continue to do so. For example, on our company intranet alone we have around three million documents. That’s on around 10,000 sites and sub-sites. Managing that and making sure that it’s a secure database of information is a big task.” To ensure that confidential information remains safe, steps are already being taken to implement cryptography, which many experts say is the route companies should be taking. “We’re looking into new technology that puts an electronic certificate on your computer which helps to encrypt communications by default if you seek access to our corporate network,” continues Schoehuijs. “A lot of our computers already have an encryption on them and it’s something that we will be using more and more.”

Businesses also have numerous risks to contend with, highlighted by the fact that companies suffer in excess of $2 million a year in lost productivity through employees spending an average of 30 minutes a day using e-mail for non-work-related purposes. “I think one of the biggest risks for companies is that information which used to be hard to get to is now potentially easier to access. Look at USB sticks. They’re so handy to use, but so easy to lose. We’ve also seen a lot of information escape due to carelessness or insufficient attention to firewalls. A simple answer to this is cryptography. All my online work goes via an encrypted channel using a large encryption key, so it’s effectively impossible to break in.” What about cyber terrorism, couldn’t that shut down the whole internet? “The internet was specifically designed so that there’s no single point of failure. Messages simply reroute around damage. A number of people in the past have claimed that it would collapse, but it hasn’t. I can’t think of a way total collapse could happen because it is so deliberately distributed.” And what of the future? Where is the internet going to take us? “Distributed intelligence is going to become a more realistic possibility. Anything that is part of some sort of network will end up on the internet. Lighting systems in buildings, for example, can have an internet connection built into each light and every switch so that they are completely programmable via the internet. If I’m at the cinema and I realize I haven’t turned the oven off, I’ll be able to pick up my phone and switch it off. Basically, any device that plugs into the wall will be connected to the internet.” Pemberton also says that computers will become more intelligent when users are browsing. “If you go to a web page now, you can see what it’s about and you can interpret it, but that’s just because you’re smart and you can read what’s on the screen. Your computer only knows you’re looking at a web page. What we’re developing now is a way of being able to mark up web pages in a standard which allows machines, when they look at that page, to know what it’s about to some level or another.” So if you’re reading about an event, your computer could suggest it puts the date in your diary, it could look for a hotel room, start searching for hire cars or seek out available flights, then present all the data it has found, without you having to start looking it up yourself. Continues Pemberton: “The first version has already been implemented from the research we’ve done and it’s taking off in quite a big way. For example, Google and other search engines are already using it to identify reviews of products. The biggest online retailer in the US has adopted it and so has Facebook. We’re very enthusiastic about it.” But what about the risk of becoming too dependent on the internet? Are we overly reliant on the web and all things digital to the point where we’ve become vulnerable? “The internet is so valuable that we’ll only end up using it a lot more,” suggests Pemberton. “We’re still only at the very beginning and it makes things so much easier that I don’t think there’s a danger we’re using it too much. People will only continue to find new ways of using it.” For good, and no doubt for bad as well. But that’s a risk we’re going to have to take.

Map of the internet created by the Opte Project on November 23, 2003 Asia Pacific: Red Europe/Middle East/Central Asia/Africa: Green North America: Blue Latin America and Caribbean: Yellow RFC1918 IP addresses: Cyan Unknown: White

ack in 2004, at a time when Nokia held a 40 percent global market share in smart phones, several of its leading research engineers pitched a neat little device to business customers and management – a touchscreen phone which exploited the power of the internet. The organization also considered a proposal to set up an online applications store to leverage the power of the device. Both proposals were rejected as too risky. Not quite as risky as adopting the idea of Agent 86’s lessthan-covert shoe phone from TV series Get Smart perhaps. But these days, while Nokia remains the market leader in mobile phones, it’s Apple which has come to dominate the smartphone sector with its iPhone – total sales are around the 40 million mark. Apple, worth less than half of what Nokia was worth in 2004, now has a market capitalization of considerably more than $250 billion. Nokia, now worth less than it was in 2004, is scrambling just to stay in the smart phone race and its failure is an object lesson in how successful companies may end up risking it all when they are afraid to take risks. “If you want to be in charge of your destiny,” says business consultant Wil Schoenmakers of PA Consulting, “not taking risks is simply not an option.” Companies can do just fine as followers over the short term, he notes, but unless they can then react quickly to game-changing technologies, they risk irrelevance. “You don’t want to have a Kodak experience,” he adds. “For a long time, if you had a photo camera, Kodak was the high quality film to have. But when the digital era arrived, Kodak was terribly slow to react. They were in the film business, not the camera business, and their thinking was: ‘we don’t want to be in the camera business.’ So the whole discussion centered on their view that the digital camera business would take a long time to develop.” The thinking was that people weren’t likely to go out and buy an expensive new camera when the one they had was perfectly good. But the problem was that in the digital era, clunky expensive cameras rapidly evolved into advanced, user-friendly, powerful cameras for both consumers and professionals. In retrospect, it should have been clear (think Moore’s Law: the enhanced capacities of digital cameras mirror the rapid increase in memory and power in personal computers). But, as Schoenmakers puts it: “Kodak kind of stuck their head in the sand and in the space of five years, the film business died. Kodak missed a huge opportunity.”But you can’t throw money at every hare-brained scheme to save the world that may end up in your inbox. “The real challenge,” says Andrew Whittaker, AkzoNobel’s Research Director, “is to be able to look at the world we live in and analyze it carefully enough to gain really deep insights into what the future needs of society actually are, and how that intersects specifically with what we are doing as an organization. That is a way of getting rigor into that process intellectually. There are still risks, because there are still outcomes that we can’t predict. But we can narrow it down and minimize it significantly by analyzing carefully where the world is going and where we want to go as an organization.” As an example of such an intersection, Whittaker – who also heads the Expert Capability Groups set up within AkzoNobel to consult on advanced technology innovations – points to enhanced functionality in coatings. “In the future, clever surfaces will almost certainly have a role to play in the management of energy, in the terms of the way they reflect heat, absorb it and distribute it. So as a coatings company, we can add functionality to our products that will meet one of society’s fundamental needs. We can see that now, so investing

get

smart WORDS Jim Wake

Fictional secret agents and superspies seem to have all the cool gadgets. But it doesn’t have to be that way. If companies want to push the metaphorical envelope, all it takes is some innovative thinking – and a healthy appetite for taking risks.

in research that delivers greater functionality in coatings is a very sound and prudent thing to do. Even though we can’t be certain about the exact outcome, we can be pretty clear that it’s a better bet than just speculating randomly in our laboratories about things that look interesting – or doing nothing at all.” To avoid “random speculation”, Whittaker suggests that there are methodologies such as technology roadmapping (aligning short-term and long-term goals with specific technology solutions) and stage-gating processes – conducting regular assessments of progress and prospects for success and killing projects that don’t live up to expectations. Perhaps the most novel (and adventurous) method he proposes is what he calls structured ideation. “Structured ideation brings together creative people who have knowledge of both the market space and technology to really think through where there are gaps, what are the unarticulated needs that our clients may have, what they may not be able to tell us about their world – and then thinking about those unarticulated needs, creating new propositions that are very compelling.” When you do decide that you can’t afford not to take risks, you’re best advised to hedge your bets by spreading the risk. “You need to take risk on a number of fronts,” continues Schoenmakers. “You can’t put all your eggs in one basket; you need a healthy balance between projects that are near term and others that are longer term. And also a balance between incremental advances and investments in some of these far out ideas, because if you don’t do it, somebody else will – somebody that you don’t even know about because they are so far outside the industry you are working in.” Some of the risk taking occurs on the margins of R&D, notes Schoenmakers. It’s not really about technology or design, but about completely different ways of doing business

Bumbling secret agent Maxwell Smart (played by Don Adams) was the central character in 1960s US comedy series Get Smart. A satire on the secret agent genre, he was famous for using a covert communication device – the shoe phone – a recurring gag in the program’s five seasons. Winner of several Emmy Awards, the show ran from 1965 to 1970 and was brought to the big screen in 2008 with Steve Carell in the lead role.

or solving age-old problems. What happens to AkzoNobel, for example, if the traditional idea of coatings is obsolete? “Maybe I’d like to change the color of my house or the decoration in my kid’s room every six months depending on whether he likes Spider Man or Batman, and I can just download it and it’s ultra clean and I don’t even have to paint. Then I’m buying it! Right now, they’ve got eBooks that are what they call electronic ink. They’re expensive and fairly limited, but if you could blow that up to wall-sized, then it’s a coatings solution.” It may not be the case that a paint company can offer what is essentially an electronics solution, but Schoenmakers’ point is that a paint company still needs to consider the consequences – in fact it can’t afford not to – and it ought to consider as well how it might parlay the expertise that it does have, in colors, in consumer behaviors in the coatings market, and so on, to react to what is, admittedly, only a minor risk at the moment. “If you say we are just a paint company and that is all we do, you have a significant risk of being blindsided.” Perhaps more concretely, and more immediately, companies cannot afford to ignore the demand for sustainable products. “Right now, we use volatile organic compounds in our products,” says Whittaker. “We’d like to eliminate them completely. But that’s a significant technical challenge, and it will require major technological breakthroughs. But if we fail to invest in the technologies to achieve that – if we don’t take the risk on big investments in R&D on what are essentially unproven technologies – then we risk much worse, the risk that our products will be obsolete.” There is also a risk to the company’s reputation if it does not deliver greener products. “Consumers will hold you accountable,” says Schoenmakers. “That’s especially true of young people – kids who are ten or 15 years old now. If you look at a

company like Nike, you see that sustainability is a central theme. That’s because they know these young consumers are brand-obsessed, and they don’t want them coming back and saying: ‘You sold me these shoes and you were doing harm.’ Consumers and media organizations hold companies accountable, so not doing sustainability is not an option in the future, because people will come back and punish you.” Of course, it’s probably easier – and less risky – for a shoe company to redesign its shoes to comply with environmental standards, than it is for an industrial concern which is dependent on rare substances that cannot be harvested from the earth without significant environmental impact. But pretending that the status quo will do is really a recipe for disaster. It brings to mind a scene from director George Roy Hill’s classic movie Butch Cassidy and the Sundance Kid. The two anti-heroes – affable outlaws on the run – are fleeing through the scrubby terrain of the American west, with the authorities in hot pursuit. Suddenly, there is the sound of rushing water, and Butch and the Kid find themselves staring over the edge of a shear precipice to a rushing river far below them. The Kid is ready to fight it out with the law, but Butch says the fight is hopeless and they’re certain to die if they fight. The better option, he says, is to jump – the pursuers will never follow them over the edge of the cliff. But the Kid stubbornly resists. Why? Because he can’t swim. Butch Cassidy bursts into almost uncontrollable laughter. “Are you crazy?” he replies. “The fall will probably kill you!” A moment later, the two are plunging feet first towards the surging waters. In true Hollywood fashion, they survive to fight another day. Though Butch Cassidy and Harry “Sundance Kid” Longbaugh were real historical figures, the scene is almost certainly pure fiction. Still, it starkly puts into perspective the wrenching dilemmas we sometimes face when the biggest risk of all is not to take the risk.

decide and

conquer WORDS David Lichtneker

Balancing risk and reward can require almost military levels of strategic thinking. Sometimes, though, you may have to lose the battle to win the war.

o what would happen if six risk managers challenged each other to a game of Risk? Invented in France in the late 1950s, the classic board game is all about military strategy and balancing risk and reward in order to defeat opposing armies and conquer the world. Over the years, the hugely popular game – produced by Parker Brothers, now a division of Hasbro – has constantly evolved and various table-top and computer versions are currently available (Transformers Risk, Lord of the Rings Risk, Star Wars Risk, there’s even a Napoleon edition). It can also be played online. But what hasn’t changed is the intense analysis and number-crunching which people are willing to undertake in order to devise the best game-winning strategies.

39 Left: Napoleon’s greatness as a commander and leader was matched by his strategic genius. Previous spread: The Battle of Waterloo: The British Squares Receiving the Charge of the French Cuirassiers, 1874. Philippoteaux, Félix Henri Emmanuel. Courtesy of V&A Images/ Victoria and Albert Museum, London

Entire academic papers have even been written about the a perspective of market position and growth. The European chances of various tactics succeeding. Very clever people way of thinking is that there’s more risk of losing than gaining, have explored probability theory and used fancy mathematical while in Asia, they like to take the risk because there are a lot of tools such as Markov chains and stochastic simulation to work opportunities and they can gain a lot.” out every conceivable scenario. Essentially, the conclusions What we haven’t considered, therefore, is the nationality are all the same. If they’re faced with a high risk/high reward of the six risk managers who are engaged in our hypothetical situation, it’s a risk worth taking. High risk/low reward and board game battle. If one of them is Asian, it could make a players won’t take the chance of facing game over. big difference to the dynamics of the game play. Whether Which brings us back to those six risk managers sitting anyone from Asia ever won what used to be the only officially at the board. Some are likely to have legal or insurance sanctioned Risk tournament in the world we can’t say, but the backgrounds, others could well be statistical experts. Would game’s enduring popularity is such that the US still includes this affect their chances? Taking into account their own Risk in its annual World Boardgaming Championships (which particular knowledge and expertise, which one would have began in its present guise back in 1999). In the game itself, the advantage and emerge triumphant? Or would they all by the way, Asia is worth the most once the continent is prove so adept that the game would go on forever? conquered, but it is not easy to secure or defend. We’ll come back to that conundrum in a moment. Because Something else we need to consider is the unexpected, you’re probably wondering what all this means. Well, the point which, as Oude Alink points out, you simply can’t prepare is perhaps best made by Ronnie Bowie, who heads up The for. The real danger, however, is ignoring the warning signs. Institute and Faculty of Actuaries. An actuary, by the way, is “People don’t like to see risk or danger. They block it out,” he a business professional who deals with the financial impact says. “So what’s happening is that people in general are of risk and uncertainty. He points out that 20 years ago, no becoming more risk averse than ever.” Which probably isn’t companies had a chief risk officer. Today, every company the best strategy to adopt when attempting to win a game has one. “As businesses become more complex, so risk of Risk. Perhaps they need to heed the words of ice hockey management becomes more important,” he says. legend Wayne Gretzky, who once famously said: “You’ll So the world has moved on significantly since 1957, when always miss 100 percent of the shots you don’t take.” What’s French film-maker Albert Lamorisse first created the game he a Risk-playing risk manager to do? “I have played Risk myself, called La Conquête du Monde. Becoming adept at handling but I am not very good at it, I don’t have the patience,” admits risk has, it would seem, moved from the board game to the Oude Alink somewhat disappointingly. But what about our six boardroom. “Managing risk is all about taking as much risk as gamers? Which one would triumph? “The one who is the most possible, but making sure you balance your strategy against conservative will win,” he reveals. “Because he’s calculating all your risk appetite,” explains AkzoNobel’s Corporate Risk the time and he is always on the average and the average will Manager, Dick Oude Alink. “It’s about identifying the risks, always win in games like this. The chances that you will win by some you should be taking, others you want to mitigate, but being more extreme are much smaller.” But it does happen. the balance needs to be there. So high opportunity means “The most extreme successes have come when people least you can have a higher risk. On the other hand, low opportunity expected it. Low budget airlines, for example. Their way of with a high risk is not really an option.” thinking used to be entirely focused on how many people they Echoing the comments made by Bowie, Oude Alink adds could get on the plane. Then they took a completely different that in the past, risk management simply meant insurance approach – low cost and on time. The same thing happened in management. But the world changed, risk became a broader the cosmetics industry. Everyone though that fancy, glossy and issue and the need for those risks to become increasingly high price was the way to go. Then the Body Shop came along. It transparent within companies became more important. “My proves that in business, sometimes you simply have to take risks main role is to ensure that the company’s most significant risks and you can be successful when everyone else thinks you will fail.” are identified and decided upon by management,” he continues. But even though the role of the corporate risk manager “The ultimate goal is to ensure that managers throughout the seems to be crucial, Oude Alink is of the opinion that ultimately, company have the culture of seeing opportunities and at the there should be no need for one. “Managers should be their same time are able to realize and identify risks and make the own risk managers,” he explains. “At AkzoNobel, we are making right decisions.” it more an integral part of our management culture and risk It’s not quite so simple though. AkzoNobel may well publish awareness will simply be woven into the company. Everyone a list of its most significant risks in its annual report, but the who takes decisions in the balance of opportunities and risks top ten is far from stable. Because things can change very will be a risk manager.” Which, in Oude Alink’s case, might leave quickly, especially when it comes to changes in the economic him more time to brush up on those board gaming skills. environment, such as prices and availability of raw materials. The last word goes to US author and lecturer Denis So speed of change can have a major influence. Risk appetite Waitley, whose comments apply as much to risk managers as can also be influenced by culture and geographical location. “In they do to board gamers: “Life is inherently risky. There is only China, for example, people think differently,” notes Oude Alink. one big risk you should avoid at all costs, and that is the risk “In the West, we think shareholder value. But they think from of doing nothing.”

donâ&#x20AC;&#x2122;t let our heritage turn sour WORDS Rebecca Parsley

Our heritage is at risk, underlined by the recent collapse of the 2,000-year-old House of the Gladiators in the ancient city of Pompeii. It was a stark reminder of the importance of protecting and conserving treasured sites, buildings and structures around the world.

Photography: Corinne Fortier for Heritage Montreal

hile it may not be as old as the Italian city of Pompeii, the eye-catching structure which towers 15 meters (50 feet) into the air atop an old Art Deco dairy in Montreal, Canada, is arguably one of the city’s most iconic monuments. But over the years, the harsh weather and changing environment took their toll on the giant Guaranteed Pure Milk bottle, and it slowly began to rust away. It just couldn’t be allowed to happen. So – and those responsible for looking after Pompeii take note – Heritage Montreal decided to act. The organization was set up 30 years ago to promote and protect the architectural, historic, natural and cultural heritage of Greater Montreal. They brought the plight of the landmark water tower to the public’s attention, and last year – thanks to a project sponsored by AkzoNobel and other partners – the results of the renovation were proudly unveiled. Dinu Bumbaru is Policy Director of Heritage Montreal and former Secretary General of the International Council for Monuments & Sites, and he says it was a great way to raise awareness of the need for people to protect their heritage. “The milk bottle is a fun part of our history, whereas people traditionally think this subject needs to be serious. It reminds us that our grandparents had home-delivered milk, yet this great piece stood there deteriorating. People came along, said it was a shame, took a photograph and left. We wanted to show it was possible to save such monuments, especially when others lent their energy and enthusiasm, and we succeeded.”

Above: Destroyed by an erupting Mount Vesuvius in 79AD, Pompeii’s future is in the balance again due to serious concerns about the level of funding being made available for conservation. Left: Safeguarded by the National Trust, St Michael’s Mount is a tidal island off the coast of Cornwall in England which features buildings that date back to the 12th century.

In the case of the milk bottle, natural causes were the culprits (critics claim the House of the Gladiators in Pompeii crumbled due to neglect). But are climate and erosion the main threat to our historic monuments? What about man’s own desire for comfort and advancement? The ancient temples of Angkor Wat in Cambodia, for example, are said to be at risk as ancient drains are obstructed and too much water is being sucked from the ground to service nearby five star hotels, leaving behind potentially unstable, dried-out land. It’s a problem, of course, but Bumbaru has clear views on the main reason behind the ruination of our structures – lack of maintenance. “It’s like not brushing your teeth,” he claims. “The damage doesn’t show immediately, but eventually it gets to a point where there’s serious decay. Brushing isn’t the most exciting thing to do, but regular care keeps your mouth in good health. It’s the same with buildings.” Recent events in Pompeii would seem to prove his point. Advancing technology has also had an effect. Modern products mean maintenance work might only need to be carried out every few years, rather than months, which means the need for it drops from people’s minds and expertise is not passed on. One way of saving our structures is to convert them to another use, and Bumbaru hopes this will be the case with Silo 5. A former grain elevator in the old port of Montreal, it was built by the Grand Trunk Rail Company in the early 1900s, but was taken out of operation in 1995. It speaks eloquently of Montreal’s historic role as the world’s leading wheat-handling harbor. “It was declared redundant and was scheduled for demolition, but we managed to stop that,” he recalls. “Now we have to help give it a new life. The milk bottle is a monument – we could paint it and leave it. But Silo 5 is almost half a kilometer of vintage machinery and a more complex heritage property.” As with any project, it will take time. “People are into sustainable development, but don’t realize it’s not a case of ‘add water for instant results.’ The whole point of sustainability is that it’s longlasting. It’s like caring for an orchard – you don’t get apples as soon as you plant seeds, and you don’t leave it for 15 years and then come back to harvest. You care for it every day.” It’s a philosophy echoed across the Atlantic by the English equivalent of Heritage Montreal. The steward of more than 400 significant historical and archaeological sites, English Heritage works to protect the country’s heritage for future generations and recently published its 2010 Heritage at Risk Register. It lists the country’s most important Grade I and II* listed buildings and monuments that are at risk of damage or loss if urgent steps are not taken to stabilize their condition. The number of listed buildings at risk actually fell 17 percent between 1999 and 2007, but since then, there has been a significant – and worrying – slowdown in the annual rate of decrease. “One of the main reasons buildings are at risk is redundancy,” explains Rosslyn Stuart, Planning & Development Director (East) for English Heritage. “There’s been an unprecedented

45 The ownership and management of the Stonehenge World Heritage Site on Salisbury Plain in England is shared between English Heritage and the National Trust (along with various other organizations and individuals). The mysterious prehistoric stone circle is one of the top tourist attractions in the UK, pulling in more than a million visitors a year. Its growing popularity means that protecting the ancient monument remains a major priority. Controversial plans to build a road tunnel under the Stonehenge site to ease traffic congestion were scrapped several years ago.

disposal of hospitals, schools, town halls, court buildings and the like. If relocation happens in a heartbeat and you get a time lag between the current user leaving and a new one coming in, the structure sits derelict and begins to decay.” She adds that places of worship are especially at risk due to demographic changes. If population diminishes, a village might have just 100 or so residents, only a dozen of whom are church-goers. In such cases, it becomes a challenge to both worshippers and other enthusiasts to maintain the building and keep it in use. Development is another factor, with buildings left stranded on roundabouts where they become a blight and fall into rack and ruin. Early action is the key, insists Stuart, and it also makes economic sense. “We’re encouraging people to focus on prevention – it’s the old adage that a stitch in time saves nine. Look after our historic buildings today to save them for tomorrow. We know there’s great pressure on finances, but little and often is the way forward. It’s cheaper to pay for a blocked gutter to be cleared today than spend £40,000 on repairing the roof in five years.” However, capturing public interest isn’t always easy, although in the UK, the Restoration TV show (which highlights crumbling historic sites and invites viewers to vote for one to receive a major grant to save it) has been a big success. While this may not seem the fairest way of deciding which historic buildings and projects receive help (Victoria Baths in Manchester, pictured above, was the first winner), it at least brings the whole issue of saving our heritage into mainstream consciousness. Further afield, AkzoNobel has appealed to more aesthetic ideals to further the cause. Adding color to people’s lives is an evocative phrase, but the paints and coatings being used as

part of the company’s global community initiative (including five cities in Indonesia) are as much about protecting an area’s heritage as making it look attractive. “This program reinforces our mission of adding color to people’s lives,” explains Jeremy Rowe, Managing Director of AkzoNobel Decorative Paints, South East Asia & Pacific. “It also incorporates restoring the colors of a nation through our work on heritage sites with governments. We believe that such priceless assets have many stories to tell, especially to future generations.” So how do you persuade people to get involved with saving the fabric of their history? Rosslyn Stuart feels that showing them how simple actions can make a big difference is a good start. “The Lincolnshire Heritage at Risk project aims to get everyone working together to safeguard their historic assets,” she says. “As a community-led scheme, the idea is to involve volunteers, actively work to recruit them across the county and show them how easy it is to help. We see it as an exciting pilot scheme. Not everyone wants to start organizing fundraisers, but they might be happy to mow a lawn or paint a wall – small tasks that can actually make a real difference in the future.” Dinu Bumbaru favors a two-pronged approach. As well as running home renovation classes (also sponsored by AkzoNobel) through Heritage Montreal – which teach people practical ways to look after their own worlds – he also poses a stark question. “I ask people if they’d be proud to tell their children or grandchildren, in 25 years’ time, that they themselves were the ones who’d done nothing, and who were therefore ultimately responsible for something being pulled down, abandoned or condemned. It might sound harsh, but the reality is that doing nothing is destructive. When people realize that, it gives them a fresh perspective on the future.”

Protecting our heritage

Preserving the world’s historic assets is a challenge for everyone involved. At AkzoNobel, it provides us with a perfect opportunity to live up to our promise of delivering Tomorrow’s Answers Today. But we also understand that protecting our heritage is an area which demands a healthy respect for the past. “Products need to be different,” explains Pino Milana, Technical Director of AkzoNobel Decorative Paints in Italy. “There are a lot of historic buildings in Italy, so we are often asked for mineral paints, which are lime or silicate based. Acrylic paints would be inappropriate, because buildings in Rome, Venice or Milan shouldn’t look freshly-painted or like new, shiny plastic boxes. It’s vital that renovation work is sympathetic.” The City Plan which was developed for Portofino (pictured) is an excellent

example of the AkzoNobel approach in action. This specially-designed guide was created by the company’s Sikkens® brand to set out the specific colors and materials to be used for all refurbishment projects in the picturesque coastal village. It’s one of 25 similar schemes devised by AkzoNobel to ensure that a particular area’s distinctive character is being preserved for future generations. Other locations to benefit from City Plans have included Turin, Ponza and Caserta. “A City Plan is essentially a color collection typical of a particular city,” continues Milana. “It involves taking samples of buildings and peeling back the layers to find the true, original shades.” The products used to coat the façades also self-clean – another important feature. “There’s a great risk to our buildings from pollution, although

more areas are deciding to ban traffic. But there’s a financial consideration as well, because if we can supply a product which looks good for longer, it keeps renovation costs down.” In the UK, the Dulux Trade Heritage range offers a similar solution. Detailed research ensures that the colors remain faithful to those used in the Georgian, Edwardian and Victorian eras – but with modern levels of performance. “Available in a wide range of products, Flat Matt – with its stylish, fashionable finish and a dead flat appearance – is the product of choice,” says Brand Manager Phillipa Alden. “We’re finding the range is particularly popular for commercial interiors, where it’s important to keep maintenance costs down. The products used also have to be durable, because it gets expensive if you have to repaint frequently.”

eye storm

the of the WORDS Jim Wake

Doing business in certain parts of the world puts very particular demands on an organization and its people. Plagued by corruption, major security issues and devastating natural disasters, Pakistan is a prime example of a country which presents companies with a unique set of challenges.

hen you want to play it safe, you stay close to home and you deal with the comfortably familiar. But business is always about risk to some degree, and global companies are by definition exposed to a wider range of risks than those that confine their activities to their own neighborhoods. Not only that, but the risks are constantly changing. A coup d’etat here, a hostage drama there, a catastrophic flood – and pretty much overnight, you’ve got a very different reality to deal with. American firms prospered in Cuba for years, for example, only to be seized by the Cuban government after the revolution. A booming tourist economy in Bali came to a near standstill in 2002 after a terrorist bombing. It took several years to recover. And Royal Dutch Shell almost certainly didn’t anticipate the problems of civic unrest it is now facing in the Niger Delta in Nigeria when it started pumping oil out of the ground in 1958. Business in Pakistan has also been more of an adventure than it might be in a place like London or Geneva. In 60 years, the military has seized power in coups three times, the nation has suffered more than its share of natural disasters and the simmering conflict with India over Kashmir always looms. There is also a perception of uncontrolled extremism. But Western perceptions of Pakistan as a nation of radicals wrongly demonize a people who exude warmth and hospitality, says Waqar Malik, CEO of ICI Pakistan (in which AkzoNobel now has majority control, having acquired ICI in 2008).

A man seen through the bullet-riddled glass door of a mosque where gunmen attacked police escorting prisoners in Karachi on June 19, 2010. Photography: WFA/Reuters/Athar Hussain

“We are living in that part of the world which is in the eye of the storm,” he observes, adding that Pakistan is an emerging economy, and every emerging economy has what he tactfully describes as “its own risk profile.” In Pakistan, those risks have included corruption (the country has frequently been in the “bottom 20” on global indices of corruption), weak infrastructure, political instability, devastating earthquakes and seasonal monsoons that play havoc with supply chains in normal years – and wash away entire villages in extraordinary years like 2010. Despite those risks, the Pakistan business – one of the largest and most influential industrial firms in the country – has managed impressive growth and record profits, even during the global slowdown. Waqar says a firm commitment to seek out the cream of the crop to manage the company, and an insistence on absolute integrity which dissuades bribe seekers from even asking, have stood the firm in good stead over the years. But these days, Pakistan and AkzoNobel are facing a different kind of threat – the type which one can’t prepare for by reading training manuals and completing an MBA from even the most prestigious academic institution. “The security profile is extremely difficult,” says Waqar, speaking calmly and choosing his words carefully. “I can tell you that in my 25 years with the company, I’ve never experienced what we’re experiencing now. We’ve always had challenges, but these last three years have really challenged us as to how we can operate safely and yet remain successful. So we have adapted ourselves to a different kind of mold, and what we have enshrined as operating principles are awareness and communication. Apart from the fact that the company takes great care of the security of its employees, each individual must be aware of his or her own responsibility for security and that’s drilled in with a lot of training and communication.” Well aware of the risks that a firm with a high public profile may face, Waqar says that the company has gone to great lengths to implement appropriate security protocols at all its sites throughout the country. “We have done planning at every level of the company to put those principles into practice. We do a risk assessment at each site, so it’s a customized approach. That’s a line management responsibility, but to ensure that we maintain consistent standards, our corporate security manager has oversight and will tour the facility. And then, we audit the implementation from the head office.” In the current environment, says Waqar, there’s no time to relax – security is a full-time job – 24 hours a day, seven days a week. And whenever there’s an incident, even if it doesn’t directly involve the company’s activities in Pakistan, there’s an “SOP” (standard operating procedure) to follow. While the company has never been the target of an attack, the violence has hit very close to home. Two years ago, an office of the Pakistani intelligence service in Lahore was attacked and an employee who was out on an errand was caught in the

blast and lost his life. That sort of tragedy clearly weighs on Waqar. “We are living in times when anything and everything can happen without any advance warning.” And he knows only too well. On one occasion, Waqar himself was in Lahore to visit a factory. Two hours after he passed along the road to the factory, a bomb exploded on the same route. “That is something you can’t plan, but what you can do is avoid rush hour, avoid isolated areas and avoid traveling when it is not safe.” More recently, there was a blast which killed 50 people. “I was abroad and received a message within five or ten minutes. We were very worried, but we have a system in place to check on our people, and within half an hour we were told that everybody was accounted for and safe.” And then there are the false alarms. Because ex-pats may be targets for terrorists, there are very elaborate procedures in place to ensure their security when they visit, and to keep tabs on their whereabouts. But, as Waqar relates, the system isn’t completely foolproof. “We had a business partner visiting us from Japan and we had strict instructions at the Islamabad Airport that there would be someone there to receive him. But he missed that person and decided on his own to a take a local taxi. After four hours, we still had no communication with him and we were very worried. Then we heard that someone had seen him sitting in a cab. Fortunately, we were able to go back to a security camera, get the number plate and were able to find him.” As a prominent businessman – and one who has numerous affiliations in business and government, including a seat on the Pakistani Central Bank – security is not just a business concern for Waqar, but a very personal one as well. “It remains a challenge for us as a family,” he acknowledges. “The fear of the unknown is always there. It’s abnormal from your point of view, or from anybody’s point of view, but it is now part of life. There is a living threat, but life doesn’t stop. We do the best we can. We can’t claim that we’ll be able to negotiate every challenge, but we have made the most of it and we are proud that, so far, we’ve handled it very well. The one quality we as a nation collectively possess is resilience. In the worst of situations we come together and rise to the challenge.” He points to the recent floods, which forced 20 million people from their homes, as a prime example. “Our staff from seven different locations across Pakistan got together and prepared 10,000 care packs full of immediate relief items such as food, water and hygiene packs. Along with this, they contributed truckloads of clothes, bedding and other necessities. They spent hours putting care packs together, personally packing them, sorting clothes, labeling boxes, purchasing items and then delivering them. This spirit is what is the biggest hope for Pakistan and I am confident that no matter what the challenge is, be it the security situation, corruption, natural calamities or general instability, we will face it with our heads held high and eyes full of hope. Hope that this too shall pass and tomorrow will be a better day.”

Flood victims scramble for food rations as they battle the downwash from a Pakistan Army helicopter during relief operations on September 13, 2010, near the village of Goza in Dadu district, Sindh province.

heat

the is

WORDS Daniel Grafton

The world’s reliance on oil and gas means that accessing dwindling reserves — and finding new supplies — is vital until alternative energy sources become more viable. Drilling, however, remains a highly risky business.

ow would we cope without oil and gas? We need it Marine and Protective Coatings business. In the case of to heat our homes, power our cars and cook our the Deepwater Horizon, methane gas from the well shot up food. These resources are – and have long been – the drill column under high pressure and then expanded onto an essential component of modern life. As the global the platform where it ignited and then exploded. The platform population increases and more countries grow economically, ultimately sank due to the resulting fire. “Corrosion and spillso the thirst, and pressure, for energy sources continues. age are other major risks,” continues Fletcher. “The sea is a However, accessing the world’s rapidly declining under- very tough environment. Corrosion of an asset – from a rig, ground supplies of oil and gas – often located in remote and a tank, a ship’s hull, a processing pipe under pressure or a hard to reach locations – is a risky business. The impact of ruptured riser pipeline – can lead to a serious fire or explosion.” not managing this risk effectively can have dire consequences Then there is global supply and demand. As the world’s for all areas of human society. The recent Deepwater Horizon oil and gas reserves decrease, but car ownership in emergexplosion and subsequent oil spill in the Gulf of Mexico ing economies such as China increases, the pressure is on brought this into sharp focus. to access the last remaining pockets of oil. These tend to be The disaster – the worst offshore oil spill in US history – in hard to reach places further and deeper out to sea, such saw an estimated 4.9 million barrels of oil pour into the Gulf as the golden triangle of the Gulf of Mexico, Brazil and West of Mexico. This impacted the environment, global and local Africa. This makes drilling – particularly deepwater drilling economies, company reputations, political relationships and, where the rig is not secured to the ocean bed – more dangerof course, human life: 11 people died when the rig exploded. ous, more expensive and more risky. The high number of third Television and newspaper images of dolphins, turtles and ma- party companies and contractors involved in the oil and gas rine birds coated in oil dramatically highlighted the impact of industry can also increase risk. the spill on the local marine ecosystem. Beaches and coastal Drilling for oil involves well owners, rig owners, builders, wetland grasses along the Gulf Coast, home to shrimp and installers and operators, as well as shipping companies which nesting grounds for birdlife, were badly damaged. These habi- take oil to the refineries. These third parties make up multiple tats, not to mention the food chain, will need time to recover. company work teams and the risk of human error or miscomThe global economy experienced fluctuations in fuel pric- munication increases. Difficulties are compounded by the fact es and stock market shares, damaging investment funds such that both national and international organizations are involved. as pensions. Local Gulf Coast economies were also hit. Fish- Global oil companies operate in various national waters and ermen’s livelihoods have been destroyed, while local tourism have to abide by different national regulations. So if drilling suffered badly during peak season, with hotels and restau- for oil and gas is risky, why not use less dangerous energy rants empty as visitors stayed away. Then there has been the resources, such as wind and solar energy? cost to BP – both financial and reputational. The company, Because while eco-fuels are growing in popularity, they do which created a $20 billion compensation fund, has already not yet have high enough yields to replace oil and gas. Once paid out $8 billion in the clean-up operation. It has also lost a energy conservation legislation and policy is fully exploited, valuable asset in the rig which was destroyed. The damage to this will change – in 50 years’ time, recycled waste might be BP’s reputation, and those of the other third parties involved fuelling our cars. But until such time, the inherent risks of drillin drilling for oil, is harder to measure. This will take time to ing for oil and gas need to be effectively managed. That way, recover. If it ever does. we can all get safe access to energy, to keep us warm, mobile The spill also had political ramifications. A British-owned and well fed. rig exploding in American waters prompted British Prime Minister David Cameron to meet US President Barack Obama to discuss how to deal with the consequences. No doubt, future environmental policy in the US will be influenced by the tried and tested Gulf of Mexico spillage. With the potential for such catastrophic consequences, effectively managing risks when drilling for oil and gas is crucial. And there are many risks. For a start, AkzoNobel’s International Protective Coatings business there is the obvious danger of dealing with volatile and poten- has been protecting oil and gas facilities from the effects of tially explosive materials like oil and gas in a harsh environment, fire and corrosion, under the name Chartek, since the early such as beneath the ocean. 1970s. Chartek helps companies in the oil and gas industry to “Without doubt, the biggest risk in the offshore oil and gas manage important risks. These include minimizing the impact market is the risk of fire and explosion that can result in the of fires and explosions on valuable assets and the resulting loss of life or the entire platform,” says Ian Fletcher, Protec- financial and human life consequences (see main feature). tive Coatings Market Manager, Oil and Gas, for AkzoNobel’s “Chartek forms an insulative layer during a fire, ensuring

55 Below: AkzoNobel supplied protective coatings for the Piltun B drilling, processing and production platform, which extracts oil and associated gas from the Piltun reservoir in Russia. Previous spread: Efforts to contain the environmental impact of the Deepwater Horizon disaster included setting controlled fires to burn the oil which leaked into the Gulf of Mexico. Photography: US Navy photo by Justin Stumberg

structural integrity as a result of fire and explosion for a defined period,” explains the business’ Worldwide Protective Coatings Technical Marketing Manager, Robin Wade. “This helps to avoid rig collapse and enable the fire to be put out and crewmen rescued. This failed to happen with the Deepwater Horizon explosion.” Chartek can withstand the high rise in temperature occurring as a result of hydrocarbon fires and can provide up to three hours of protection for pool fire and jet fire scenarios. Chartek will also withstand blasts up to four bar over-pressure, ensuring that the fire protection is in place for ensuing fires. “Certification for Chartek covers structural elements, as well as decks and bulkheads (divisions)”, adds Wade. “When applied to divisions, not only is the integrity maintained, but the insulation also limits the passage of heat, protecting personnel during evacuation and while in safe areas.” The technology emerged from the NASA Apollo program. Materials were developed to protect the space module from destruction upon re-entering the Earth’s atmosphere by creating a heat shield. Chartek was then quickly recognized as both an excellent fire retardant and an effective way of addressing performance issues exhibited by cement and concrete used on oil rigs. These included weight and long-term corrosion resistance properties. The Chartek

product was not used on the Deepwater Horizon rig. If it had been, perhaps the disaster could have been avoided. But will any changes for fire insulation come out of the incident? “There are many rules and regulations and guidelines for fire protection, however these do not always adequately cover all scenarios found for oil and gas production and processing facilities,” continues Wade. “It is only when a major incident, like the Deepwater Horizon spill, occurs that investigative work allows new guidance to be developed.” AkzoNobel’s International Protective Coatings business also provides a range of ballast tank coatings for vessels operating in the oil and gas industry, including FPSOs and FSOs. “As more and more vessels and structures access larger quantities of deep sea oil, they remain on station for longer periods,” notes Protective Coatings Market Manager, Oil and Gas, Ian Fletcher. “This means their ballast tanks are constantly loading and unloading seawater to ensure vessel stability as they add or unload their cargo. To combat this corrosion, our ballast tank coatings can provide well in excess of 15 years of protection before any maintenance is required.” Other oil and gas services include approved third party coatings applicators to ensure Chartek is applied correctly; Interplan to manage corrosion risks; and Intersafe training to help raise health and safety standards in worksite environments.

thirst

a for answers WORDS Mary Cuddehe PHOTOGRAPHY Susannah Sayler/The Canary Project

It may well make up 70 percent of our planetâ&#x20AC;&#x2122;s surface, but water scarcity is already a serious problem. Which is why major efforts are being made to ensure that it is managed properly. Before we run out.

ave you ever wondered what the world would look water management of “natural water systems, levee systems, like without enough water? Mexico City is an inter- water infrastructure, water utilities and water treatment facilities.” esting place to begin. The population of approxi- Ambitious to the say the least, the program proves that some mately 20 million uses 480 million cubic meters of companies are betting that water is going to become an imporwater a year. Seventy percent is pumped from underground tant market. aquifers, which are overdrawn at twice their rate of replenishFor large multinationals such as AkzoNobel, the new tools ment, causing the city to sink a few centimeters each year. The and trends are changing the way business is done. “We exremaining 30 percent gets piped in from reservoirs 80 miles pect business managers to address the water usage situation outside the Valley of Mexico. of suppliers and customers to assure sustainability of the whole But when there isn’t enough rain, the reservoir levels dip supply chain,” says Richard Westlake, Director of Sustainability dangerously low, forcing city officials to temporarily shut off and Innovation for AkzoNobel’s Functional Chemicals business. service and stranding some residents without running water The company recently conducted what Ivonne Studer (AkzoNofor days at a time. Even when it pours, the Mexican capital – bel’s global focal point for sustainable fresh water management) one of the world’s largest megacities – is merely getting by on calls a self-assessment test to measure important risk areas water. But some areas of the globe have far more serious scar- that could impact the organization’s use of water (water sourccity issues. Parts of Africa and Pakistan are facing extreme es, supply reliability, water discharge efficiency, compliance, soshortages, while rapidly industrializing countries with booming cial impact). “We’re trying to raise awareness in the company,” populations, such as India and China, have similar problems. she explains. “Water used to be a free resource that was availThese are only likely to become more common around the able. Now we need to look at it as a resource which needs to globe over the coming decades. be managed.” The number of people on the planet is expected to inThe company relied on two tools to assess its risks concrease 33 percent by 2050, by which time 70 percent of hu- cerning water scarcity – the Global Water Tool and a self-asmanity will live in heavily resource-dependent cities. “Water sessment developed internally using a combination of available will probably be the biggest challenge for resource-use going tools in the market such as the Collecting the Drops GEMI. For forward,” warns Bjorn Stigson, President of the World Busi- the identification of locations with water stress, AkzoNobel used ness Council for Sustainable Development (WBCSD). A rising the World Business Council’s water tool to evaluate its producpopulation means more pollution, more resources consumed tion locations around the world. Only one country, Estonia, was and most probably less water. But this is not a puzzle for determined to have a high risk based on the water scarcity environmentalists and city planners alone to piece together. index in the future (according to the Global Water Tool 2025 Private companies have as much to lose as private citizens. trends). But Studer says the concept of water as a limited re“If you have coal, you need water,” continues Stigson. “Water source has become central to the way the company thinks, and connects to energy use, water connects to food, and industry that is part of the sustainable strategic plan. AkzoNobel wants is most likely to be cut off from water if there is a scarcity. The its production sites to be fully sustainable in water management government isn’t going to stop having it. They’re going to close by 2015. “Water has become a vital element for our sustainable the valves on water availability for industry.” operations,” she adds. “We decided to be proactive and not Industry, it seems, is waking up to the risks. Water once wait until water becomes a scarce resource for our locations. served as a sort of understudy to blockbusters such as air pol- We want to responsibly manage it wherever we operate.” lution when it came to corporate attitudes on the environment. In fact, AkzoNobel is, in some ways, already ahead of the Lately, however, that has started to change. A recent United corporate curve on water. A €16 million eco-efficiency proNations Global Impact/Accenture Zero study on CEOs found gram at one of our chemical plants in Greiz, Germany, has that 93 percent viewed sustainability as critical to their suc- been running for 20 years. During that time, the factory’s waste cess. And water is a part of that conversation. stream – which once exceeded the output of desired product As the commodity’s value – or at least the awareness of – has been reduced by 70 percent. (A parallel research project it – rises in development and business circles, new tools and exploring newly efficient ways to make polysulfides also began regulatory guidelines are being created for companies that last year.) The results extend beyond the factory. Independent want to streamline production and reduce intake. In 2007, the tests last year on the Weisse Elster river downstream from the World Business Council released a Global Water Tool, a mecha- plant determined that fish and micro-organisms were prospernism which is designed to help businesses calculate their total ing. Westlake says that the river’s health is at least partly the water consumption, efficiency and vulnerability. And IBM, for result of the program developed by researchers and engineers example, has created a bundle of packages to improve local from Greiz and AkzoNobel.

Right: Many Nigeriens now have to travel long distances in order to find water. Previous spread: The area that was once the Qin Tu Hu Lake in Gansu Province, China.

But he points out that this isn’t the company’s only success. At another European plant, in Delfzijl, the Netherlands, the site is developing a method for cleaning wastewater which can then be redistributed to neighbouring businesses, reducing the total ground water consumption in the area. The Netherlands does not have a water shortage or any need to safeguard against maladies such as Mexico City’s sinking water table. In water, as in real estate, it’s all about location: availability depends on access, and the fact is that some places may never have to contend with significant

shortages. Nevertheless, efficient water management is a good habit the company wants to get into throughout its many operations around the world. Yet management of water remains a global concern as much as a local one. According to the WBCSD, 60 percent of the world’s fresh water supply comes from ten countries. But if one country’s population is starving, or one industry is forced to close factories, the impact is never isolated. As Westlake puts it: “Sustainability relates to the business as a whole.”

crimestoppers WORDS Jim Wake

Covert detective work has come a long way since Raymond Chandler’s hardboiled style first brought Philip Marlowe to life and Dashiell Hammett created Sam Spade. Because in the 21st century fight against corporate crime, it’s more Robocop than pulp fiction.

ike Lacie (not his real name) had what he came for. He’d learned the ropes. Put in his time. He had the creds to move up in the world, strike out on his own, make it far bigger than he’d ever get as Marketing Manager at the UK-based firm we’ll call Acme Manufacturing Company. And he had something else that no one else did – intimate knowledge of Acme’s workings, its strategy, its product pipeline and its customers. It was time to move on. He gave his notice, waited it out and they sent him off with their best wishes for success in the future. That might have been the end of the story, but for a tip from an Acme client. That Lacie character was suggesting that maybe he could offer something Acme couldn’t. Were they aware of that at Acme? That’s when they called in Dave Kearns, a broad-shouldered ex-cop who headed up a firm whose name said it all – Expert Investigations. Maybe he could check it out. “Sure,”

said Kearns. “It’s what we do.” So they put a tail on Lacie, placed a covert tracking device on his car, discovered him moving around pretty suspiciously, meeting lawyers, seeing accountants, caught him on camera frequenting the sort of places you might visit if you were in the business that Acme was in. Unfortunately for Lacie, the non-comp agreement he’d signed was still in effect. “When we took it back to the client,” explains Kearns, “the client said he was in breach of contract. So we decided that we would data mine his old computer.” Turns out that Lacie had rigged his computer so he could continue to log in from outside the office. And that’s not all. He’d even bugged the place so he could eavesdrop on his successor. It all came back to bite him. Because Kearns could trace the e-mails back to even before Lacie had left – and from that data trail, it was obvious he’d started plotting his scheme while still on the Acme payroll. What’s more, the e-mails

showed he was in cahoots with the sales manager, who’d stayed behind and fed him information. But Kearns cleverly turned the tables on Lacie, by using the bug to send out false leads to the over-confident aspiring entrepreneur. The jig was up when Lacie took the bait and fed it to a potential new client. Last Kearns heard about the case, the judge was coming down hard on Lacie and his would-be accomplice. Kearns spent 25 years as a police field intelligence detective – tracking criminals using old-fashioned shoe leather techniques and higher-tech snooping devices. But he tired of the red tape and the bureaucracy. So ten-and-a-half years ago he set up Expert Investigations with a staff of ex-police detectives and ex-military operatives as what he calls a “commercial and corporate risk management detective investigation agency”, to distinguish it from the unregulated detective agencies. “A lot of people come into the industry because they think it’s something easy and sexy and you don’t have to have any skills for it,” he explains. “So you’ll get one guy sitting in a car with a camcorder involved in matrimonial issues. For us, however, being commercial investigators, all our work is commercially based, with a business focus. “Our clients range from PLCs and government bodies all the way down to a sole trader, but they all have the same kinds of issues, which can have a devastating effect on a company. The areas we generally work are internal and external theft and fraud: white collar, blue collar, tangible and intangible items, fraudulent claims, false absenteeism, employment issues such as breach of contract, subversive individuals, harassment, discrimination in the workplace and risk assessment and close protection. I would say that there’s not an industry that isn’t at risk in some form. We’ve seen thefts and fraud in every industry you want to know about, so everybody needs to be aware of their risks at all times and they need to know

what to do and to educate themselves as to what facilities are available, should they need them.” But old-fashioned thievery and fraud aren’t the only risks that companies face these days. Data theft and theft of proprietary information are prominent risks. Terror is always a threat, but probably more serious is the disruption to business that might occur if a terror attack brings down your communications, or you have to shut down for several days, as recently happened when a terrorist cache of fertilizer to make bombs was discovered in an industrial park, bringing in a swarm of police to lock the place down while they investigated. And then there is the risk of damage to your business from adverse media that you might face if a high-ranking official gets caught in a compromising position. Plus, the less obvious and more difficult to measure risks of embarking on new ventures in untried markets. The thing is, it’s mostly a case of closing the barn door after the horse has bolted. In fact, more often than not, companies are oblivious. Although he sees a slow trend towards a more pro-active approach, Kearns says most of the time, information comes from anonymous tips, or from customers who report to their suppliers about employees who are ripping them off. “You generally have your first dealings with clients when you go to investigate because something has happened. This week, for example, we’ve just done a large factory premises that’s been burgled twice. The first time they cut the phone wires and went in. The second time they knocked a hole through the wall. So now they’ve come to us and said we’ve got to thwart this. We’ve gone and secured the premises so they will not be subject to any more burglaries.” The message Expert Investigations try to get across is that they can help companies to avoid a lot of grief by carrying out a thorough risk assessment before anything has happened.

Kearns suggests that companies need to take a more comprehensive approach to risk management than most do. Gone are the days when you could hire an ex-cop and be done with it, or let your facilities manager oversee security. Neither have an adequate understanding of the intangible risks that can bring a company down. “It used to be that security was one person’s role and risk management or contingency planning was somebody else’s. Now they both sit so closely aligned to each other that it is better to have one person doing security and risk management. You need to have it at a high level – at board level because the risks you face are not just security, but general business risk.” So what does it cost to hire Expert Investigations for a risk assessment or an investigation? “It can be anything from a couple of hundred pounds to £50,000,” Kearns offers. “It depends on how much is being done.” A three-man surveillance team – car, van and motorbike rigged up with built-in surveillance equipment – will run £1,500 a day. Forensics or computer data retrieval might run more. The company employs 14

retired police officers with investigative skills, and 26 ex-military from the British Special Air Service (the SAS) and Marine Commandos. They’ll hide in the shrubs day and night to stalk a warehouse or suspected crime scene, or even, as happened not so long ago, seal themselves into a fully equipped building container – cameras, transmitters, solar panels, cooking and sanitary facilities – for 28 days to get the goods on a gang of thieves who hadn’t a clue they were being watched. Whatever it takes, says Kearns. Their corporate motto is right people, right skills, right kit, and right support delivers the right results. If you want to make sure you’re not going to fall victim to one or another of the disasters that can befall the underinformed, unwary and ill-prepared, Kearns advises you to take a good, hard, honest look at what you’ve got going, how it all fits together, what you could lose if it doesn’t all quite go according to plan. You might get it done yourself, or maybe you’d be better off calling on the experts. “In theory,” he says “you know your business better than anyone else.” Left hanging like that, it doesn’t feel altogether comforting.

to protect and serve

If you want to keep thieves out of your house or your store, you can put a lock on the doors. But if you want to prevent the theft of ideas and know-how, it’s not so easy to manage the risks. At AkzoNobel, the person most directly responsible for protecting the company’s ideas and identity from illegal poaching is Loek Penders, Director of Intellectual Property, otherwise known as IP. Penders manages a staff of around 30 attorneys and 30 support staff at six locations around the world, making certain that technical innovations are protected by patents; brands and trade names are registered; works are protected by copyright; internet domains are registered; and trade secrets remain secret. Protecting intellectual property also means enforcing your rights against infringers and cooperating with local authorities to keep counterfeit products out of the marketplace. It’s not quite the cloak-and-dagger stuff of Expert Investigations (see main feature) or one of those made-

in-Hollywood industrial espionage thrillers. More a matter of raising awareness, using the staff to register and defend IP rights and offering good advice to those in the company who deal with confidential information, be that technology or strategy. It may involve deciding, for example, if it is better to patent an innovation – which necessarily means revealing the technology to the public – or maintaining the information as a trade secret, which means that if a competitor comes up with the same technology and patents it, AkzoNobel may no longer obtain exclusivity. “More and more,” says Penders, “we’re responsible for strategic support, particularly to the R&D community and the marketing community.” One concern is to invest in innovation for which the “output” can actually be protected. “Otherwise,” he observes, “the effort may well be wasted because someone else can copy it immediately, and you lose your competitive advantage.” Penders adds that the threat of

industrial espionage is not so prominent – he’s never had to deal with a single case – but what does remain a constant concern is someone leaving AkzoNobel with inside knowledge and then sharing it with a competitor or going into business and using the knowledge to gain a competitive advantage. Training programs is one of three main tools Penders uses to protect the company’s trade secrets. A second is access control – making certain that locations, databases, intranet sites and other depositories of information are only accessible to those who really need to use them. Thirdly, says Penders, people who have access to confidential information should be required to sign confidentiality agreements. Paradoxically, AkzoNobel’s size and global footprint are sources of both strength and increased risk. “Investing in innovation and using our global strength more and more, with R&D facilities all over the world, is a good thing. But it also brings risk that needs to be managed professionally.”

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