Babes in Lawsuit Land
What Are Risk Scenarios?
Each Risk Scenario consists of two parts — The Scenario and The Analysis.
Part 1: The Scenario (15 minutes) Read The Scenario and answer integrated poll questions that solicit your approach or feedback to the situation. The Scenario is based on hypothetical situations that showcase emerging risks.
Part 2: The Analysis Review key themes in the Summary, access relevant articles and resources, learn about existing products and discuss the scenario with other participants.
Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.
Paul Ferranzo took a deep breath and surveyed the fairway of the Par Four 16th as it banked left and around the stand of maple trees that blocked a player’s view of much of the green. He was strongly tempted to intentionally hook the ball and try to cut 25 yards off of his second shot if he could.
A Tiger Swallowtail butterfly chose that moment to visit the hydrangea bushes next to the ball-washing machine that flanked the tee. Paul tried to blank the butterfly out of his mind. He had $500 on this game and his opponent, who was also his insurance broker, was standing about 25 feet away.
The broker was ostensibly staring at the face of his iPhone, reading a text message, maybe. But if Ferranzo knew him like he thought he did, he knew the broker was secretly wishing Paul would shank one.
“Screw it,” he said to himself. “I’m going to bend this baby.”
Paul settled his feet, dropped his head, drew the head of the driver back and swung through, letting the club face linger on the ball just a millisecond longer than he normally would. He brought his head up just in time to see the ball begin to descend from the peak of the drive. The ball took a nice, midsummer grassy bounce, heading left, just where Paul had wanted it to.
“Holy crap!,” his broker said with a real edge in his voice.
“Wasn’t that great a shot,” Paul said, turning to see his broker still staring at his iPhone.
The broker looked up with concern in his eyes. Then cast a quick glance to where he last saw the golf ball.
“Not that. Don’t you have a distribution center near Lincoln?”
Paul felt ice water enter his bloodstream.
“Two tornadoes touched down in Lincoln, or just outside of Lincoln, about an hour ago. Big ones, one an F3, the other an F4,” the broker said.
“Can you drive?” Paul said, motioning to the golf cart. The broker nodded and headed briskly to the cart, sheathing his driver in his golf bag with practiced alacrity.
By the time they got to the club house, Paul, the risk manager for the Beamish Babe retail line, had learned that the company’s distribution center near Lincoln had been torn that very day into unproductive pieces.
Game over. Game on.
The supply chain implications of the loss of the distribution center were sobering, to say the least. Paul had a feeling the implications were big. He really couldn’t say just how big. It would probably be days before the company knew the full extent of this.
In the back of his mind was the company’s 10K for 2011, which it had published a scant three months ago. The work Paul and the company’s finance committee had put into that report was beyond anything they had ever taken on. But that was the atmosphere these days, with the SEC demanding more and more detail on risk exposures from publicly traded companies.
This supply chain loss loomed large. Paul now worried that the company’s reporting in this area might have been inadequate.
“Who knows,” he said to himself as he drove home for what was probably not going to be a very good night’s sleep. “Who knows what the SEC will make of this,” he said.
“Or the shareholders.”
(The Scenario continues on page 2)