Risk management is erring on the side of preparation rather than on the side of celebration

June 22, 2015

by benign0

Is information that we get from politicians, celebrities, and business people reliable? Think about it. These are people who’s job it is to tell people what they want to hear rather than what they need to hear. Politicians want potential voters to think that they have a bright future that they will, presumably, be led to by said politicians. Businessmen making a sizeable investment in a country will always express their “bullishness” about the market of said country — because share prices rise on the back of positive perceptions. Celebrities will tell people what their sponsors, producers, and directors tell them to say.

Who then fills the void where being realistic on the bases of objective facts is the primary goal? It’s simple, really. People who don’t have agendas.

Relying on politicians, traditional media, and the business community for information on what the future potentially holds is like relying on a Toyota salesman for advise on what the best car to buy is. The Toyota salesman will give you the best options available — as long as they are all Toyota options.

Take, for example, the way AirAsia Group CEO Tony Fernandes gushes about the Philippines…

“This is an amazing country. Every time I go there, I love it even more. In ASEAN, Philippines is probably the best economy right now. In past years, you’ve lagged behind but because of political reforms, openness, you are catching up with the best economies… Philippines is the one I keep telling people about during conferences, the one I’m most bullish about in ASEAN,” Fernandes told reporters at the sidelines of the Paris Air Show in Le Bourget last week.

Most Filipinos will eat all that up and fail to see Fernandes’s real agenda which, if people applied a bit more brain to what they read, can be gleaned from what Fernandes says next…

“Philippines has 2 million tourists, Malaysia has 20 million tourists. Something’s not right. You have a beautiful country. You have so much more to offer than Malaysia. We think we can contribute to that,” he said.
Fernandes noted the Philippines has a lot of tourism potential, which the airline can help develop.

But of course. When you run an airline in the Philippines, there’s lots of money to be made if the Philippines lifts its tourism game. It’s a thing called “growth potential”. If Malaysia can rake in 20 million tourists, it follows that the Philippines can potentially pull an additional 18 million visitors through its entry ports.

AirAsia needs those suckers. In a rare stroke of journalistic insight, that quoted ABS-CBN News report provides this notable bit of contextual information:

While AirAsia Philippines has yet to turn a profit since it started operations in 2011, Fernandes said he expects the unit to post a profit in the fourth quarter.
“I think Q4 this year but hopefully, we can try to do it earlier,” he said.
AirAsia’s Philippine unit is also eyeing an IPO by 2017.

There you go.

So now the right question to ask easily comes to us in hindsight following the above insight…

Why does AirAsia’s Tony Fernandes say that he is “bullish” about the Philippines?

Answer: Fernandes has to say all that — because he needs to talk up the market for Philippine tourism to get lots of bums on his planes’ seats. With an IPO for his beleaguered Philippine operations looming in the horizon, Fernandes as CEO needs to make AirAsia’s Philippine adventure work. Happy shareholders keep CEOs employed.

Armed with this insight, we now need to ask ourselves: When someone like Fernandes and, again, anyone with an agenda tells us that they are optimistic about the Philippines, should we be taking that as The Truth?

That’s not to say that being optimistic is necessarily bad. The point being made here is more about the benefits of applying a critical mind to digesting information served to us by people we are told to believe. When we are pessimistic by default and optimistic by exception, we become better managers of our destinies.

It means that we err on the side of preparation rather than celebration.

The above philosophy towards risk management is a close cousin of an ethic of focusing on results rather than promise. Unfortunately for Filipinos we apply the wrong sorts of thinking to the imporant task of charting our destinies: Pwede na yan (“that’ll do”) when it comes to preparation and bahala na (“come what may”) when it comes to foresight. It’s a recipe for absolute failure — which is why the Philippines is where it is today.