By now, you have probably learned of the final play that resulted in a unbelievable finish to the Michigan-Michigan State football game. Michigan, with 10 seconds left, a 2-point lead, ready to punt the ball to a timeout-less MSU team. Michigan’s punter subsequently fumbled the snap & then tried to punt the ball in a reverse position. During the effort to get the ball off, it was then jarred, landing in the hands of an MSU player, who raced down 47 yards, with time expiring, to provide the miraculous finish for an MSU victory.
Anyone watching the game was in disbelief. 111,000+ fans left in silence, stunned by what they had just saw. What were the odds of that happening? Did anyone really expect that outcome?
What does that play/outcome teach us about insurance/risk management? The play and ending reminds us to be wary of making decisions on probability versus possibility.
Business owners are faced with risks throughout their operations. Some risks are good and offer good returns, other risks are potentially catastrophic. Insurance and other management procedures are used to manage these risks and help influence a viable business objective(s) for organizations.
When considering risk transfer and insurance purchases, the guess-work of probability often influences the final decisions of what to buy. In reviewing risks, many owners say “what are the odds of that happening?” and dismissals of risk are quick to follow.
As risk management professionals, we must help to look at what is “possible” not just at what is “probable.” After reviewing all risks based on possibility, organizations can then make the best decisions with current information.
To answer the question of the “odds” of the final play made by MSU, the probability was 0.002% according to ESPN sources/new articles. Michigan coach Jim Harbaugh states, knowing what he knows after the final result, he would have made different decisions.
For businesses, it’s not just a game. What’s at stake are people’s livelihoods, family businesses and community engagement. Just as Coach Harbaugh stated, after a low probability risk occurs, hindsight often leads to a different decision tree that should have been made before the event.
When looking at your risk protection strategies, ask yourself, is it possible? If the answer is “yes” then you should address the risks- your business depends on it.
by Brian Pilarski