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Black Swans and Herding CATS

Black Swans and Herding CATS. Leadership lessons from EQC’s response to the Canterbury Earthquakes. A caveat…. Context: Canterbury earthquakes. New Zealand’s most severe losses since 1920s to 1940s. 185 deaths Economic losses estimated at $NZ 40 billion (20% GDP)

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Black Swans and Herding CATS

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  1. Black Swans and Herding CATS • Leadership lessons from EQC’s response to the Canterbury Earthquakes

  2. A caveat….

  3. Context: Canterbury earthquakes • New Zealand’s most severe losses since 1920s to 1940s. • 185 deaths • Economic losses estimated at $NZ 40 billion (20% GDP) • Insured losses estimated at $NZ 30 billion. • 150,000 homes damaged • GDP in 2011 reduced by 1.5% • 2.5% NZ capital stock destroyed

  4. Events Since June 2011 Known unknowns Claims by event type • New Zealand’s location on the Pacific “ring of fire” means it is prone to earthquakes and volcanic eruption. • Every year there are some 15,000 earthquakes in New Zealand. • About 100 – 150 of these are large enough to be felt by the population. • Our communities also face a number of other natural hazards including landslips and floods. Earthquake Landslip/Storm/Flood Mt Tongariro – 21 November 2012 Nelson Landslips & Floods, 15 December 2011 Opunake – 6.5, 3 July 2012 Taupo – 5.5, 17 October 2012

  5. Known unknowns – the “Shaky Isles”

  6. Unknown knowns

  7. EQC Response: Vital Statistics Data as at 5 July 2013

  8. Unanticipated Issues

  9. Unanticipated Issues • Complexity of multiple large events in the same location. • Response of EQC’s legislation • New roles for EQC and increased expectations of EQC. • Actions of key actors and stakeholders. • Depth of social/psychological impact (customers and staff). • Contingent capability model • focused on front line and the impact of “just in time” scaling. • need to develop “standard” organisational infrastructure, negotiate significant commercial contracts, against a backdrop of significant claims volumes and multiple events. • Assembling and training the (mainly private sector) workforce and coordinating service delivery with other agencies, while addressing these complexities.

  10. The Bigger Leadership Challenge Large CATS have long tails

  11. The Hierarchy of Denial Before • It won’t happen • or, if it does happen, it won’t affect me • or, if it happens to me, it won’t be bad • or, if it’s bad, then there’s nothing I can do... So why are you worrying me with this?

  12. Reaction of Loss After • Psychological scarring • Over-estimation of repeat disaster • Risk appetite switches – from high to low • Risk over-priced How could this be allowed to happen?!

  13. Exercise Ruaumoko 2008 • Modelled GDP Impacts • Auckland: 47% regional GDP decrease • NZ: 14% GDP decrease Modelling by Market Economics Source: Statistics NZ and M Thompson, Auckland University

  14. The false dichotomy

  15. LeadershipDevelopmentCentre www.ldc.govt.nz

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