Listening, or rather looking at the presentation of Kazumasa Yoshida, the CEO of Emergency Assistance Japan, I was yet again struck by the fact that there is no direct translation in Japanese for the English word “risk”. Yoshida even had a slide to define “risk”, with “risk” written as "リスク/risku” in katakana, which is the Japanese alphabet used for borrowed, foreign words. His definition of risk was the potential for a crisis to occur, which if then becomes reality, is a threat, and then when there is harm, is a crisis.
Crisis is “kiki/危機” in Japanese, and “kiki” is sometimes used instead of “risku”. This causes problems when trying to distinguish between risk management and crisis management in Japanese. Risk management then becomes two borrowed foreign words “リスク・マネジメント/risku manejimento” and crisis management is the entirely Japanese “kiki kanri/危機管理”.
I asked Ikeda why there was no word for risk in Japanese. He said it was indeed puzzling, when you considered how prone to natural disasters Japan was. His view was that it was something in the Japanese mind-set, that cannot deal with a crisis in advance, only if it happens in front of their eyes. This, he added, is why Japan has not coped so well in terms of preventing natural disasters from turning into wider crises, as with the Fukushima earthquake.
This kind of explanation can shade into the Myth of Japanese Uniqueness/Nihonjinron school of thought, which I am not so keen on. My preferred explanation is a mix of more universal psychological, geographical and religious influences. Most humans are bad at assessing and dealing with risk, vastly overestimating the probability of facing situations they cannot personally control (airplane crashes, terrorist attacks) and vastly underestimating the risk posed to them by situations they think they can control, such as crossing the road, or skiing. So it’s the very fact that Japan has had a history of massive and regular natural disasters such as earthquakes, volcanoes and tsunami, that causes a numbness to set in. The Japanese expression “carp on a chopping board” springs to mind. Apparently carp, when faced with a chopping board, know the end is nigh, so stop fighting it and face the inevitable.
This kind of acceptance of fate, and seeing struggle as a waste of effort, is very much a Buddhist teaching. And yet, looking out of the window of a bullet train in Japan, you can see the enormous but often useless efforts being put into preventing a disaster from occurring or having an impact in Japan – the concreting of the bottoms of mountains and the sides of rivers to prevent landslides and flooding and the huge concrete boulders and walls that cover the coastline. And yet the markers left by previous generations who survived tsunami, warning that houses should not be built beyond that point, were ignored.
Japanese companies are riddled with processes for double and triple checking, imposed after a mistake has happened and yet when a mistake does happen, it is usually covered up rather than dealt with. A participant in one of my seminars told me how a misdirected client confidential fax, which ended up on the private fax machine of an elderly Japanese lady (fax machines are still quite common in private homes in Japan) resulted in the old lady ticking off a senior director, who then immediately imposed a “fax buddy” system on the entire company – Japan and overseas. Any employee sending a fax must be accompanied and monitored by another employee.
This story found its way into an article in the Nikkei Asia Review, by Michael Stott, a Financial Times journalist who heard it at one of our Japan Intercultural Consulting seminars in Japan. As his article observes, “the painstaking decision making processes, the elaborate corporate hierarchies, the extreme fear of failure and the entrenched conservatism have not changed much” for Japanese companies over the past couple of decades.
Ikeda had a clear recommendation for what Japanese companies should do, namely, appoint an executive to be responsible for “risk”. They should not be someone who has been moved horizontally away from business line management because they are deemed to be no longer effective (which would be a classic Japanese corporate resolution). They need to have the ear of the President and be able command business units on what they should do. It should therefore be an important and recognised role – either for a specialist, or be made as a precondition that any President should have occupied the role. And they should be someone who, as he put it, “doesn’t run away.”
Ikeda said the question he usually gets asked is how he ended up founding the company - which, as the name suggests, provides assistance to Japanese overseas who find themselves in life threatening situations. It would seem in itself to be a risky venture, given that Japanese notoriously won’t pay for something which is simply a service. As a consultant to Japanese companies, I do indeed recognise this problem. He said when he was working for Yamaichi Securities in Paris, he came across a similar French company and thought Japan could do with such a service and then what with one thing and another…
He did not need to specify – the name Yamaichi Securities alone tells the story for Japanese business people. It was one of the most famous casualties of the 1997 Asian financial crisis and the uncovering of illegal trading which in turn was covering up losses made on client accounts. The company’s last president made a famously tearful public apology on television. Unfortunately, lessons in managing risk do not seem to have been learned twenty years’ on, with a seeming procession of Japanese Presidents bowing their heads in shame at unanticipated risks and covered up mistakes which escalate into full blown crises. Judging by the other reactions to Ikeda’s presentation, the audience at least will be lobbying their companies to appoint a senior risk executive as a matter of urgency.