When Hurricane Katrina made landfall in 2005, it caused 1,800 deaths and some USD125 billion in damage, flooding about 80% of New Orleans, Louisiana. At the time, it was one of the costliest hurricanes ever recorded.
As CEO of Argo Group at the time — a global specialty insurer and reinsurer — we were faced with potentially hundreds of millions of dollars in damage claims from our business customers. Heavy flooding, lost roofs, power outages … everything was set for a cascade of bankruptcies for years to come.
And yet, when the tide receded, nearly all our customers remained in business, including restaurants in the severely hit French Quarter. To add to the tremendous resilience shown on the ground, we helped by covering their loss of income and securing access to raw materials.
Not only that, but we also survived the event ourselves, which is not a given for an insurer after a natural disaster of this scale. In fact, the following year we were able to acquire new customers and generate growth in the process.
In my experience, resilience is the ability to process existential shocks, absorb them and keep moving forward toward a better place. But for many of us, that is easier said than done, especially when we suddenly find ourselves in the eye of the storm. Here are five tips that help build resilience.
Anticipate and build your toolbox
In the case of Katrina, like other natural disasters, business owners had anticipated such an event by, among other things, insuring their businesses. We, as an insurer, had prepared for such an event in many ways as well, notably by having enough capital, securing access to new capital — should we need it — and by pushing to grow our customer portfolio immediately after the event.
The path to resilience is found through preparedness. Dedicate some time to pre-building your own toolbox before a potential shock. You can do so through a combination of things:
- Being mentally prepared — plan for the worst, hope for the best
- Having a disaster recovery plan for yourself and business
- Having a unique skillset that differentiates you
- Saving for a rainy day
- Having strong connections
Stay alert and informed
We’re often so focused on daily projects that we miss the big picture: What’s happening outside of our own bubble? What are the current and future trends? Where is the world going?
It’s true that we can’t predict the future, but we can get a broad understanding of our environment and what’s going on by digging and thinking.
— Mark Watson, Founder, Aquila Capital Partners share
If you’re in a field where climate can hurt your business more than anything, you might want to buckle up for hurricane season or rising sea levels. If it’s economic crises you worry about, you might want to study how we’ve had one every 8 to 12 years on average since 1987, then get ready accordingly. For instance, as is now common knowledge, in part thanks to the movie “The Big Short,” a handful of people did see the economic crash of 2007-2008 coming a couple of years prior, and they did so by digging into mortgage-related data.
Stepping outside daily execution mode to see the big picture will not only guarantee your resilience, but also give you an edge over everyone else.
Resist the emotional tsunami
During major shocks, emotions are heightened and tend to take over rational thinking. Fear will be more likely to drive decision-making than strategic planning, and the irrationality of hoarding toilet paper at the beginning of the COVID-19 pandemic is the perfect illustration of this.
However, just as the panic took over, some businesses showed exemplary resilience. For instance, as stores were shutting down worldwide, many companies, like Nike, were able to leverage its customer relationships in order to boost online sales.
In times of crisis, careful planning and rational thinking will naturally improve your chances of success and your resilience.
Be quick and open
When I was in high school, I was inspired by my grandfather’s work in the oil business, and I also wanted to become an investment banker. So, I decided to become an investment banker in the energy sector. But as I was in law school, the crash of 1987 happened, and no one was hiring investment bankers anymore. My dream and career path evaporated overnight.
Thankfully, I had some previous experience in insurance that I leveraged to get into a law firm, and then took it from there.
Things move fast during a crisis. Be quick on your feet and be open to adapting your plan as you go. This can be greatly facilitated through anticipation and preparation as mentioned in the first tip.
Consider the end of the tunnel
When you’re going through the storm, remember to look toward the light at the end of the tunnel. It will give you hope and strength to keep going.
After all, resilience is also about optimism — always remember that after the rain comes the sun! In our case, a year after Katrina, our share price went up by 50%.
