The Risks are Real

For students in USC Marshall’s Risk Management program, the lessons just got real

March 24, 2020

Four years ago, members of the Southern California risk management community approached USC Marshall with a challenge. 

They were reaching retirement age, and there were very few young professionals in the pipeline to replace them. Could they partner to create a program of study that would introduce undergraduates to the field of risk management?

They could, and did. In 2018, USC Marshall created a minor in risk management, and hired Kristen Jaconi, an attorney with extensive governance, risk management and Washington policy experience, to run the program. 

Now, with the novel coronavirus shutting down colleges, towns and non-essential businesses across the country and the globe, the purpose of risk management as a profession has become crystal clear. 

“It’s a fascinating time to be teaching risk management,” said Jaconi. “In mid-February in the Enterprise Risk Management class, we were reading excerpts from Nassim Taleb’s The Black Swan and discussing network theory and the cascading of risks through an interconnected economy. Now, the ERM students are using those conceptual frameworks to explain the world around them.”

While it’s too early to predict whether the Coronavirus pandemic will drive students into the risk management program, she said, it certainly has made for some highly engaging class sessions. 

In a campus-wide test run of bringing classes online for three days before spring break, Jaconi noted a deeper level of engagement from her students. Since late January, her Risk Management in Entertainment, Sports, and the Arts course has been discussing the coronavirus’s impact on the event space. 

First, in February, events in Asia were cancelled or restricted, including the Tokyo Marathon and Art Basel Hong Kong. Then, in early March, Europe followed with professional soccer being played in arenas with no fans. 

It hit closer to home in mid-March. “During the last class I saw the students in person it was announced that Coachella was being postponed. Many of my students were planning to attend.”

Experiencing Risks

Jaconi has seen her share of crises. She was a corporate attorney working with some of the largest telecommunications firms when the accounting scandals of 2001-2002 hit, and she was serving at the Treasury Department as a senior policy adviser when the 2008 financial crisis unfolded and wreaked havoc on the economy. 

This, however, feels different, she said. 

“This is something much more devastating, especially given the human fatalities,” she said. “You could consider 2008 a suspension of credit and liquidity and today a suspension of life.”

With the announcement that all classes will be held online through the end of the spring semester, Jaconi is looking forward to her lineup of speakers, all of them with risk management responsibilities, all of them facing very real issues. 

Students in her risk management in entertainment, sports and arts class will be hearing from the registrar and collection manager of USC’s Fisher Museum of Art and the former global chief compliance counsel for Sotheby’s.

Her ERM class students will be hearing from two risk management executives from Disney, Steve Wilder, senior vice president, risk management and Stephanie Conner, risk management manager. With Disneyland now officially shut down (but the Disney+ channel up and streaming), they are likely in for a master class on risk management.

There are other lessons for her students. 

They are understandably concerned, particularly her international students, many of whom have flown back to their home countries and are facing a set of risk controls upon landing, such as mandatory testing and quarantining. 

“For my students, it’s their first global crisis experienced as adults,” she said. “They were children during the financial crisis. But now, just as in 2008, they can see the ramifications of increasing globalization, urbanization, and wealth accumulation: the fragility of an interconnected world.”

The aftermath will also be a learning experience. A once-in-a-generation opportunity. 

“Currently, we are in crisis management mode, with some countries and organizations better prepared to respond than others,” she said. 

“Once this passes, we will need to engage in a robust lessons learned post mortem analysis. This will need to happen at every level of government, and for every organization, businesses, large and small, universities, school districts, charities, cultural institutions.”

In other words, there will be ample roles for those skilled in risk management. 

“The silver lining is that emergency response, business continuity, and contingency planning will be stronger, organizations will be more resilient, for the next inevitable pandemic,” she said.