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Well-managed risks yield rewards: Albright

Well-managed risks yield rewards: Albright

NEW YORK--Taking risks is a precursor to reward, even in an increasingly uncertain world, Madeleine K. Albright, former U.S. secretary of state, told an audience of insurance industry members and academics last week.

"Risk is indeed an inescapable reality of life," Ms. Albright said. "Our purpose is not to eliminate risk but to manage risk."

Some risk categories that present particular challenges today are acts of God, such as cataclysms and natural disasters, and damage caused by people, she said. "Human beings create the toughest tests of leadership through violence, terrorism and war," Ms. Albright said. But "there is nothing inevitable about killing and strife--violence is a choice."

Ms. Albright was the highest-ranking woman in the U.S. government when she became secretary of state in 1997. She now is a principal of global strategic consultancy The Albright Group L.L.C. in Washington and chairs the Pew Global Attitudes Project. She made her remarks at St. John's University's School of Risk Management, Insurance and Actuarial Science as part of the school's William J. Parkinson Distinguished Lecture Series, sponsored by the school and the Kathryn & Shelby Cullom Davis Library (see box).

Brian Storms, chairman and chief executive of Marsh Inc., introduced Ms. Albright, who spoke on a variety of topics, from climate change to globalization. "The process of destroying our habitat will accelerate as industrial development continues in India and China," she said.

In addition, the U.S. war in Iraq has become "the greatest disaster in American foreign policy" in terms of unintended consequences, which have helped increase uncertainty in geopolitics, she contended.

Such uncertainty presents challenges to businesses seeking to enter emerging markets. "The hardest thing" for businesses to cope with in emerging markets "is arbitrariness," Ms. Albright told Business Insurance in an interview following her speech. Corruption and "rules that can be changed by fiat" create great difficulty for foreign investors, she noted.

"On the other hand, there are opportunities in emerging markets to do good and mitigate a lot of this," she said. "You can't have democracy without a middle class, and to develop that you need domestic investment, but you can't attract domestic investment without foreign investment," Ms. Albright said. "So while there is risk, there is also an opportunity" to help markets work.

Despite broad opposition to U.S. policies, people in many nations have favorable attitudes toward American culture, Ms. Albright said.

Last Wednesday, the Pew Research Group released results of its study of attitudes in 47 countries. It shows that majorities in 25 nations have positive views of the United States. Favorable ratings are lower, however, from Pew's last such study, conducted in 2002.

"The survey shows criticism of our policies, but those can be changed," Ms. Albright said. "To the extent we can see ourselves as partners and help others get out of the hole they're in, that goodwill continues to be there."

A global perspective

Madeleine K. Albright, right, last week spoke at St. John's University in New York as part of the William J. Parkinson Distinguished Lecture Series, established in 1987 at The College of Insurance in memory of a former Johnson & Higgins executive. The lecture series reflects the idea that insurance industry leaders should take a broader perspective and learn from scholars and public figures, said Ellen Thrower, executive director of St. John's School of Risk Management.