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Sunday, August 6, 2017

The Chameleon in the Room - Five Star Book Reviews

The Chameleon in the Room is a must-read for those managing risks!
By William Bastiaan on July 7, 2017 Format: Paperback

The writer looks beyond the obvious, makes comparisons across cultures. He ‘slices’ the concept of risk in fragments and does describe the obvious but, even more important, explains the non-obvious.
It makes you re-think, challenges you to look at things from a different perspective, and provides tips and direction, based on actual events. In short, very practical and a must-read for those engaged in the management of risks.

Recommended to everyone who wants to deal with business risks successfully!
By Andriy Sichka on November 26, 2015 Format: Paperback

I always had a feeling that knowledge of the theory is only one part. Another, much more difficult one is finding a way to apply it in practice. Reading The Chameleon in the Room resolved majority of my doubts concerned with risk management. Written by a practitioner for practitioners the book shines the light on the areas left by theories in dark, and gives clear guidance for everyday practice. I recommend this book to everyone who wants to deal with business risks successfully!


Tuesday, March 7, 2017

Empowerment is the Key to Creating Engaged Team Members

Far too many employees are not actively engaged at work or worse actively disengaged, mainly because they are not empowered to make decisions; they always have to refer ‘up’ before acting to solve a problem or grasp an opportunity.

They are not trusted to make ‘the right decision’ despite having been employed based on having the necessary knowledge, experience and common sense.

The best way to equip Team Members to make ‘the right’ decisions thus empowering and engaging them, is to agree as a team a clear Vision Statement.

The agreed Vision Statement can then be used as each Team Member’s reference point or compass when making an autonomous (empowered) decision.

Easy to digest guidance for creating a jointly agreed Vision Statement is available in the highly recommended, fun to read book “Full Steam Ahead!” by Ken Blanchard and Jesse Stoner.

To illustrate the points made, here is an example of a Vision Statement agreed by a Credit Team:

Purpose: Nourishing Businesses...
The Credit Team seeks to provide credit solutions that enhance internal and external customers’ business models and sustainability; thereby promoting economic growth and stable employment.

Integrity, trust, transparency, creativity and enterprise

If a situation requires a choice to be made between one value and another, the values are stated here in order of precedence. For example if one can exercise integrity or creativity one must elect to honour integrity and forego creativity in that instance.

A Picture of the Future:
(A word picture describing the Credit Team as it will look when its Vision is realised)

The Credit Team is an innovative, market leading, customer focused credit solutions provider - fully aligned with the Strategic Intent of the Business. It is recognised as having great people with imagination, committed to delivering added value to customers. The team works ‘as one’; guided by its purpose and values.

The foundations for this work are:
1. Compliance with Credit Policy,
2. Holistic credit analysis,
3. A “Yes; provided …. Can Do” attitude, and
4. An on-going programme of research, development, participation in professional discussions and networking.

Books authored by Ron Wells are available from: BarrettWells Books

Wednesday, January 4, 2017

What Every International Business Traveller Needs to Consider – Practical Guidelines

Obtain a tourist guide that includes a street map of each city or town to be visited.

Check that your visit will not clash with a public or bank holiday or some other local festival that will make it difficult to arrange appointments or flights and hotel accommodation.

If a train or vehicle journey of three hours or less would suffice, then seriously consider these alternatives rather than flying to your destination.

Check the relative position of the airport (or railway station), your hotel and each appointment location. Decide the means of transport to use between these locations and check that enough time is allowed in your schedule to ensure punctuality.

Establish the street address of every appointment. Prepare notes for taxi drivers in the local script, so you can ‘show and tell’ - your accent may be difficult for a driver to understand.

Study the brief country history which is included in most tourist guides. This is a minimum requirement. Additional reading about the country and people is recommended whenever possible. This will help you to avoid potentially sensitive topics and it will help you to show respect where respect is due.

Obtain information about the local weather and dress codes, to indicate what to wear and what to pack.

Do not wear clothing or insignia which identify your employer, such as logo bearing jackets, watches or pens. Do not display company logo bearing files or baggage. Such items could mark you out as a target for theft or kidnap.

Arrange for an Interpreter if necessary. Do not assume that "everyone speaks and understands English" - this is absolutely untrue - check. In some cases your host will provide an Interpreter, this will reduce your costs but may be a disadvantage. See Working with Interpreters.

Make copies of your passport, visas and any other travel documents. Leave these with a colleague in your office - or at home - together with a copy of your itinerary (including times, contact names and telephone/fax numbers). This will be invaluable should you lose any documents or should you suffer some misadventure.

Obtain some small denomination bank notes in local currency, for tips. If local currency is not available outside the destination country, carry several US one-Dollar bills for this purpose. Your tourist guide will usually indicate local ‘tipping’ customs.

Check on the acceptability of credit cards. In Austria, for example, many restaurants do not accept credit cards. It is embarrassing to invite a business acquaintance to dinner and, at the end of the evening, to have to borrow cash from your guest to meet the bill.

Learn enough of the local language to say; "good morning / afternoon / evening", "please", "thank you", "goodbye", "I would like a mineral water / coke / beer / red wine / white wine / coffee / tea", "where is the restroom/toilet" and to count to twenty. Learn the appearance of important signs such as; "men’s restroom/WC" as distinct from "women’s restroom/WC"; "entrance"; "exit"; "push"; "pull"; "closed" and "open". Your tourist guide will usually include all of this information and a pronunciation guide.

Be aware of the adverse effects of ‘jet lag’ on your reflexes, on your coordination and on your ability to ‘think straight’ and speak coherently. Plan your schedule to allow time to overcome these effects both at the beginning of the trip and upon your return to base.

Arrive in any strange city or town the day before any business meetings are scheduled. Use any ‘spare’ time to learn about the locality; read local papers, visit shops, use local public transport and attend a concert or sports event. This will equip you to impress those you meet with the fact that you respect them sufficiently to invest time in learning about their home, their ‘team’, their culture and their concerns. This will be invaluable support for your efforts to establish a rapport with those that you meet and to build relationships.

Do not arrange appointments and your departure schedule such that you will have to rush away from an appointment in order to catch your flight or train. This shows a lack of respect for your host and could mean that you either;
(a) miss those valuable pieces of information that come to light as you are departing (after the formality of the meeting evaporates) or
(b) that you will be forced into making negotiating concessions in order to close the meeting on time.

Remember that one meeting may lead to another unscheduled-meeting, so you must build some flexibility into your schedule. At least you must expect to have to make changes to your plans without much notice.

Ron Wells

Tuesday, November 1, 2016

Accessible Credit Risk Tools for Chinese Executives

T3P LIMITED is pleased to advise that the Chinese language (Mandarin Simplified Characters) version of Global Credit Management - an Executive Summary is available.

The Authors are grateful to have had this opportunity to make such key information accessible to Mandarin literate executives and students. The original English text was adapted prior to translation in order to ensure it would be understood in the reader’s context.

This book is ideal for Chinese business executives of all types; Chief Executives (CEOs), Chief Financial Officers (CFOs), Treasurers, Credit Managers, Entrepreneurs starting or running their own businesses, and students of business practice preparing to face the tough challenges of business management.

It has been designed to provide the essential basic information needed to understand payment risk management in a domestic and international setting, with the addition of a practical tool kit covering the essential aspects.

Above all it is easy to read, Dr Jing Zhang commented; "I have enjoyed greatly reading this book as it has presented this complex subject in a very light and lively manner. The authors have summarised the entire world of credit management within an effective length, focusing on the practitioners’ perspective."

Professor Yang commented; "I believe this book should be extremely useful and helpful for Chinese firms and managers to learn about international practices and standards in credit management and improve their competitiveness."

The Hong Kong based magazine Asset Publishing & Research Ltd reported on October 28; “Taiwan and China are the markets that are the least 'credit-friendly' in the region with less than 40% of respondents conducting business-to-business (B2B) sales over credit, a new survey shows.” The result of this research strongly supports the notion that the practical skills and knowledge imparted in this book are urgently needed in China. (

Click here to read the introductory pages, which have been translated into English to enable you to judge the book's value for yourself; the original Chinese text is also included.

The book (ISBN: 978-988-99586-1-9) consists of 250 pages; unfortunately the Paperback version is out of print so only a PDF electronic format is available. To purchase the electronic version (an eBook) click here.


Thursday, February 18, 2016

Oil Major Executives need to stop dreaming and reinvent their businesses…

Quoted by the Financial Times on Valentine’s day: “Philip Verleger, an energy economist, argues that ‘nightfall is coming’ for big oil companies, threatened on one side by the rise of renewable energy and climate policies that will curb the growth of fossil fuel demand, and on the other by the smaller, nimbler companies that lead the shale oil and gas industry.”

“The companies that are wedded to high-cost projects, like deep water in Brazil, are going to have to take some large write-downs,” he says. “The likelihood that those investments are going to pay off over the next 20 years is extremely low.”

Companies that put their hopes on a strong rebound in oil “aren’t going to make it”, he adds.

In fact anyone who has watched Jeremy Rifkin’s presentation on the Third Industrial Revolution & a Zero Marginal Cost Society (view it here: ) will realise that fossil fuel prices will not recover sufficiently to make current or future oil-major funded and developed large projects viable.

Oil Major Executives should abandon their pipe dreams about the golden days of crude prices returning, as they did before the previous price dip crises; el Dorado will not rise again from the mists of the future.

There is an oil glut because oil is in less demand; a fundamental shift towards renewable sources of energy has taken place and is gathering speed.

Oil Exec’s should take on-board Ms Nadya Zhexembayeva’s advice and reinvent their business models; her short but telling evocation to reinvent can be viewed here:

It is time to acknowledge that Change has Changed and to Embrace the Exponential.

Investing in renewable energy production, storage and distribution infrastructure is the only viable future strategy for the medium and long term.

Thursday, January 14, 2016

Surviving the Deviant Risks that KILL Businesses – Don’t do ‘a Volkswagen’

A happenstance that occurs for the first time and causes serious, usually fatal losses for a particular business, an industry or a whole system – the financial system for example – has become known as a Black Swan Event but is also termed an Unquantifiable Uncertainty.

Unquantifiable because there is no data relating to the past on which to base a probability model, so no way to estimate the loss that may be incurred when the event happens.

Uncertainty is an alternative word used to describe a risk or uncertain outcome; in this case a detailed description of the risk event cannot be imagined therefore specific avoidance, corrective or remedial actions cannot be organised.

The Board and Senior Executives of Volkswagen AG should have realised that an extreme risk event could strike the business at any time. That is assuming that they had read or heard of The Black Swan by Nassim Nicholas Taleb. If in fact they were aware of the chameleon in the room that could destroy the business – in the form of an unimaginable risk with devastating potential – they did not prepare to deal with such an event.

Perhaps they thought that since they could not imagine what may happen to overwhelm VW Group they should simply wait for a crisis to break and then thrash around, blame each other, fire people, apologise, ‘re-arrange the deckchairs on the Titanic’ and put aside a hopelessly inadequate €6.5 billion.

Unimaginable Risk Drivers must not be overlooked simply because they cannot be imagined, described or counted. They will occur in the future and they are the risks most likely to destroy real businesses.

The Financial Times article of September 30, 2015 titled Seven Reasons Volkswagen is worse than Enron states: “The stock collapse is only the beginning. Potentially irreparable reputational damage, a crisis of confidence and massive legal liabilities could do the company in.” Volkswagen AG’s (stock) price dropped from 213.45 on July 2nd to 96.50 on October 1, 2015.

Most physical business Board Risk Committees, Chief Risk Officers, CEOs and business Owners only pay attention to assessing and managing those risks for which data is available. They follow the banking fraternity’s love affair with risk and probability models, which naturally cannot be produced in the absence of data. Of course that means that when unimaginable risks occur they are totally unprepared to manage the fallout, so they miss opportunities to limit the damage and/or opportunities to capitalise on the resulting market turmoil.

The consequences that ensued in the wake of Lehman’s collapse in September 2008 negatively affected the lives and livelihoods of millions of people in every corner of the Globe, and will continue to do so for at least a decade. However the purchase of Bear Stearns (including its valuable New York office building) in the midst of this Extreme Risk crisis is an example of a survivor (J P Morgan Chase) taking over a failing competitor based on ‘fire sale’ asset values; asset values were falling rapidly as inter-bank credit evaporated and banks frantically chased cash to meet margin calls and other obligations falling due.

Despite all the previously unimaginable disasters that have occurred there is a widespread naïve belief that mathematical models can foretell future risk. However models cannot because they use historical data, ignore data projections that fall beyond 99.7% probability, include too few variables and use simplified assumptions.

In the face of rapid change and globalisation, data driven risk management methods alone are no longer adequate. Unquantifiable Uncertainty Risk cannot be modelled because there is no data, so cannot be covered by traditional risk management practices or insurance; moreover extreme risk events (Black Swans) occur relatively frequently and result in business failures.

Business leaders are ‘risk managers’ entrusted with safeguarding the jobs of their employees and the assets of their investors therefore they must take seriously the possibility that those jobs and assets could be destroyed by an unimaginable extreme event.

Operating in the real world of business, as opposed to the purely financial world that only makes money, means facing future risks; hence Risk Management is about Managing the Future.

The challenge is that the Future does not exist; the past existed but only the present exists – one moment at a time. Therefore we cannot know the Future; in order to fulfil our responsibility to manage the Future we must imagine it and anticipate it. Three factors work in our favour as we attempt to anticipate the Future:

The Future is constrained by the existing environment both physical and social – it comes from today carrying the baggage of the past,

One major set of variables that shapes the Future is the collective decisions made by the world’s seven billion citizens, some of whom have more influence than others, and

As William Gibson said in 1993; “The Future is already here - it’s just not very evenly distributed.”

Searching the web and reading books such as An Optimist's Tour of the Future: One Curious Man Sets Out to Answer "What's Next?" by Mark Stevenson and watching talks like Nadya Zhexembayeva’s To Hold On, Let Go; also available on YouTube, can provide a lot of material to help create planning scenarios.

Of course the other set of variables that shape the Future is provided by Nature and Major Impact Events that result in one or a combination of the following categories of risk; Black Swan Event Risk, Liquidity Risk, Operational Risk, Concentration and Correlation Risk, and Lack of Flexibility and Agility Risk.

All of these risk variants could strike a real business as a result of a catalyst that was previously unimaginable.

In all cases except the first mentioned (Black Swan Event Risk) it is possible to take pre-emptive practical steps to protect a business; for example reinventing the business model every three and half years, as Ms Zhexembayeva recommends, could avoid the negative impact of the Lack of Flexibility and Agility inherent in most businesses today.

On the other hand the most challenging variables that shape the Future are those caused by Nature and Major Impact Events, collectively often called Black Swan Events. When such events have arisen in the past they have caused many real businesses to fail – thus destroying jobs and investors’ assets.

Therefore Executives and Owners in real businesses wishing to prepare to deal with and possibly profit from a Black Swan Event, require an entirely new approach in order to be adequately prepared to manage the fallout. Otherwise they risk missing opportunities to limit the damage and/or to capitalise on any bargain arising in the resulting market turmoil.

Black Swan events that were unimaginable before they happened have occurred frequently in the recent past, some examples of those that had global impact are listed here:

1990 US High Yield (HY) bond market collapses
1991 Oil price surge
1992 Swedish banking crisis
1994 Mexican crisis
1997 Asian crisis
1998 Russia default, Rouble crash, Long-Term Capital Management LP (LTCM) collapse
2000 TMT (Technology Media & Telecoms) collapse (a.k.a. Dot-com Bubble)
2001 9/11 payment system disruption
2002 Argentina crisis
2004 Russian banking crisis, Indian Ocean tsunami
2008 Global credit crisis
2010 Greece
2011 Japan triple tragedy - force 9 quake, massive tsunami and Fukushima nuclear melt-down
2014 Rouble in free-fall
2015 Euro – Swiss Franc (EUR-CHF) exchange rate CAP removed

Black Swan events are generally comprehended in respect of Financial Institutions and systemic catastrophes, as illustrated by the above listed examples. Nevertheless lesser and often more local events with the same devastating consequences and bearing the same characteristics often occur. These mini- or industry specific or geographically localised or single supply chain related incidents may only directly touch a single business, a group of connected businesses or the businesses within a region however they almost inevitably prove fatal in respect of those businesses directly or indirectly affected.

This is due to the fact that leaders in the vast majority of businesses do not prepare to deal with the fallout that follows unimaginable events; the associated risks are ignored simply because they cannot be imagined, described or counted.

Therefore, should an Unquantifiable Uncertainty strike, the corporate entities' equity capital becomes the last line of defence against bankruptcy.

Although bankruptcy of failed businesses is considered part of the capitalism notion of creative destruction it is not a satisfactory outcome as it destroys jobs, destroys investments and often devastates communities. Hence it is preferable that business leaders prepare to ensure the survival of their business regardless of what may happen to threaten its future.

Having recognised the Unquantifiable Uncertainty risk category the first sensible step to take is to anticipate the potential maximum future loss that could result from such an occurrence. Armed with this information the leadership team should think through and discuss possible defensive measures that could be taken in order to protect the entity's capital and ongoing concern status.

The aim of such preparation would be to arm executives with an array of possible action steps that could be tailored to any situation that may arise, thus enabling them (a) to react immediately and effectively in any extreme situation and thereby (b) to be in a position to capitalise on the opportunities that are bound to arise in the wake of such situations.

As a first planning step the size of the challenge can be estimated by aggregating the ‘forced sale’ net disposable value of the entity’s assets; which could be referred to as the ‘Maximum Covered Liabilities’ (MCL) if no management action is initiated. In other words the MCL is the amount of the liabilities that can be paid using asset sale proceeds, the balance of the liabilities plus equity and reserves can be termed the 'Maximum Uncovered Liabilities' (MUL).

The MUL minus the Equity Capital could be referred to as the ‘Owner Protection Gap’ (OPG). Preparation for dealing with a Black Swan event should focus on identifying actions that could be taken to reduce the OPG in the face of an Extreme Risk situation.

Black Swans can be positive as well as negative, depending on the circumstances; Black Swans are also ‘scalable’, meaning the consequences positive or negative, have unknown limits.

In The Black Swan, Nassim Nicholas Taleb wrote; “Knowing you cannot predict does not mean that you cannot benefit from unpredictability. The bottom line: be prepared! Narrow-minded prediction (based on mathematical models) has an analgesic or therapeutic effect. Be aware of the numbing effect of magic numbers. Be prepared for all relevant eventualities.”

In short, Mr Taleb suggests that one should; “learn to distinguish between those human undertakings in which the lack of predictability can be (or has been) extremely beneficial and those where failure to understand the future caused harm, invest in preparedness, not in prediction. Chance favours the prepared but do not prepare for something precise, Black Swans cannot be predicted; and seize any opportunity, or anything that looks like an opportunity because opportunities are rare, very rare.”

Nadya Zhexembayeva, in her talk titled To Hold On, Let Go – Forget ‘Built to Last’ Build to Reinvent, suggested that those operating real businesses “must remake who we are, what we offer, and how we deliver our offerings to the world. Take the essence of what you are, and let go of everything else; because the business you are in today (will) not be the business you’ll be in three and a half years from now.”

Invest in Preparedness, not in Prediction

Business leaders are more likely to succeed in their most important responsibility, which is to protect the jobs of their employees and their investors’ assets, by being prepared to act effectively when a previously unimaginable risk driven event occurs and by reinventing their business model often enough to avoid becoming obsolete in the face of rapid change.

Ron Wells is the author of The Chameleon in the Room: Embrace Business Risk – Assure Survival & Growth, refer to for more information.

Friday, November 27, 2015

The Chameleon in the Room has a 5 STAR review on

Recommended to everyone who wants to deal with business risks successfully!

Five Star Review by Andriy Sichka on November 26, 2015 Format: Paperback

I always had a feeling that knowledge of the theory is only one part. Another, much more difficult one is finding a way to apply it in practice. Reading The Chameleon in the Room resolved majority of my doubts concerned with risk management. Written by a practitioner for practitioners the book shines the light on the areas left by theories in dark, and gives clear guidance for everyday practice. I recommend this book to everyone who wants to deal with business risks successfully!