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The business of risk.

Byline: Ken Brownlee, CPCU

What is the business of America? At his Congressional hearing for appointment as President Eisenhower's Secretary of Defense in 1953, General Motors CEO Charles Wilson told the Senate that "for years" he thought that "what was good for General Motors was good for America." Considering the world situation at the time (the Korean War) he wasn't so sure.

Undoubtedly, many readers of this column will be quick to suggest that the business of our nation is business, which affects everything from health to politics. When Moses came down Mount Saini with the Ten Commandments, he found his people worshiping a golden calf. Today that calf has grown up and many worship a golden bull market.

We follow the Dow religiously, and cheer when it, the NASDAQ or S&P 500 reach new records. My first journalism job was with The Wall Street Journal; during an economic slump, we made wagers on the number of new "lows" each day. Today, there are numerous cable channels that do nothing but cover business day and night. Some shows feature various aspects of business deals, the investors, speculators and the would-be entrepreneurs. We seem drawn to numbers like moths to the lacy curtains nearest a bright lamp.

Toward the middle of the 19th century, many Americans might have proclaimed the most important business in America was agriculture and industries that relied on farming, including manufacturers of farm equipment, the railroads, granaries and seed or fertilizer companies. Then the Industrial Revolution claimed more of our cities, industrial manufacturing became the primary "business" of America.

We made steel and automobiles, locomotives and airplanes, not to mention ships that moved America's goods around the world. This created the need for new businesses, including energy, advertising, marketing, wholesale and retail. By the 21st century, agriculture and manufacturing had globalized and outsourced, putting a crimp on manufacturing and energy. The Atomic Age became the Age of Technology and Information. "Data" was a new product, and the means of employment became computers.

Those curious Ten Commandments

Marketing and advertising lead us to violate the last of the Big Ten -- covetness! If we don't covet the latest model of car, new prescription, kitchen gadget or other products, businesses fail. We see it, we want it! The Declaration of Independence suggests the goal is "the pursuit of happiness." Maybe happiness is America's business?

The Iconoclast's choice: Risk

There is one business that seems primary not only in America, but worldwide. It is the business of "risk," defined not only as "the chance of loss," but also as the "chance of gain." Entrepreneurs risk their own, a bank's or investor's money starting new businesses. A certain percentage will strike it rich, while others will go bankrupt. They may try again and be successful.

Those of us in the claims business deal with risk where "loss" is the only option. Under the principle of indemnification, one cannot profit from loss, at least one should not, if adjusters stick to the concept of fairness and actual cash value. Look how many industries risk supports: doctors and hospitals, auto body shops, home repair and construction, the need to fix and maintain damaged infrastructure. There's no Dow Index on risk, but maybe there should be. It's a big part of the Gross Domestic Product.

Ken Brownlee, CPCU, ( is a former adjuster and risk manager based in Atlanta, Ga. He now authors and edits claims-adjusting textbooks. Opinions expressed are the author's own.
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Title Annotation:Departments
Date:Mar 1, 2018
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