We live at a time when humanity is steadily moving away from riskier forms of self-sufficiency to safer and more productive forms of mutual interdependence. Consequently, the future of ERM will be concerned with building enterprise-wide approaches to pursuing opportunities and managing threats. This means business leaders and ERM practitioners must learn how to help their organizations build a culture of trust.
Previous sections cited the work of Matt Ridley (How Innovation Work, and Why It Flourishes in Freedom (2020)) and the importance of developing a culture of innovation. Ridley teaches us that innovation is often a hard slog that requires years of guess-work, experimentation, and learning. People need opportunity and room to make unexpected discoveries and they need a supportive environment and stamina to gradually develop their ideas into useful products and services.
Consequently, an important role for leaders and the nascent field of enterprise risk management (“ERM”) is to put truth into the world in way that defines and promotes the pursuit of the common good. Psychologists and behavioral scientists refer to this as helping organizations develop cognitive immunity which at bottom means our ability to sort out facts from fiction. If we lack the ability to think rationally and problem solve based on a shared perspective of reality, it’s difficult to innovate and create solutions to our biggest challenges. In other words, the absence of a shared reality makes it difficult to act in a manner that increases the probability and magnitude of good things happening (i.e., pursue positive risk). Consequently, cognitive immunity based on truth is an important pillar of ERM.
Cognitive immunity, however, is not enough. Problem-solving based on a shared understanding of reality and truth also requires trust or what we call social immunity. In the United States, one of the earliest expressions of the need for social immunity appears in Federalist 55, one of the essays written by James Madison urging his country to adopt the Constitution and a democratic republic over an autocratic form of government. Madison acknowledged that the “degree of depravity in mankind” did not guarantee that a structural system of incentives and constraints (think ERM) would work. Recognizing that no system is perfect, Madison argued that the well being of any organization, including governments, ultimately depends on whether there is a sufficient number of admirable men and women who can be trusted to do what is right for the betterment of humanity.
Social immunity - or trust in the knowledge and expertise in other people - has been the key ingredient in stopping pandemics. As the world tackles the CoVID-19 pandemic, there are lessons to be learned from the 40th anniversary of smallpox eradication, first celebrated on May 8, 1980 at the 33rd World Health Assembly and considered the biggest achievement to date in international public health.
An infectious disease of unknown origin, smallpox plagued humanity for at least 3,000 years, killing more than 300 million people in the 20th century alone. Caused by the variola virus, the disease was contagious, spreading from one person to another over many centuries as different civilizations grew and interacted with each other through exploration, trade expansion, and colonization. Symptoms included fever, headache, backache as well as a severe pustular rash or “small pocks,” hence the name smallpox. Three out of every ten people who got it died. Survivors were often disfigured by scarring and some were blinded if the blisters had formed close to their eyes.
Humanity spent centuries looking for ways to combat smallpox before the scientific basis for vaccination began in 1796 with an English doctor named Edward Jenner (1749-1823) (Good historical accounts of smallpox are available at the website maintained by the Centers for Disease Control and Prevention (https://www.cdc.gov/smallpox/index.html) and in Dr. Stefan Riedel’s article entitled Edward Jenner and the History of Smallpox and Vaccination, Baylor University Medical Center Proceedings, 21-25 (January 2005). By the 1500s, China and India had developed a pre-vaccination form of treatment known as inoculation, a word derived from the Latin inoculare meaning “to graft.” Smallpox inoculation, also known as variolation, was carried out through injecting the skin with a small amount of smallpox fluid obtained from blisters on people suffering from a mild case of the disease.
In 1716, Lady Mary Montague, wife of the British ambassador to Turkey, learned of inoculation from Turkish women, after surviving a bout with smallpox two years earlier. Blessed with great curiosity and intelligence (e.g., she had previously taught herself Greek, Latin, and French), Lady Montagu inoculated her own children and then started a campaign in England and across the Europe, enlisting a number of high profile personalities including the royal families of England, France, Austria, and Russia. Similar efforts to garner public support took place in the colonies as evidenced by the decision of John and Abigail Adams to inoculate their children in 1776, and George Washington’s decision in 1777 to inoculate all of his troops.
Naturally, these campaigns generated considerable controversy and skepticism. Fierce public debate was often fueled by religious leaders who argued that inoculation violated divine law, by either inflicting harm on innocent people or by attempting to counter God’s will. Others feared that inoculation was untested, seemingly based on folklore, and would hasten the spread of smallpox.To some degree, this fear was rational, especially because other contemporary treatments such as bleeding and purging were still common practice during the early 18th century.
In the end, the leadership of people like Lady Montague mattered. Although inoculations still presented significant risk, the practice lowered the fatality rate tenfold, from 20% to 30% to 2% to 3%. Further, it set the stage for learning the mechanics of generating social trust needed to stop the spread of misinformation regarding the potential risks, contents, and mechanism of vaccination that would be brought to life at the very end of the 18th century. Then, as now, confidence in science and the belief that scientists know what they are doing better than your family members or friends is critical. Likewise, responsible leadership, especially from the top, who can help generate a positive ratio of good information to disinformation is needed to generate social trust and lessen the avoidance of tribalization (such as we saw with mask wearing and COVID-19).
The next section further explores these issues as we continue with the story of fighting smallpox through the much safer vaccination method developed and promoted by Edward Jenner.