Dick Kamp: Risk management through different thinking and facilitating leadership

May 21, 2024

^{This column was originally written in Dutch. This is an English machine translation.}

Door Dick Kamp, Director Pension, Investment and Risk bij Milliman Pensioen

I apologize in advance if you find this too philosophical a piece. I like to think about things with a slightly different perspective.

Ideas are created by looking at something in an innovative way. Innovative may also be 'special'. What someone's perspective is for that unusual thinking may be due to their past experiences. But some people just think differently; perhaps their 'wiring' is different. Thinking differently can take you further. Paradigm shift and disruption can be the result. These are words that usually have a positive connotation.

When things start to go wrong, it is time for a change. But where to? Then a new perspective through innovative thinking is important. That is one of the reasons why attention is rightly paid to diversity. That is also a condition for being able to change if necessary.

So-called cross-thinkers and people with a special history can then make the difference. Can that be organized? Or is it something that just happens?

If we can believe natural evolution, and why not, then the new idea is already ready. It still needs to be activated. This requires vision, courage, stubbornness and perseverance. It doesn't all have to be in one person. There could also be several. It's those moments when everything comes together. Recent examples are the Tesla and the iPhone. Elon Musk and Steve Jobs are not necessarily the inventors, but they are the personalities who boosted these brands. Their products feel exactly appropriate for the time in which they were created.

Now looking at the new pension system in the Netherlands. A problem was identified at the beginning of this century. Many people have thought, both within the existing frameworks but also outside the box. And in an unprecedented group process, something came out that was accepted by the polder and politicians. Is that the end of it? No, not yet and there is also quite a lot of resistance. Usually from people who still find the 'habitat' of the old/current system fine. A little tweaking and the old one would still have fit perfectly is their idea. With the meteorite 66 million years ago it was clear: adapt or die. Sometimes 'meteorites' are not so clear. Yet change is desirable for survival. After all, the dodo didn't make it either.

Change does not always have to come from external disasters. New technologies, social and (geo)political changes are all reasons to be able or required to change. There is a danger of being too fast, not working on the right idea, or having to invest too much. All valid possible outcomes. Working blindly at something is always dangerous.

So no matter how 'linky' it sounds and how the situation may be: courage, vision, luck and leadership are needed. Everything depends on ambition stimulated by leadership. What is that in this context? Pull and push. Charisma. To be able to see ideas and have them taken forward. Bringing people together and encouraging open discussions. But also being able to make accepted choices. This is now taking place at all tables in the pension sector. I am thinking of the consultation between social partners, the boardroom table within pension funds. But also the boardroom tables of the pension providers, who must make the transition to the new contract with large investments.
Finally, I would like to say to directors and managers: be aware of the larger context with which you are working. And be aware that innovative and different-minded people may be the holders of the ideas that can guarantee the successful survival of your pension fund or organization.
Have fun and perseverance in consciously organizing innovation under your leadership.

This is the twenty-eighth column in a series on risk management. The series aims to encourage the reader to consider risk management as an integral part of running a pension fund.