The role of investment firms is to manage risk–finding the optimal point on the risk-reward continuum. But understanding of risk can lag real-world developments. Securities analysts who focus on metrics specific to a company or sector can miss the forest for the trees. Preventable Surprises is more interested in the forest and, in particular, how climate change is decimating that forest. But we also have a “watching brief” on other systemic and sustainability related risks, in particular biodiversity loss and executive pay.
Why these three?
Climate disruption is widely considered to be the most serious systemic risk facing human civilisation. The Task Force for Climate-Related Financial Disclosure recommended increased transparency around climate risk to reduce the likelihood of a climate-driven financial crisis. We believe corporations and investors need to do more.
Biodiversity loss, driven by intensive, chemically dependent agriculture, is another risk that rises to the systemic level in its scope.
Finally dysfunctional compensation schemes reflect dysfunctional cultures, where incentives are misaligned in ways that contribute to systemic risk.
Resource constraints currently force us to focus on only one major programme. If you can help us expand our activities or you know philanthropists/foundations that can, please let us know.