WHAT
What we do

The financial system is accelerating systemic failures, from climate change to biodiversity loss, widening inequalities to democratic and political institutions.

We work with positive mavericks – professionals who share aspirations for a sustainable and ethical financial system – to challenge the status quo and propose ambitious solutions.

 

Mission

A financial system that safeguards social cohesion and the environment. Who wouldn’t want this? But common sense isn’t common practice in the finance system and today’s financial system is the opposite of what we need. Which is why Preventable Surprises exists.

We are a group of investment industry insiders – some retired, some in post – and related experts who seek to persuade institutional investors to accept their fiduciary responsibility to mitigate systemic risks before the next preventable surprise.

Our unique contribution
Overcoming the inertia of business as usual requires multiple players using multiple strategies. Here’s how we fit into this puzzle:

1) Many groups have investment firms as members or clients but we work with individual “positive mavericks” within the investment industry to push for faster, deeper change than might, at first, seem possible. Many of the strategies that responsible investors are pursuing today will only have incremental impact on the real world. Most strategies ignore systemic risks. Many ESG professionals – and a growing number of traditional investment professionals too – know this gap exists between “walk” and “talk”. “Positive mavericks” are those who are conscious of this gap and want to do something about it. We support, challenge and coach them to aim high, and push their organisations to deliver.

2) We don’t shy away from explaining the wrongs of the present-day investment system. But as a “think-do tank” we go much further, developing bold thinking and fresh proposals which are fit for purpose given the severity of the issue. Our proposals are authentic yet practical. And we place significant emphasis on getting these ideas adopted by raising the profile and building the necessary alliances. We don’t seek PR and indeed often work behind the scenes because this has more impact.

3) We ensure that conflicts of interests do not get in the way of how we work. We don’t have consultancy income to safeguard, corporate members to satisfy and we don’t accept grants from foundations that tell us what to think. Thus we are bold in our recommendations, focussing on what is needed, challenging conceived ideas and powerful players whenever and wherever this is needed.

 

Goals

For many years, Preventable Surprises has been addressing financial disasters that investors could–and should–have seen coming. Concerns about BP’s safety record, the accounting practices of Tesco, sloppy mortgage lending–these were in the public domain for years before disaster struck.

Preventable Surprises is an influence tank that seeks to prevent or mitigate corporate and market implosions.

We work with a group of positive mavericks within the investment industry to persuade and cajole the financial sector to better address systemic risks. We define systemic risks using three features:

  • They are pervasive and not confined to a sector or territory. For example, the Sustainability Accounting Standards Board found that 72 of the 79 industries in the SASB classification system are affected by climate change.
  • They are non-linear with unpredictable tipping points. The long-term climate transition will almost certainly be volatile and messy. Global temperatures and rainfall may rise incrementally on average but extreme changes will be localised and deadly.
  • They are inter-related, making it impossible to predict the likelihood of Black Swan events

While regulators, the media, NGOs and consumers each have a role to play in building a more transparent and sustainable market system, most of the power lies with corporations and their investors. Preventable Surprises focuses on institutional investors because, through the trillions of dollars in assets under their management, they have enabled corporate and market dysfunction. While this may be unintentional, the continuing damage caused to investors and to ecosystems in untenable.

Long-term investors cannot use stock-picking or hedging strategies to avoid systemic risk. Institutional investors’ end beneficiaries will pay the price as the extent of portfolio risk is revealed. That is why investors must mitigate systemic risk through forceful stewardship.

How we do it