BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Risk And Leadership: Getting Ahead Of The Curve

This article is more than 9 years old.

Is it global warming and climate change? Greater fiduciary responsibility coupled with mandated transparency? New scientific discoveries about health, aging and disease or escalated concerns? The last years certainly appear to have been fraught with more than their share of weather-related emergencies, financial crises and health concerns.

How can corporate leaders hedge their bets? How do they get in front of these issues rather than become trapped behind the eight ball?

AXA, one of the world’s biggest (by market cap) insurance and financial services companies, is in the vanguard, setting aside 200-Million Euros (approximately $300-million USD) to finance fundamental academic research into environmental, health & life, and socio-economic issues. The money is to be spent by 2018 and is part of the company's approach to corporate (social) responsibility.

The AXA Research Fund was started by Chairman and CEO Henri de Castries, indoctrinated early into one of the most severe cases of risk to-date: his tenure at the helm of AXA in 2001 coincided with the attacks on the World Trade Center in New York City. As he told me at the time during an interview for CNBC “I knew I would be dealing with serious risk – that’s what we do at AXA – but I didn’t imagine it would come so soon!”

Dealing with Catastrophes

A series of additional catastrophes – Hurricane Katrina, the Asian Tsunami, the global financial crisis, for example – prompted the creation of the AXA Research Fund in 2007 (renewed and replenished in 2012), a scientific-philanthropic initiative to engage academic minds in researching the roots of these problems so solutions to mitigate or remedy them can be applied in business and society.

The Fund also seeks to foster discussions between scientists and civil society through long-term partnerships with leading academic institutions around the world. So far some 430 projects in 30 countries have been funded to the tune of more than 100-Million Euros by financing post-doctoral research and creating “chairs” at research institutions. Each chair’s work is anticipated to last at least five years. The projects must be global in reach, and the awards are made on the merit of the research; there are few conditions or restraints.

“We don’t ask anything in return for the grants, except that the research be academic and that we be kept in the loop,” Godefroy Beauvallet, head of the AXA Research Fund, told me in an interview for this post. Indeed, AXA retains no special rights, nor any exclusivity to the findings. Beauvallet himself was a researcher and assistant professor at a French technical institute – not a businessman and not in the insurance industry – when tapped to head the Fund in 2011.

The work began with a handful of AXA Fund board members canvassing international scientific literature (including some 200,000 articles with the word “risk” in the abstract) to define areas of interest and institutions and individuals working in those areas. The Fund’s work has already achieved global recognition: the program is mentioned as a contributor to AXA’s #1 spot among insurers in the Interbrand brand reputation rankings for each of the past five years. One past grant recipient, Jean Tirole of the Toulouse School of Economics (France), won the 2014 Nobel Prize in Economics for his analysis of market power and regulation.

The key projects for 2015 include issues that are concerns of most global leaders:

1. Natural Hazards & Climate Change: Resilience at the City Level - A series of three videos were produced this year and work will continue in conjunction with National Geographic on how cities can be more resilient to the effects extreme weather hazards in the context climate change, initially spurred on in the aftermath of Hurricane Katrina. Projects focus especially on the vulnerability of coastal areas, and the political and social capacities needed to take prompt and effective action.

Professor Adam Sobel – Professor of Physics and Applied Mathematics in Columbia University’s Department of Earth & Environmental Sciences – received a 250,000-Euro grant to study the dynamics of extreme precipitation and global climate patterns of extreme events (such as hurricanes and tornadoes). Sobel rose to prominence with his work on Super Storm Sandy in the northeast of the USo far, a total of seven academic chairs and large projects in Asia and Europe are working on climate and environment-related issues, in prestigious research institutions such as Imperial College in London, the Chinese University of Hong Kong, Nanyang Technological University of Singapore and the UNESCO Institute for Water Education in the Netherlands.

2. Health & Life: from Pandemics to Non-Infectious Diseases – Not so much a look at Ebola (which turned out NOT to be a pandemic), but how to spot the early signs of menacing contagious diseases before they become global emergencies.

An article in the Cell scientific magazine outlined research by professors at universities in France, Spain and Portugal identifying nine biochemical traits that are fundamental to diseases related to aging.

Some 3-million Euros have funded a permanent AXA Chair in Alzheimer’s disease research for neurology professor Harald Hampel at the Universite Pierre & Maris Curie in Paris to explore the use of biomarkers in diagnosing Alzheimer’s.

3. Financial Risks: Stability at the Country Level – Studies of country risks in business terms and early warnings of political instability (note: AXA has only limited business in Russia and as yet conducts no research there). A chair in Financial Market Risk has been funded recently for 2-million Euros at INSEAD in France for Associate Finance Professor Joel Peress.

Though Beauvallet says it is difficult to create chairs in emerging markets, the AXA Research Fund recently did just that in China and is planning to do so in Mexico in the near future.

The connection to research is also good for the AXA brand, but the Fund is keen to downplay too much publicity. Recipients are expected to share their findings with a wider audience of policy-makers, financial markets and the general public. To do so, the Fund itself offers speaker training to its junior researcher recipients.

“We want to help them become visible,” Beauvallet explains, “but not as ‘AXA experts’. Our business and the debate in risks are rooted in science; it is important to AXA that a scientific voice on risks be heard at a global level. We see the Fund and its research as a knowledge tool for the world.”