Roads to Resilience

Case study: AIG

Introduction

American International Group (AIG) is a multinational insurance company, serving commercial, institutional and individual customers in more than 130 countries 1 . AIG history dates back to the beginning of the 20th Century starting in Shanghai, China; after the end of the Second World War, it saw dramatic growth as it expanded in the US and other markets such as Asia, Europe, Latin America and the Middle East. The company very quickly grew to be the world’s largest insurance group and, by 2008, it was the 18th largest company in the world. However, this growth came to an end in 2008 as the company suffered a liquidity crisis and it was rescued by the US Treasury by the provision of a lending facility of $182.5 billion. The reversal of fortunes led to the company contracting and there were several changes in the boardroom as directors and senior managers departed. Mid 2009 saw the appointment of a new CEO, Bob Benmosche. Under his strategic leadership, the company has come out of the crisis with revenues of $65.7 billion in 2012, and the final shares owned by the US Treasury were sold in late 2012, resulting in a profit of $23 billion to the US Government and Tax Payer and closing off the lending facility. The company has an open and supportive culture where employees are urged to “ put your hand-up ” to ask for help. “ For a young person coming in, (I was one of those 15 years ago) I was told if you’ve made a mistake, you’ve come across something, put your hand up, ask for help, ask questions ” (Executive Director, Commercial Lines Division). It is acceptable behaviour for employees to ask questions of those above them; they are strongly encouraged to ask difficult questions and to raise concerns about possible problems. There is an acceptance at the senior levels in the organisation that asking difficult or embarrassing questions is beneficial (rather than just tolerating issues out of politeness): “ … the more questions you have, the more you can learn and the less gaps you have, so even if they think they are embarrassing it is absolutely correct to put them on the table ” (Managing Director, UK). The open discursive culture provides an environment “ where people can challenge others, where people can challenge themselves, they can challenge our management, they expect to be challenged by their management and then they can report openly on what’s going on because they realise that open disclosure is generating a benefit to the overall strategy and to the whole company ” (Managing Director, UK). The culture of the organisation is people centred – “ Each time I see someone who has just been appointed a new manager, each time I’m talking to someone who is probably going to be appointed as a manager, I ask them the same question: ‘What do you think is your biggest responsibility?’. Invariably the person will say making sure that I’m going to deliver whatever is going to be the budget for next year. And I say: ‘Business is Key but your primary responsibility is that you are now in charge of your people … you’re in charge of the safety and security of your people and only when you are comfortable with that can you start doing your business as a manager’. ” (Managing Director, UK). This attitude and the open supportive culture help to explain why the employees are engaged, they feel they are a valued part of the organisation. People and culture

1 Based on: http://www.aig.com/investors_3171_437776.html

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Roads to Resilience: Building dynamic approaches to risk to achieve future success