Ridge Global LLC

REMARKS BY THE HONORABLE TOM RIDGE

DETROIT ECONOMIC CLUB

DETROIT, MICHIGAN / APRIL 14, 2008

“Fortune Favors the Brave: The Net Gain of Security in a Risk-Based World”

** As Prepared **

Thank you, Yousif. My thanks also to Beth Chappell. And to the membership and board of the Detroit Economic Club for your kind invitation.

A free and open exchange of ideas is the foremost instrument of a democracy and many a productive discussion.  Forums such as yours widely contribute to this character of American life...so I very much appreciate the opportunity to join you today. 

Let me begin by acknowledging the obvious – that these are uncertain times. I realize that when people think of Detroit, they think of an industry steeped in tradition. One that affects people in this region directly, but the rest of the country as well.

Understandably, people are now nervous about the future; they see a downturn and expectations are not being met. It seems as if there’s little to cheer about…and everyone’s trying to make sense of it all. Yet last week, we saw a couple of signs that there might be a turnaround – still, there’s a good deal of hand wringing. But let me reassure you…and say to you unequivocally – never  /  ever /  count the Tigers out!

Same goes for my Pirates, but I thought my friends here in Michigan might need a little more encouragement.

Detroit’s spirited Sparky Anderson once said – “Those of us lucky enough to be part of the game have a tremendous responsibility – we're charged with giving back to the game all the good things the game has given us.”

And that goes to what I’d like to discuss today. Because those of us lucky enough to be blessed with freedom are charged with a tremendous responsibility as well.

We’re charged with furthering the security and prosperity that generations before us have made possible in our lives. We’re charged with managing the vast, rapidly changing American frontier. We’re accountable for the risks we take, the opportunities we embrace and the outcomes we deliver.

Our charge is to give back – in a way that furthers a resilient and resolute nation – the kind of nation our Founders wanted it to be.

There have been many times when people have wanted to count out America…and many still try to do so today, especially when there are inevitable economic downturns and political challenges.

The volume goes up on that skepticism when times are tough…and certainly, I think we can all agree…during an election season.  Like baseball, that too is a tradition.

I have no tolerance for divisiveness. I suspect you don’t either.

In terms of the political landscape, it serves us best when we embrace the notion that disagreement does not mean disloyalty. And that unity does not require unanimity.

Good people can and do disagree and yet share the same goals.

It’s often some level of respectful dissent that brings us to compromise and creative solutions to reach those shared goals.

My guess is that – no matter which political hat you wear – red or blue – most of us see the country in terms of red, white and blue.  We all want the best for our fellow citizens, our nation and our world.

But achieving the best for our nation in these post 9/11, 21st century times is more complicated than ever before. The indisputable influences of globalization have created a more vulnerable, complex, interconnected world – full of challenge and opportunity.

The global forces of transportation, finance and communication that facilitate the travel of extremists and fund their evil work – are the same forces that open markets, create jobs and serve America’s interests in ways never considered a few decades ago.

Some view these challenges and look inward – arguing for political isolationism and economic protectionism. I would argue that America must take all of these challenges head on and engage the world more aggressively, not less.

After all, a challenged America has historically become a more energized, innovative, stronger and more competitive America. It’s our nature to turn potential adversity into national advantage.

It’s not our nature to look inward, to doubt ourselves and to retreat.

The horizons of a better tomorrow have always beckoned the American spirit.

From my vantage point as a governor, Cabinet Secretary, from within the corporate boards on which I serve and from within my own business, I accept as a fundamental principle the notion that America’s future security and prosperity is now and forever more tied to the security and prosperity of the rest of the world.

I also accept the notion that the risk/reward calculation associated with global engagement is substantially greater as well.

We have been incident free since 9/11, but draw no unwarranted, self-serving conclusion from this fact. We are better protected – but we remain at risk. We should not be breathless and frightened, just realistic and determined. The extremists are strategic actors and their sense of time is not Western. They are more patient.

Our government will continue to act strategically to reduce our risk and vulnerability to another attack. We cannot eliminate it. But we can manage it aggressively – and we are.

So too, an increasingly global private sector seeking more markets, jobs and profitability becomes more vulnerable and subject to greater risks as well. And the universe of potential risks is growing every day.

Certainly terrorism is a concern for both government and business – but candidly it is one of many. Today, both the public and private sectors must be attentive to the risks associated with energy availability and cost, adverse geo-political events, weather events, criminal activities and vendor issues, just to name a few.

In government, we accept the notion that in spite of more people, programs and technology directed toward preventing another attack, we manage the risk and yet accept the possibility of another one.

It seems to me that globally connected businesses must embrace this same approach – identify the risk or risks…assess vulnerability and consequences…and have a plan in place to direct attention and resources throughout the enterprise, should a vulnerability be exposed.

And while the approach might be the same, not every company will identify the same risk or have the same set of priorities.  The level of risk tolerance may vary, but in every company, there are certain risks that can never be tolerated.

This idea seems to be gaining modest acceptance within the business community generally, but not in every business.

Too few view risk assessment and mitigation – all hazards security, if you will – as a core function – as they do finance, procurement and HR. Others dismiss it with the notion: “nothing will happen here.”

But events of the recent past serve to remind us that no one is immune from the risks of being globally connected.

• When a prominent toy retailer recalled its products because of lead paint issues, those of you in this room with young children certainly took a close and second look at the toy your precious child was bouncing around in his or her little hands.

• When several pet food retailers faced recalls after the deaths of pets across the country, those of you with a dog or cat opened your cupboards, found the name of the manufacturer on the can, bag or box, and compared it to the list of manufacturers on the hook for this tragedy.

• And when the largest tire recall in history occurred some time ago, who among us didn’t look at the brand name on the tires – used on our cars – that we drove each day –  when we took our kids to school and ourselves to work?

The point of origin for all of those supply chain issues wasn’t the store from which you bought the toy, the pet food or the tires. The point of origin was in another country, not the United States. Somewhere along the line of those supply chains – a manufacturer or vendor was lax…or reckless…or unaware…or even apathetic to the need for investments that could have alerted issues of poor quality, tampering, malfunctions and security breaches. That could have prevented sickness, death and heartache for the public…as well as financial detriment for the companies and their brands.

And then there are those external factors over which you have no control. But if you ignore or fail to consider them in your risk portfolio, they can undermine customer confidence, profitability and brand reputation.

Consider:

• An earthquake in Taiwan affects your chip supply and you question your decision to “sole source.”

• A domestic maritime strike disrupts your “just in time” world.

• Increased fuel consumption in emerging countries and insufficient refinery capacity in your own, drive fuel costs, both personal and corporate, through the roof.

Now, more than ever, anticipating and managing risk are critical tasks within any organization.

It’s the pro-active versus reactive approach. Better to manage risk before it manages you.

Whether you’re the Department of Homeland Security or a business, your shareholders, customers and employees are best served if you have assessed all potential risk to your operation – the probabilities and the consequences – and made investments in gaining greater visibility, prevention and response capability.

Certainly money is tight. CFOs are accountable. Dollars on risk-related and security matters are often viewed grudgingly as an expense. The ROI many not appear until the incident you prepared for occurs. But then those dollars look like a wise investment.

It’s not that far off from the notion of just-in-time inventory – it’s just-in-time security. The end result is that you transform security expenditures from a net cost to a net benefit and turn existing security programs into a competitive advantage.

Several years ago, one might have argued that security expenses were an unnecessary allocation. But whether you’re a business or a government, in a post 9/11, post-Katrina, flat-world economy – such thinking is the “lean-back view” – not the forward-leaning view.  

And that’s why we ask of the private sector what we ask of the public sector – that you aspire to be a risk-intelligent enterprise – that you work to create a culture of resiliency within your operations.

You won’t be impervious to risk – again, perfect security doesn’t exist. But disruptive events – from the natural to the man made – will be less disruptive and contingency planning will help to protect everything from your fixed assets…to assets in transit…to human capital…to loss of revenue…to your brand equity and public goodwill.

***

Let me close by underscoring the notion – this big, powerful, wonderful country called the United States of America can succeed as a secure and prosperous nation only if it stays connected to the rest of the world. But staying connected incurs a level of risk that must be addressed, not ignored. And to that end, we must develop new avenues of cooperation that will make our open societies safer and more secure, our borders more transparent,  our economies more resilient and our businesses more competitive.

We have to engage the rest of the world with an eye toward parity and partnership – with strong, mutually reciprocal trade agreements, diplomatic relationships and investments that address collective security and economic interests.

We’ve certainly benefited from the success of cross-border collaborations. Due to the good work of good people, we’ve benefited from innovative use of technology, information sharing and biometrics.

Mutual standards and options for secure documents are helping to facilitate cross-border travel.

We’re exchanging law enforcement personnel to improve information sharing across borders and vast oceans.

And we’re working to enhance good stewardship and collective conversation on issues such as energy, the environment, transportation and other private/public sector policies.

In other words, these efforts have kept things moving in America.

They’ve kept security at the forefront and the welcome mat at our front door.

But more progress is needed.

In an interdependent, 21st century world, we need the irrefutable and irresistible power of a globally driven marketplace – of innovative people, products and ideas.  

All of which can and do thrive in a world of risk and challenge.

In fact, since the days when a group of innovative, passionate and determined people said “no” to a monarchy and “yes” to liberty, risk and challenge have encouraged people to pioneer, to persevere…and to be better for it all.

So to those who threaten risk and challenge – to those who tamper and disrupt, hack into networks and hide in caves – I would simply remind you that America does not yield to cowardice and coversion. 

We live in freedom, not fear of terrorists, competitors or anyone else who would challenge our standard of living or way of life.

Every day, since September 11, 2001, we have demonstrated that we are a resilient nation.

With a resilient economy. And a resilient people – emboldened by the spirit of freedom and free enterprise.

We have the greatest country in the world – and we will do everything we must to protect it.

We will be confident, not self doubting.

We will manage risks, not ignore them.

We will engage the world, not withdraw from it.

As Sparky Anderson advised us – we will accept the luck we’ve been given…and give back – as only this great nation can. 

I have every confidence that this sense of mission and leadership is abundantly present in this room, and that working together, we will continue to enjoy the opportunities and freedoms so plentiful in this great republic. 

May we all support the next President. And may we summon our best efforts to secure a safe and more prosperous future for all who call this great country home. 

Thank you.