Here is your premium-wrapped crisis!

Most of us have experienced in 2008 the subprime mortgage bubble related financial crisis. The media made it look scarier; saw people with packed up boxes, walking out from Lehman Brothers building; some were sad and some were angry, devastating!

I recommend watching the film The Big Short, which gives a brief background of the crisis back in 2008, explaining some financial terms to people with relevant examples from a more common perspective – with plenty of laughs along the way.

Here is my version to explain it that hopefully kids can understand. The mortgage bubble is similar to the story Emperor’s New Clothes (ENC). In this case, the private financial companies designed and produced the ENC, a lot of ENCs, as quickly as the fast fashion industry can turn around a new look. Then wrap them with one layer of glittered wrapping paper to their clients. Some clients opened up the gift, combined with other ENCs from other agencies, wrapped up this luxury gift with greeting cards, and a touch of scent, sell them to their VIP clients. And of course, everything is rated by the third party that “proves” the contents of those gifts truly were high quality.

The finance industry was mass-producing the ENCs, and let the wishful thought carried away that the housing market will be stable forever!

So this is how crisis initiated in that scenario; crucially it didn't feel like one in the first place. In fact, very friendly and welcoming to us.

The prevailing crisis we have in our head and mind should be sudden hits such as death, natural disaster and things totally out of control. For instance, when we got injured by an external force; fall from the bike, for instance, the brain reacts to that instantly by sending the pain signal and release adrenalin into the blood, enabling us to take action, try to save us. It works, otherwise, we would carry on hurting ourselves until we die. It’s obvious because we all know the result. In that sense, pain is indispensable as a necessary evil.

What if the crisis we can’t see and feel now, but will hit us harder in the future with different time span?

For example, if we don’t invest now, we will have less pension in the future - the crisis might be getting old with bad health and limited resource for welfare. During that time, the health system becomes more and more expensive. Go further, this individual works in your company; as an employer, how to prevent the mental crisis gradually occurring to the employee, that will cost more for the company in the long run?

One of the examples of long haul crisis is the increasing number of people who have diabetes, which has much higher chances to kill people comparing to flight and car accidents. The following charts show how what is very likely to kill us changes as we age for female and male, according to Flowing Data.

But do we have ever acknowledged it daily basis in the organisation? Are the health and safety policies embrace the people who are vulnerable due to suffering such diseases for a long period? Do we as organisations need to take a larger role in our employees' wellbeing before an illness such as this rears its head – or is this a case in which individual choice is paramount?

Controversially, one could make the same point about car accidents and coronavirus…

So here you are, a crisis has its own character, hard to define, it all depends on the impact and consequences that accompany with time.

But is there any patterns that we can recognise from the past crisis and the one we are experiencing, hence the COVID-19 related crisis? I found three primary root causes, very welcome to add more.

1. Always watch out for the weakest link

How do we identify it? I would suggest that looking for things are on the list but has been disengaged for an extended period. For instance, we are going to start a new project, but the kick-off won't begin in the next six months, let's wait until it starts, plays safe in the scope. No, no, no. My experiences taught me; you will spend longer than six months to chase the game. This is not suggesting that to fix the weakest link and make it become your strongest. You are welcome to do so if that will become your unique selling point to compete in business.

2. Too good to be true, despite that it’s true

There are so many business books like to remind us of the Enron scandal back in 2001 again and again. You see accounting fraud, governance issues and psychological problems. Like Titanic, Enron has set up its virtual museum that showed us vividly how wishful thoughts turn into greed, then bubble, and bust with the internet bubble after 911. So many staff worked there lost their pensions, the Founder Kenneth Lay died of heart disease not long after he was convicted on fraud and conspiracy. It was tragic!

3. Overpromise and 100% guarantees and non-reviewed polices, nutritious for a potential crisis

The new year resolution pheromone is a sign of over-promise; some of us ignore setting SMART goals; instead, we go big or go home. Does this look familiar to what local governments of China were trying to do a couple of weeks ago? They were encouraging and expecting to see consumers “revenge spending”, however, due to the whole globe's economy is under attack, most of the Chinese are likely turning into "revenge saving" because of traditional culture. The challenge is to ensure the job market will be stable as well as prevent inflation in a short period.

Crises come along with negative emotions. We have had great experiences in dealing with surprises with positive one, work and live during a happy mood. Now, it's a good time to know crisis better, find it, then work and live during negative emotion while injecting the positive attitude during the crisis. I met an experienced accountant, was impressed by what she said work during a hard time " Well, I suppose we work as usual, the only differences is we struggle and learn.”