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Jamie Dimon, the CEO of JPMorgan Chase, has seen it all when it comes to financial crises and unexpected challenges. In a recent discussion, he highlighted the importance of being prepared for anything that might go wrong, drawing from his extensive experience in the finance industry.
Dimon pointed out that crises happen all the time, whether it's the Ginnie Mae's, Commercial Paper collapse, the 1987 crash, the 1990 recession, or the 1974 recession. His key message? These events are inevitable, and the best way to handle them is by being prepared in advance. "The best preparation is in our business capital and liquidity," he says. This means having enough financial resources and assets on hand to weather the storm.
"You can't be prepared after the fact. You got to be prepared before the fact."
Preparation isn't something you can do after a crisis hits; it needs to be done beforehand. Dimon emphasizes that risk management is about understanding a range of possible outcomes and being able to handle them. This includes being ready for geopolitical crises and cyber threats, which are becoming more common.
"You got to be prepared for that stuff. And it does happen and it's going to surprise you one day," he warns.
Dimon advises businesses to think about risks that could go terribly wrong and to ensure they can survive those scenarios. This could be anything from technology failures and government regulations to natural disasters. For instance, a restaurant might need to consider whether it can stay afloat if severe weather forces it to close for a week. Having enough cash reserves is crucial.
"Think when you think about risk, think about things that can go terribly wrong. Can you survive them?"
Dimon's insights are echoed by other successful entrepreneurs. For example, Jeff Bezos, the founder of Amazon, has often spoken about the importance of being ready for unexpected challenges. Bezos once said, "You have to be willing to be misunderstood if you're going to innovate." This highlights the idea that preparation involves not just having resources but also being mentally ready to face and overcome challenges.
A notable case study is the experience of Airbnb during the COVID-19 pandemic. When travel came to a halt, Airbnb faced a massive crisis. However, the company had been preparing for unexpected events and quickly pivoted its business model. They focused on long-term stays and experiences, which helped them survive and eventually thrive despite the pandemic's impact.
Jamie Dimon's message is clear: crises are inevitable, but with careful preparation and risk management, businesses can survive and even thrive through tough times. His advice to always be prepared and think ahead is a valuable lesson for anyone looking to build a resilient and successful business. Listen to Dimon: