Flawed Assumptions, Real Consequences

“You should definitely change your flight and come with me to Peru,” Tomas implored me over beers in a Budapest watering hole.

We had just closed a project finance deal—our second or third together—and, ever the consummate arranger, he was trying to whet my appetite for a power project still in the planning stages. Tomas was always the smartest guy in the room, but he was understated about it. Tomas just got things done.

I was tempted to go to the Andes, but I was managing institutional money and had preliminary approval protocols to follow... well, truthfully and more pressingly, I had tickets to the Canadian Grand Prix in Montreal that weekend, and I had not seen my wife, infant son and toddler daughter in a week.

Tomas and I had bonded over being at the same stage in life: working in investment finance in our mid-30s. He also had a toddler, an infant and a wonderful spouse at home, and he was also a massive F1 fan. We could argue over deal terms, then go for beers afterwards and argue over Senna versus Schumacher. So he got it. Peru would have to wait, but he’d send me the deal teaser the following Tuesday.

“I’ll give you first look,” he promised.

That Saturday I was watching qualifying from Grandstand 12 on Île Notre-Dame when I got the text that Tomas had been killed. The chartered helicopter carrying him and a dozen executives to the site visit had slammed into Mama Rosa mountain in Peru and burst into flames.

In the following weeks, it came out that there had been no risk inquiry or safety assessment of the flight. The pilot had a chequered flight history, and it was questionable whether the 1950s-era Sikorsky S-58ET could even operate safely at high altitude in the Andes.

As the lawyer for his widow later argued, “Although [Tomas] was prepared to take risks, he did so on a calculated basis, he was also a devoted family man. He would not have taken on the risk of this flight in the light of an instruction not to do so from his employer on safety grounds.”

Due diligence on the journey, not just the deal

Investment professionals make judgment calls about risk every day. We stress-test cash flows, question management’s projections and walk project sites before we commit capital. But any risk decision is only as good as its underlying assumptions and the quality of the information behind it, and the trip to see an asset often gets less scrutiny than the asset itself.

A few basic questions are worth asking before any site visit in unfamiliar territory:

• Who is getting us there, and what is their record? Charter flights, local drivers and boat transfers are often arranged by the host. That is a courtesy, not a safety assessment. For charter aircraft, ask whether the operator has passed an independent safety audit.

• What are the conditions? Altitude, weather, roads and local security can turn a routine trip into a risky one.

• What happens if something goes wrong? Know who to call, where the nearest reliable medical care is, how you would get out, and whether your insurance covers medical evacuation.

• Does anyone know where I am? A colleague, your employer’s travel program or a check-in service should have your itinerary.

• Has anyone assessed the trip, not just the deal? If your employer has a travel-risk process, use it before you book, not after you land.

  
  

Make it normal to say no

The line from that case that stays with me is the last one: he would not have boarded that helicopter if his employer had told him not to.

Good dealmakers take calculated risks; it is part of what makes them good. But a deal team on a site visit is under quiet pressure. The host has arranged everything, the schedule is tight, and no one wants to be the person who holds things up. Employers can remove that pressure by making it clear in advance that declining an unsafe leg of a trip will never count against anyone. Travel-risk tools and pre-trip briefings help, but the culture matters more than the tools.