Risk Management

From the perspective of risk management, these internal and external "adjustments” may result in inefficiencies, introducing odd "pieces” into the production value chain

Risk Management
"Piece” or "head” were the terms used from the 16th to the 19th century to describe each of the individuals in a lot of slaves, in what was known as the "diabolical trade” 1.

The business of buying, selling and exploiting "pieces” was governed throughout this intense trading period by a number of official regulations in order to make the productive cycle of these "tradable goods” more efficient by reducing the depreciation of the "merchandise” that resulted from the high losses experienced and consequent detriment to the economy. 

In this way, efforts were made to reconcile the not always coincident interests of the various stakeholders, i.e. the "owners” of the merchandise, who needed "pieces” for their businesses and domestic service; the "shippers” of the merchandise whose interests lay in ensuring that the "pieces” arrived at their destination in a fit state to be sold for the best price; and the "masters” of the vessels, who wanted to make their maritime cargo as profitable as they could by packing as many "pieces” on board as possible, leading to lethal overloading of the transport vessels. 

However, these regulations, which were, in fact, constantly being disregarded due to a lack of effective monitoring, contributed little over the course of time to ensuring acceptable conditions and longevity for the "pieces”, whether during transportation to the destination markets or during assignment to the productive processes "after delivery”. Consequently, high replacement and maintenance costs were incurred and armed overseers had to be employed by the transporters and the owners of the "pieces” to ensure not only their suitable transportation and performance but also to deal with the numerous rebellions and desertions resulting from the slaves’ latent feelings of revolt, fired by the despairing circumstances in which they found themselves. 

From the early 19th century onwards, the expansion and development of agriculture and industry, particularly in the colonial territories and former colonies in the Americas, and the growing scarcity and consequent higher cost of man power from the "diabolical trade”, led to an increase in salaried employment. In turn, this made room for unfair competition between producers in territories who began supporting this new production cost and those who traditionally continued to have marginal access to cheap slave labour. 

This situation served as support for the arguments put forward by religious and lay abolitionists who, in addition to considering the slave trade a crime, also maintained that its eradication would be advantageous to countries’ economies, since, allegedly, "free labour” would be more productive and perhaps cheaper than "servile labour”. As a result, the British Parliament passed the Aberdeen Act, which granted the British Royal Navy powers to apprehend any ship involved in slave trafficking anywhere in the world, as a means of bringing about the end of slavery. 

Others, holding more conservative views and who had interests in, and easier access to, the "diabolical trade” argued that "abolition would cause an economic crisis since large-scale farming would be unable to support the impact of the loss of slave labour”. 

However, notwithstanding these very different outlooks on the benefits of "servile labour” for the economy, according to more recent theories2, countering preconceived ideas on the subject, the "economic relevance of slavery and the slave trade lay not in the fact of having been central to the development of the European and British systems but precisely in its marginality in respect of the main trends in economic growth centred on the Atlantic”. Indeed, in light of the transformations taking place in a northern Europe heading towards industrialisation, the Atlantic peripheries with "declining and threatened economic interests resorted to slavery and the slave trade as a means of staving off imminent collapse”. 

In recent modern times, productive organisations feeling threatened by a lack of "competitiveness”, and with no possibility or no management capacity to find other ways to address the issue, are forced to adopt "austerity” measures aimed at cutting labour costs. This could involve salary "adjustments” and the progressive elimination of employee benefits and "social perks” considered thus far as irreversible, or by resorting to outsourcing. 

Merely from the perspective of risk management, these internal and external "adjustments” may result in inefficiencies, introducing odd "pieces” into the production value chain which are not geared towards organisational strategy and culture. The consequences of this are loss of flexibility and reaction to changes in the trends of technological innovation and working methods, and a lack of motivation in achieving and planning objectives. And this is in addition to unforeseen increases in costs, both for monitoring and controlling outsourced tasks and in integrating these with the organisations’ internal tasks. 

Such inefficiencies could actually, in many cases and contrary to the desired effect, lead to the unsustainability and collapse of the organisations themselves and to the decline of the economies. 

By Pedro Castro Caldas, Risk Management Consultant

1 "diabolical trade”: term used by the 19th century abolitionist movements to describe the slave trade.
Joseph C. Miller "a marginal institution on the margin of the Atlantic system: the Portuguese southern Atlantic slave trade in the eighteenth century” work quoted in Arlindo M. Caldeira: "Escravos e traficantes no Império Português”.

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