The Fall of AIG
Abstract
When business is booming and thriving, everyone is happy and in good spirits, but when things go wrong, attitudes get real sour and fingers start pointing. It always needs to be someone’s fault yet at the same time it is always made to seem like nobody’s fault. Who is to blame in these situations? These are some of the questions in which both employees and customers faced when it came to the crisis with American International Group or as they are more commonly known as AIG. AIG is known for being the largest insurance group in the world and for having to undergo the largest bailout ever by the government. There are many views on what went wrong or who did what but by directing our focus on the leadership, culture and incentives, we will be able to better understand why the company landed in this predicament. These three issues show us how AIG was built for success, but also how that success was not built to last.
Take Risks, Make Promises
American International Group is the largest insurance company in the world, “While it held the spotlight for staggering losses and government bailouts, the company’s subsidiaries have steadily provided general property/ casualty insurance, life insurance and retirement services, financial services, and residential mortgage guaranty insurance to commercial, institutional and individual customers in the US and more than 130 countries around the world” (Hoover, 2011). This is the type of business that assumes a lot of risk. With risk, comes the chance of failure, problems, and mercy which is exactly what happened to AIG. AIG was a company that took risks; risks that were seen as being unmethodical which can result in empty promises for customers. In my opinion, there are three reasons that AIG fell and needed to be bailed out by the government: the company culture, the leadership of the company, and the incentives that were presented for the employees.
Company Culture
The culture of any... [continues]
Abstract
When business is booming and thriving, everyone is happy and in good spirits, but when things go wrong, attitudes get real sour and fingers start pointing. It always needs to be someone’s fault yet at the same time it is always made to seem like nobody’s fault. Who is to blame in these situations? These are some of the questions in which both employees and customers faced when it came to the crisis with American International Group or as they are more commonly known as AIG. AIG is known for being the largest insurance group in the world and for having to undergo the largest bailout ever by the government. There are many views on what went wrong or who did what but by directing our focus on the leadership, culture and incentives, we will be able to better understand why the company landed in this predicament. These three issues show us how AIG was built for success, but also how that success was not built to last.
Take Risks, Make Promises
American International Group is the largest insurance company in the world, “While it held the spotlight for staggering losses and government bailouts, the company’s subsidiaries have steadily provided general property/ casualty insurance, life insurance and retirement services, financial services, and residential mortgage guaranty insurance to commercial, institutional and individual customers in the US and more than 130 countries around the world” (Hoover, 2011). This is the type of business that assumes a lot of risk. With risk, comes the chance of failure, problems, and mercy which is exactly what happened to AIG. AIG was a company that took risks; risks that were seen as being unmethodical which can result in empty promises for customers. In my opinion, there are three reasons that AIG fell and needed to be bailed out by the government: the company culture, the leadership of the company, and the incentives that were presented for the employees.
Company Culture
The culture of any... [continues]
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