Some say the economy and markets will heal themselves in time; markets climb a wall of worry. That may be true, but how do we know? The answer is that no one truly knows what lies around the next corner during this unusual period in economic history. All we can do is prepare for unforeseen events by managing our businesses carefully and be conscious of business risks we take.

Asset managers who manage their firms strategically, with an eye toward judicious growth and thoughtful expense management, are likely to be the survivors of a variety of potential economic and market scenarios.

In some sense, this seems right, since the asset management industry enjoyed out-sized margins for many years. But it will require sharpened skill sets and new tactics. Resources will need to be deployed efficiently, minimizing waste. All logical alternatives for accomplishing tasks and executing functions should be considered, such as appropriate outsourcing. Strategies must be focused, based on careful planning, and executed crisply.

We all hope this year will bring an easier operating environment. But we must be prepared for continued challenges to come.

These factors all fit within the typical scenario for credit induced downturns which tend to be much more difficult to recover from than cyclical downturns. This “new normal” environment will require management to follow careful and thoughtful strategies, and executive crisply and flawlessly. Executives will need to be on the top of their game. However, those that differentiate themselves from the pack could enjoy excellent success.

Dorothy, we are not yet out of the poppy fields. Let it snow, let it snow, let it snow!

While, in absolute size, this event is not large, it seems to be reigniting some fears of contagion. As I wrote recently, market sentiment moved from fear to greed quite quickly in less than a year. This creates an environment which is ripe for disappointment. Further, since we do seem to be experiencing an extended period of deleveraging globally, Dubai provides a reminder that there is much work to be done before we get the all clear signal that conditions are relatively normal again. Indeed, as I’ve written before, we seem to be in a “new normal” environment which will be unlike the recent boom times.

For asset managers, as well as managers of other businesses, the events of Dubai remind us that we must manage our businesses with the very best practices in order to succeed in the “new normal” environment. We need to move forward, but in a cautious way with great respect for unknown risks and events which could appear without warning. A well managed business is the best way to overcome such events without losing significant momentum.