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The Wisest Investment Morgan Stanley Ever Made

Posted in on
March 30, 2021

Author: Ron Dembo

To the 3,000 employees of Morgan Stanley who occupied 22 floors of the World Trade Center in 2001, Head of Security Rick Rescorla was a pain. He was an old sergeant too caught up in unrealistic scenarios who had them rehearse fire drill after fire drill, interrupting multimillion-dollar deals and dressing up stockbrokers in the bright orange vests of fire marshals. They couldn’t wait until he retired.

The Warning Signs

But Rescorla was a risk thinker, and he had a good reason for his rigour. He had been in New York in 1993. Then, terrorists had driven a truck bomb carrying urea nitrate–hydrogen gas into the garage of the North Tower, detonating an explosion that rattled the very foundations of the building, killed six people, and injured over a thousand.

He had already warned Port Authority, the overseer of the World Trade Center, of just such an attack months before – a warning they had ignored. And he had seen the lackadaisical attitude with which the traders on the trading floor had responded to the evacuation commands, too occupied with their split-screen monitors to be concerned with leaving the building. “Do I have to drop my trousers to get your attention?” he had yelled from the top of a desk.

Running the Scenarios, Finding the Hedge

Since that day, Rescorla placed no more faith in the Port Authority and realized that it was unwise to rely on first responders to access them on the 73rd floor.

So, he began training the employees to take responsibility for their own survival in a disaster scenario. He ran countless surprise fire drills and trained employees to meet in the hallways between stairwells and descend two by two. But most importantly, he told them to ignore any instructions from Port Authority that came out over the speaker system in the building.

The most likely scenario for Morgan Stanley was that nothing else would happen. They could continue operating in the building at maximum capacity with all the benefits that being in the most high-profile financial center in the world brought to their company. But another scenario, however unlikely, was that of another terrorist attack. And, being investors, Morgan Stanley knew how to operate with this type of risk: they had employed Rescorla as their hedge.

Every time Rescorla ran a drill – every time he pressed pause on millionaire, top-performance bankers, split brokers from their phones and computers, and pulled huge-net-worth clients from meetings – he cost Morgan Stanley money and potential upside. Rescorla was there to prevent a failure of imagination on their part. He was there to sketch scenarios, to run drills, to mitigate against the improbable. And it was a hedge that, as a recent analyst of the story quipped, “was the wisest investment Morgan Stanley has ever made”.[1]

Jumping into Action

When, on the morning of 9/11, Rescorla heard an explosion in the North Tower and saw the flames and smoke pouring from the impact site, he and every one of the Morgan Stanley employees knew exactly what to do.

Port Authority came over the public address system and instructed everybody to remain at their desks; they immediately began their evacuation in an orderly and well-rehearsed manner.

Rescorla, armed with a bullhorn and walkie-talkie, was there to guide them, and he successfully evacuated 2,687 employees out of the burning tower.

Then he turned around and went back in, charging up to the tenth floor and beyond to help others.

That was when the tower collapsed.

Rescorla’s remains were never found. But thanks to his abilities as a risk thinker, only 13 Morgan Stanley employees perished along with four of his security officers.


[1] Ripley, A. The Unthinkable: Who Survives When Disaster Strikes and Why (New York: Crown Publishers, 2008), pp. 203-210, at 203.

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