Risk Management in Latin America: As Global Trade Creates New Exposures in Latin America, ALARYS Is Promoting Risk Management

Article excerpt

As risk management practitioners gather in Buenos Aires on October 27-30 for the second biennial conference held by the Asociacion Latinamericana de Administradores de Riesgos y Seguros (ALARYS), organizers hope the benefit of the exchange of ideas and techniques will continue after the event concludes.

"ALARYS is a confederation of national risk management associations from Mexico, Brazil, Venezuela, Argentina and Panama," says Jorge Luzzi, risk manager-Latin America for the Pirelli Group in Buenos Aires and president of ALARYS and ADARA (the Argentine risk management association). "Because many of us are located far away from each other and we're trying to understand these issues at the same time, it's not always easy to share ideas. The conference gives us time to explore our questions and get to know each other better."

Mr. Luzzi says that throughout Latin America there is a growing recognition of the need for risk management, a discipline that formerly existed only within multinational corporations based in the United States or Europe.

"Most companies in the past have left insurance issues to financial managers who dealt with risk management on a part-time basis or depended on their brokers," Mr. Luzzi says. "Now more companies are recognizing a need to control their own risk management needs better and are creating internal structures for doing so."

As more Latin American companies begin to trade internationally, their exposures to risk are expanding as quickly as their horizons. "As the local markets have opened up and Latin American companies have started exporting products to the rest of the world, they realize that there are liability risks that they didn't have before," Mr. Luzzi says. "If you send products to the United States, for instance, you're subject to the laws there. Also, legislative changes in Latin America have introduced pollution and environmental risks for our companies. We need to share ideas about managing these exposures."

Another factor assisting the growth of risk management in Latin America is reform of regulations that mandated the use of government-run insurers and reinsurers. Mr. Luzzi says many companies, presented with an array of insurance choices for the first time, aren't sure how to identify their needs and select the best solutions.

"Companies need to have someone analyzing the markets and working on loss prevention, claims and reducing workers' compensation costs. …