Seizing the Future: An Imperative for Risk Management and Higher Education
Thrower, Ellen, Nelson, Jack M., Cochran, Susan M., Risk Management
The future of risk management education in the United States and abroad will be inextricably tied to the practice of risk management and its future role and importance in global planning and management. To the extent that practitioners and others concerned with the advancement of risk management are successful in elevating the visibility and importance of the discipline as a vital part of sound business practice, university risk management education faces a bright future.
Beyond this, the future growth and importance of university risk management programs will depend on the extent to which educators can effectively demonstrate the value their programs add to the practice of risk management. Today, several university programs are doing an excellent job demonstrating their value to industry partners, through a wide variety of strategies designed to strengthen the contributions of students, faculty and curriculum to the field of risk management.
This article discusses the future of risk management and the important contributions university risk management programs can make in advancing the discipline and practice. In order to provide a broad perspective, four respected educators from leading risk management programs were invited to offer their thoughts about the future of risk management, the contribution of risk management education and strategies currently under way at their institutions to strengthen the value of their programs.
The academics consulted include: Dr. Dan Anderson, University of Wisconsin-Madison; Dr. Lisa Gardner, University of Nevada-Las Vegas; Dr. Sandra Gustavson, University of Georgia at Athens; and Dr. Luttgart Van den Berghe, Erasmus University Rotterdam. It is our collective hope that this article will stimulate and encourage closer interaction between the risk management academic community, and practitioners, brokers, insurers, and others concerned with the discipline and practice of risk management.
THE FUTURE OUTLOOK FOR RISK MANAGEMENT
The tremendous changes currently under way in today's business world are having a radical impact on risk and uncertainty and the practice of risk management. Professor Anderson points to the rapid pace of change with which new risk management problems are surfacing today.
"Witness the catastrophe perils of hurricanes, earthquakes, floods, and winter storms, environmental liabilities, skyrocketing health care costs, major insurer insolvencies, the aging population, workers' compensation and the problems of Lloyd's to mention just a few," he says. Professor Gardner adds, "the emergence of regional trading blocks, health care agendas, stronger civil rights protections, and the 'green movement' supporting environmental protection are increasingly affecting business risks and accompanying management strategies."
The massive reengineering and restructuring under way in the corporate world is further adding to the complexity and importance of sound risk management. As more and more organizations reorganize processes, systems and staff responsibilities, while seeking to eliminate unnecessary resources, cut costs and improve performance, the significance of managing risks has grown throughout the corporate workplace.
At the same time, the traditional risk management approach, with its focus on insuring pure, identifiable risks, is no longer adequate. As Professor Van den Berghe explains, "The risk escalation has proved to be so dramatic that the borders of the 'insurability' have been reached." She adds, "For the difficult risks, no insurance cover or only a very expensive one is available." In response to these "capacity bottlenecks," risk managers are being forced to look for new solutions such as self-insurance, captives, risk retention groups, pools and trusts, retention plans, and other forms of risk financing and control.
These massive environmental changes are also demanding far greater skills and knowledge from today's risk management practitioners. …