Magazine article Risk Management

Earning a Seat at the Table

Magazine article Risk Management

Earning a Seat at the Table

Article excerpt

When Accenture released the results of its most recent annual study on the top priorities for senior executives, risk management concerns topped the list for the first time in the history of the report. In the minds of corporate and public sector leaders, managing risk exceeded issues such as improving workforce performance and leveraging IT innovations. This elevated urgency indicates that risk managers are or should be playing much more significant roles within their organizations.

This is certainly the case within public entities where risk managers have now become the focal point for all insurance and litigation initiatives. It was not always this way.

Initially, public risk managers generally came from the fields of safety inspection, finance or human resources, and therefore, emphasized the training and prevention facets of the job. This still represents a significant portion of a risk manager's duties, but it is only half of the equation today. Increased litigation costs, a hardened insurance market, and more restrictive coverage for public entities have completely reshaped the role of risk managers.

Today's public entity risk manager must take a more active role in the insurance and legal arenas, serving as the primary liaison to claims specialists, underwriting staff and attorneys. A risk manager can dramatically influence insurance product pricing and help to close cases more swiftly with the desired outcomes simply by facilitating the work of their partners in the insurance and legal domains.

One critical duty unique to public sector risk managers is to help their colleagues from the private sector to navigate through bureaucratic and political environments. Most underwriting professionals, for instance, come from a statistical or accounting background, and have not worked in the public sector. They need access to someone close to the pulse of the political entity to help them to consider extenuating factors involved in pricing accounts.

Certainly insurance companies will examine the historical loss ratio of an organization when pricing, but this data is essentially useless without understanding the political context. A good public entity risk manager can demonstrate how a single election can greatly impact an account. A new political administration or key appointment can easily turn around a poor loss ratio, and the risk manager is in the best position to communicate this to the underwriter. …

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