Magazine article Risk Management

Executive Forum

Magazine article Risk Management

Executive Forum

Article excerpt

In the movie "Mr. Roberts," the character played by Henry Fonda sees an armada pass in the night. He becomes very concerned that major events are occurring and that he is being left behind. Do we, as risk managers, share this concern about our future? Are we preparing for changing times in our profession? Are we on the cutting edge or merely following along?

The responsibilities of risk managers have evolved beyond a concentration on buying insurance to encompass sophisticated approaches to financing loss through various methods that can include self-insurance, larger retentions, contractual transfers, bonds or commercial insurance for losses arising from pure risks.

But what about losses that arise from business or speculative risks? Risk managers cannot dismiss these exposures and their potential consequences. Risk is risk, whether it is pure, speculative or dynamic. We need to reexamine our strengths and knowledge, and educate ourselves on the financial mechanisms of derivatives, finite risk, accounting standards and the financial implications of any exposure to business risk. As risk managers, we must keep abreast of changing times, emerging financial practices and alternate sources of capital that can be used to finance risk and business operations. …

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