Magazine article Risk Management
Risk Management in the Limelight. (Career Builder)
After a highly publicized event that adversely affects a large organization, risk managers wonder: Would my company have been prepared? In the wake of September 11, chief financial officers have asked the same question. This means that risk management is now, more than ever, in the limelight.
CFOs are closely monitoring the renewal process and seem to be keenly interested in alternative risk financing strategies; everyone is more aware of the impact of insurance costs on the bottom line. Suddenly, risk managers who have previously had difficulty generating interest and support have an opportunity to promote their ideas. But can they sustain this interest?
In an online discussion forum for insurance and risk management professionals, most risk managers said they have received a significant increase in attention from senior management. Understandably, interest has been focused on the cost of insurance and what can be done to deal with price hikes. In addition, increased self-insurance levels have made executives curious about risk mitigation techniques. After all, self-insuring companies now have greater dollars at risk and therefore every dollar saved could go right to the bottom line. (Conversely, every dollar spent comes right off the bottom line.)
While some risk managers are being held directly accountable for the increases in their insurance premiums, most have been able to weather the storm. A few risk managers report that underwriters have not been interested in negotiation or in risk and claims mitigation initiatives--only in rate hikes. As a result, not much could be done in the short term to avoid significant price increases for significantly less coverage. Some risk managers prepared management ahead of time for this shift in the insurance market. And those who avoided taking credit for the soft market have also been less likely to be blamed for the hard market.
The Silver Lining
In a speech I delivered to a group of risk managers at the Western Regional RIMS Conference in October 2001, I asked, "How many of you have been speaking to your CFOs more often since September 11? …