Proving Your Worth; Planning and Publishing a Risk Management Annual Report
East, Tim, Risk Management
In the 15 years I have worked in risk management, I've never felt more pressure to produce results and demonstrate our contribution to the bottom line. Our company has expanded dramatically within the past year, acquiring new business units and streamlining operations. We all have to work harder to remain visible and reinforce our importance The challenges of explosive changes in technology, growth in international business and shifting domestic markets are plenty to keep us busy well past 1997. But this year, we're adding a new project that may prove our worth and actually help us tie all these challenges together: a risk management annual report
How will adding a new project help us face existing challenges? I hope it will do so in three important ways: by giving us the opportunity to frame our risk management philosophy, goals and objectives together in a single document; by establishing the criteria by which we will measure our success; and by providing a tool to communicate the value we can bring to our business units.
The main point to keep in mind in preparing a risk management annual report is to keep its focus narrow and make sure the message is concise. I've learned that when communicating to senior management, it's usually better to shoot an arrow than a shotgun. Therefore, there are a couple of things that the report will not try to accomplish. First, a report alone will never motivate or energize a leader of a business unit to support the risk management agenda. Personal service, contact and relationships can't be replaced by a flashy 12-page publication. While it may reinforce the influence of personal contact and relationships, an annual report will not create it. Second, the report will not communicate a great body of technical information or provide a vehicle for premium allocation. Those tasks are far better accomplished by other means such as a complete premium distribution plan geared toward financial controllers and accounting functions.
With those caveats in mind, it is time to consider a plan. In most cases, we follow a straightforward path, reasoning from the data to the conclusion: Gather data [right arrow] Organize data [right arrow] Format [right arrow] Publish
In the case of our annual report, I will first develop very specific conclusions we want to reach--clarifying and framing the risk management function, and communicating its objectives, value and results. We will work backward to select the data that best illustrate or define these. I will plot my development in this reversed order:
* model final publication
* make format decisions
* plan how data will be organized
* gather pertinent data
This approach will result in a final product that will be tightly focused to achieve our objectives.
Modeling the Publication
We will start with a diagram of where the text will appear and set aside blocks for charts and financial tables we want to highlight. During this phase of the project, I am "story-boarding" the publication, trying to bring together the different elements that will eventually tell the story.
As I plan the report's content, it's important to build consensus with all the risk management functions within my company.
Although we'll take contributions from each, it's absolutely essential to have one person write and edit the publication. If not, the result will lack a unified theme and style. Who should that person be? He or she must have a good understanding of the risk management functions and the ability to communicate them in a simple manner that is easily understood by those outside of risk management. This may not be the staffer with the greatest technical knowledge or insurece savvy. Although this input is essential it is more important to find a person who can bring this information together in concise and readable style. This may even be an experienced support staff or risk management generalist. …