Monthly Archives: April 2012

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RIMS 2012 in Infographic Form

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Last week, thousands of risk management and insurance industry professionals gather in Philadelphia for the RIMS 2012 Annual Conference & Exhibition. We covered many of the largest events and most fascinating discussions. Of course, given that it is the largest event in the industry, there was no way we could be there for everything.

Fortunately, the Toronto risk management information system firm Rismans has helped get a feel for what a few others of those in attendance got out of the event. The below infographic shows the results of the company’s informal poll of RIMS 2012 exhibitors in Philadelphia. (Click for larger version.)

Why Risk Management Should Collaborate With Internal Audit

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Risk management and internal audit should work together. That’s according to a joint report between RIMS and the Institue of Internal Auditors released last week. “The two disciplines are more effective working together than separately, especially when there is a common understanding of each other’s roles,” said Carol Fox, director of RIMS’ strategic and enterprise risk practice. She noted that internal audit’s role helps inform top executives about the companies’ strategic risks while risk management function helps leadership use the proper techniques and methods to assess all the possible outcomes of different strategic paths.

In short, internal audit sees everything that is going on within a company. And risk management can take that knowledge and ensure that all contingencies can be properly understood.

During a panel session at RIMS 2012 Conference & Exhibition on enhancing the value of risk management, Diane Askwyth a risk manager at Harrah’s Entertainment, echoed these sentiments and expanded on how risk managers can partner with their colleagues in internal audit. “You have to look at internal audit as another pair of eyes for you,” said Askwyth. “It’s a very powerful resource if you can get that in your corner.”

In fact, more than just serving as an additional resource, that partnership can greatly enhance your standing in a company. Because if risk management isn’t using the knowledge that audit has, audit will be. And that will mean that the risk management department’s standing will be lowered by comparison.

“The group that knows the most about what’s going on in the entire organization on a very granular level is internal audit,” said Askwyth. “And from that perspective, they have a big advantage over us. So they can either be your enemy or they can be your best friend. It’s your job to make them your best friend — or else they’ll slit your throat.”

Kristina Narvaez of ERM Strategies, LLC  has some advice. She says there are three “Cs” that should govern risk management’s relationship with internal audit. “You can complement and collaborate but you don’t compete against each other,” she said.

Walter Isaacson Talks Innovation and Creativity

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Walter Isaacson is a man of many stories. He has written biographies of Benjamin Franklin, Albert Einstein and, most recently, Steve Jobs. His latest is a riveting story of the roller-coaster life and intense personality of Apple’s creative entrepreneur. Isaacson brings a combination of wit, history, drama and humanity to the stories of Jobs, Einstein and Franklin, and their contributions to the world.

When Isaacson was working for Time is when he first met Jobs. “I remember siting with Steve and watching him and thinking about what a passion he has for making great products,” said Issacson to RIMS attendees. “But I also saw the other side of Steve Jobs. He’s impatient, petulant, sometimes can be rude, unkind, pushy. But I came away from that meeting still liking him.”

It was that passion, brains and curiosity that attracted so many to Jobs, regardless of his personality flaws. But how does Steve Jobs relate to risk management?

“For me, the first lesson that Steve can teach in terms of risk management is to pay attention — even to the parts unseen,” said Issacson. “Pay attention even to the things that other people aren’t going to see. And you know that that is the key to making a great product and it also plays out in the world of risk.”

Jobs vehemently believed that paying attention to the parts that no one sees is what  makes products perfect. For risk managers, this is a part of their daily job.

Risk managers also possess an ability to have complete focus on the risks at hand. Jobs mastered this skill with his products. “He had a great ability to focus, to filter out distractions,” said Issacson. “I think it came from his time in India — the zen focus.”

Perhaps most importantly in terms of Apple’s success, Jobs knew what people thought were high-risk products or initiatives, and he knew he could eventually get these people to embrace the risk. “He knew how to bend reality at times,” said Isaacson. “That’s why he had a reputation for driving people crazy. But he could also drive people to do things they thought were impossible. He knew how to know what people thought were high risk, but he knew it could work and got these people to believe and achieve the impossible.”

He would’ve made a great risk manager.

Walter Isaacson signs copies of his recently released Steve Jobs biography at the RIMS 2012 Conference & Exhibition.

Benjamin Franklin: America’s Original Risk Manager

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Benjamin Franklin was a man of many talents. In addition to being one of the key Founding Fathers and one of the most famous people of his day, he was a noted businessman, scientist, legislator, diplomat, author and philosopher. And according to Wendell Bosen, director of risk management for Management & Training Corporation, Franklin was also America’s original risk manager.

In a session today at RIMS 2012, Bosen chronicled the life of Philadelphia’s most important resident and outlined how many of his actions revealed that Franklin possessed the soul of a risk manager. For example, his invention of the lightning rod and a safer wood-burning stove demonstrated his ability to identify risk and develop innovative ways to mitigate it. In order to make Philadelphia safer, he also pioneered the use of street lights, night watchmen, fire departments and even industrial hygiene after he discovered that a common malady of the time called “dry bellyache” was actually symptoms of lead poisoning from unsafe industrial production methods.

Franklin practiced the principles of risk financing through his use of insurance associations and fundraising efforts, both public and personal, and even followed some enterprise risk management principles, such as supply chain preservation and crisis management, when he established river blockades to protect his paper supply deliveries and organized a militia to protect local citizens from the Paxton boys, a gang of criminals who had led a march on Philadelphia in 1764.

Later, when revolutionary conflict began to heat up, Franklin’s risk management efforts took on a more strategic tone. He utilized diplomacy, negotiation and governance efforts to break with England and establish a new Constitution for the young United States. His efforts to protect his fellow citizens continued even up until his death in 1790. Bosen recounted that in Franklin’s later years, he became an outspoken anti-slavery advocate because he felt the institution was not only degrading, but that it had the potential to tear the United States apart. His concern would prove to be prophetic 70 years later.

Risk managers already have many role models, but by adding Ben Franklin to the list, it truly gives the profession a historical legacy befitting a city like Philadelphia.