Survey Finds Alliance with Organizations and Risk Reporting Structures

NEW ORLEANS—Seventy-nine percent of companies are aligned with their risk management reporting structure, however, only 27% of risk professionals believe that emerging risks will be a company priority in the coming year, according to the 12th annual “Excellence in Risk Management Survey” released here by Marsh and RIMS.

In the last five or six years, “We have seen significant narrowing of the gap, where there is better alignment of what risk managers and risk executives are providing their organization and what their C-suite and management is looking for and needing in this riskier world that we all live in,” said Brian Elowe, a managing director at Marsh and co-author of the report. Findings are based on more than 300 responses to an online survey and a series of focus groups with leading risk executives.

Elowe explained that the study focused on organizational alignment, risk management effectiveness, data analytics and technology and cyberrisk.

In their study of organizational dynamics, he said, “We looked at priority setting, organizational structure and performance measurement standards to understand effective execution of a risk management strategy.”

The first insight was in respect to structures risk management reports to inside an organization. “We also asked whether the people responding to the survey felt risk management was reporting to the correct area inside the organization. We found that 79% of the respondents said they felt risk management was reporting into the appropriate area inside their organization,” Elowe said.

Looking deeper, he said the survey found that 50% of executives report into the finance area. The other half reports into a wide number of areas inside the company–12% report to general counsel, 8% to other C-suite members, 5% to internal audit, 5% to operations, 2% to human resources and 11% to “other” functions.

“We found that while they are all in the risk management function, those that report to areas outside of finance tend to be involved in areas deemed to be more strategic in nature. So they are more likely to be involved with things like ERM strategies, IT, privacy and security.”

Elowe said, “We think that finance executives might be well-served to help facilitate greater connections inside their companies to help broaden the perspective that risk executives reporting into finance might be able to have inside their own companies.”

In addition, only 27% of risk professionals reporting to the CFO or treasurer said they expected an increase in spending for training risk management staff. This is compared to 46% in increases expected by those reporting to other areas.

The top-five programs reporting to risk management were insurance management (92%), claims management (88%), enterprise risk management (67%), captive operations (65%) and emergency response (63%).

Looking at functions that report into risk management, he said that while the traditional functions of insurance and claims were well aligned, there is a significant alignment with IT. This is compared to several years ago when IT “operated in and of itself in an organization. That is an outcome of the growing cyberrrisk and the need for organizations to have a multi-disciplinary approach to how cyber is affecting their organization.”

Discussion groups agreed that the “here and now” is most important to their companies and that more needs to be done to develop understanding of emerging risks. “Risk managers are concerned they are not looking far enough ahead,” Elowe said, adding that company focus is largely directed to regulations and compliance. Carol Fox, director of the strategic and enterprise risk practice at RIMS and co-author of the report observed that organizations focused on operations are generally not as involved in strategy. She said management understands risks, but fell off in actually planning for emerging risks.

Findings include:

  • Risk management departments that do not report into finance are generally better aligned with other strategic functions within their organizations — most notably in the areas of enterprise risk management, compliance, information technology (IT) risk management, privacy, and security.
  • Despite the importance placed on emerging risks by many board members, senior leaders, and risk executives, only 27% of survey respondents said that identifying emerging risks would be a priority in the coming year.
  • Over the next two years, 42% of organizations expect to increase the level of investment in risk analytics, according to our survey, with 57% saying it would remain flat.
  • Nearly 60% of respondents said their organization has no formal communications plan in anticipation of a cyber event.
  • Risk professionals who report into the CFO or treasurer are much less likely to expect an increase in spending for training risk management staff in the coming year compared to those reporting elsewhere.


RIMS Presents Top Risk Management Awards

Janice Ochenkowski RIMS Award

Janice Ochenkowski was presented with the Harry and Dorothy Goodell Award by RIMS Executive Director Mary Roth and President Richard Roberts.


NEW ORLEANS—At today’s RIMS 2015 Annual Conference & Exhibition Awards Luncheon, RIMS, the risk management society, announced the winners of its top industry awards.

Janice Ochenkowski, international director of global risk management at Jones Lang LaSalle, received the society’s most prestigious honor, the Harry and Dorothy Goodell Award for furthering the goals of RIMS and the risk management discipline through outstanding service and achievement.

Victoria Nolan Heart of RIMS Award

The Ron Judd “Heart of RIMS” award for outstanding performance in furthering risk management at the chapter level was presented to Victoria Nolan, risk and benefits manager at Clean Water Services and an active member of the RIMS Oregon Chapter.

Three individuals received the RIMS Rising Star Award, which honors up-and-coming risk management professionals under the age of 35 or with less than seven years of experience in the industry. Anna Bendgen, risk management specialist at Sedgwick, Andrew Bent, senior advisor, EH&S risk at Suncor Energy Inc., and Yelena Urcia, senior global insurance analyst at The AES Corporation, were recognized for their exceptional initiative, volunteerism, professional development, achievement, and leadership potential.

RIMS and Business Insurance magazine presented the 2015 Risk Manager of the Year® Award to Kathleen M. Ireland, vice president of global risk management at IBM.

Richard Rabs, immediate past chair of the RIMS External Affairs Committee, was presented with the Richard W. Bland Memorial Award for commitment in the area of legislation or regulation.

This year’s Cristy Award, for the highest marks on the three exams required to earn the Associate of Risk Management designation, went to Michael Grosso, risk analyst at Bimbo Bakeries USA.

RIMS Inducts Three Industry Legends into Risk Management Hall of Fame

NEW ORLEANS—Today, Gary E. Bird, James D. Hinton and Reginald A. Pitchford were recognized as the 2015 inductees to the Risk Management Hall of Fame (RMHF), a joint venture between AIG and RIMS that celebrates risk professionals who have made exceptional contributions to advancing the discipline.

“With an eye on the future, it’s important that we remember the risk management leaders who have laid the groundwork, generously volunteered their experiences and demonstrated an unwavering commitment to advancing the profession,” said RIMS Executive Director Mary Roth. “Gary, James and Reginald are shining examples of this industry’s best and it is a privilege to announce their induction into the Risk Management Hall of Fame.”

“Throughout their professional careers, these industry leaders have gone above and beyond to make significant achievements in risk management,” said Rob Schimek, President and CEO of the Americas for AIG. “It is truly an honor to recognize them for their success.”

gary bird

Before his death on September 11, 2001, Gary Bird served as director of risk management at the Phelps Dodge Corporation and senior vice president of construction risk management at Marsh & McLennon. He also authored the first three editions of The Wrap-Up Guide, an internationally recognized series that explores strategies and best-practices for managing liability policies designed to serve as all-encompassing insurance for all contractors and subcontractors. For his contributions to the field, IRMI changed the name of its annual construction risk management award in his honor, annually celebrating a risk or safety manager who has implemented an innovative risk management program for a construction project with the Gary E. Bird Horizon Award.

Jim Hinton

James “Jim” Hinton spent 33 years managing risk with the Hospital Corporation of America (HCA) and its predecessor companies and served as president of Health Care Indemnity, Inc., HCA’s captive insurance company. In addition to developing innovative loss prevention programs, he lobbied successfully with industry colleagues to change the legal environment by investing heavily in tort reform efforts. Hinton also dedicated much of his life to leading a number of charities dedicated to aiding individuals with cerebral palsy and other disabled adults, spurred by his son’s struggle with the disorder. In recognition of his dedication to both risk management and social service, the James D. Hinton Memorial Captive Insurance Volunteer Award was created and awarded to Jim after his death in 2012 for his outstanding leadership within the captive insurance community.

reginald pitchford

After serving in the Royal Air Force medical service during World War II, Reginald Pitchford worked his way up in the Canadian risk and insurance fields, becoming a champion of risk management in Manitoba and the RIMS Manitoba Chapter (MARIMS) before it even achieved chapter status in 1976. His work as corporate risk manager at United Grain Growers Insurance Department was characterized by his belief that a primary risk function established a strong foundation, ultimately leading to one of the first successful applications of a series of risk processes that would later be called Enterprise Risk Management. In the early years of MARIMS, he was critical in its growth, serving as chapter president while also holding the position of president of the Insurance Institute of Manitoba and sitting on the Council of the Insurance Institutes of Canada, and taught during the 1960s and ’70s as a Fellow of the Insurance Institute of Canada.

Insurance Industry ‘Disappointed’ by Senate’s Non-Renewal of TRIA

Last week’s optimism about the possible reauthorization of the Terrorism Risk Insurance Act was replaced by “disappointment” today, as the insurance industry sounded off about the Senate’s failure to pass the House-approved TRIA bill before adjourning. TRIA, the federal insurance backstop that requires insurers to offer terrorism insurance coverage to policyholders, is set to expire on Dec. 31, 2014. More than 60 percent of all U.S. businesses purchase terrorism insurance coverage, according to Marsh USA.

“A major terrorist attack occurring without a TRIA law on the books will be far more disruptive to the U.S. economy than one where TRIA is in place,” Robert Hartwig, Ph.D., president of the Insurance Information Institute and economist said in a statement. “Terrorism insurance policies are going to lapse in 2015, and insurers will be under no obligation to renew them, adversely impacting the construction, energy and real estate industries, among others. For instance, a theatre owner hosting a controversial movie premiere on Christmas Day may have insurance coverage for losses triggered by an act of terrorism but this same business might not have it if a comparable attack were to occur on New Year’s Day.”

The Coalition to Insure Against Terrorism (CIAT) spokesperson Marty DePoy said, “CIAT is incredibly disappointed that the Senate chose to adjourn without reauthorizing the Terrorism Risk Insurance Act, a program that since 9/11 has provided critical stability to the marketplace against another terrorist attack. This is a bipartisan failure; the 113th Congress has let down American workers, American businesses and jeopardized U.S. economic and national security. CIAT urges the new Congress to make TRIA reauthorization its top priority in January and immediately vote to extend the program for the long-term.”

RIMS President Carolyn Snow echoed disappointment. “We are extremely disappointed that Congress failed to pass an extension of TRIA, despite strong bipartisan support. The program’s expiration will have many negative repercussions for commercial insurance consumers, the countless organizations they represent and the U.S. economy as a whole.”

She noted that since its inception, “TRIA has stabilized the marketplace by providing adequate capacity at affordable rates. Its expiration will almost certainly cause rates to rise, placing many lending agreements in jeopardy and forcing some organizations to self-insure or simply go without.”

Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), said AIA is “incredibly disappointed,” adding that by letting TRIA lapse, “Congress has failed to protect taxpayers and the economy.”

She said, “Without TRIA in place on Jan. 1, insurers will be forced to assess their exposures. The program’s lapse will significantly jeopardize the terrorism insurance marketplace that currently protects our nation’s economy against major acts of terrorism. We strongly urge the new Congress to take up the House-Senate negotiated TRIA reauthorization package as its first item of business when it returns in January in order to minimize marketplace disruptions.”

Global risk advisor, Willis expressed disappointment as well, noting that its biggest concern is that Clients “will need help in reevaluating their risk exposures according to the changed environment where TRIA is no longer available as a back stop for the insurance market place. Of particular concern is where clients have loan covenants that determine the type and amount of terrorism insurance coverage that is required.”

Mike Becker, executive vice president and chief executive officer of the National Association of Professional Insurance Agents observed, “Disagreement won the day and politics took precedence over protecting the American people. There was overwhelming bipartisan support to renew TRIA, with both parties showing strong leadership to get a compromise deal done in recent weeks. That support was nearly unanimous, with the House approving the TRIA renewal deal 417-7 last week, and the Senate having already passed a similar version 93-4 last July.”

Snow concluded, “RIMS and many other organizations have been pushing Congress to pass an extension for the past two years but Congress senselessly ignored those concerns and waited until the very last moment. This delay has ultimately led to the worst possible outcome.”