Monthly Archives: April 2012

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Former Presidents Roundtable at RIMS 2012

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Ever wonder what the former RIMS presidents have been up to since they fulfilled their leadership service to the Society? Well, they’re still practicing risk management — and doing it well.

At the RIMS 2012 Conference & Exhibition in Philadelphia, one of this morning’s sessions brought together past presidents who have a combined 100 years of experience in the field. They were:

  • Louis Drapeau, director of risk management for the University of Kentucky
  • Lance Ewing, vice president of Chartis
  • Michael Liebowitz, director of insurance and risk management for New York University
  • Christopher Mandel, executive vice president of professional services for rPM3
  • Janice Ochenkowski, managing director at Jones Lang LaSalle Incorporated
  • Mark Walls, assistant vice president of claims for Safety National (moderator)

The first issue discussed was the state of the economy and how that affects risk managers across all industries, to which Ewing remarked, “I don’t think they’re looking at the poor economy and wondering what to do, I think they’re living the economy and figuring it out as they go.” He also emphasized the importance of risk managers taking this opportunity to get in face time with senior management and claims people. Liebowitz added that companies will likely go looking for other sources of revenue during hard economic times and, therefore, will look to emerging markets. But with emerging markets come emerging risks.

When asked about the impact of the eurozone financial crisis, everyone was in agreement that it undoubtedly affects the industry. “We’re seeing the beginning of a hardening market in Europe,” said Liebowitz. “It’s a mirror of what we’re seeing here in the U.S.” Ochenkowski reminded everyone that investors in European banks are from all over the world and the impact from the eurozone financial crisis is global, not centered solely in Europe.

The topic of social media and cyber liability was brought up, and rightly so and it is a serious emerging risk that will affect every company sooner or later. “We’ve decided to embrace social media but we can’t ignore the risks,” said Ochenkowski. “We ask ourselves, ‘how can we do it not viewing it as a risk, but as an opportunity?'” To control the risks, Jones Lang LaSalle has incorporated social media guidelines for employees. “You can go from a nobody to viral in 15 seconds,” said Ewing. Referencing the recent Pink Slime incident and how both traditional media and social media coverage of the event eventually caused the company’s demise. “There should be no doubt about its potential,” he said. Indeed. As Leon Panetta has said, the next Pearl Harbor is going to be a cyber attack.

And it wouldn’t be a meeting of risk management minds without the mention of reputational risks. “A company’s reputation comes down to its weakest employee,” said Ewing, as he emphasized that the risks of reputational damage gives risk managers an opportunity for more face time with senior leaders and a chance to explain how the’re going to protect the company’s reputation and brand image. Drapeau recounted his school’s recent NCAA championship win and how he prepared for the following riotous behavior of students and fans because, if he had not, the school’s reputation would have suffered. “We faced risk immediately [following the game], but we did a lot of preparation in advance,” he said.

Napco Spencer Cup Hockey Tournament Raises Money for Risk Management Education at RIMS 2012

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On Saturday night, some 60 RIMS 2012 attendees gathered to skate around an ice rink carrying sticks and shoot rock-hard pucks of vulcanized rubber at one another. Not exactly the type of behavior you would expect of risk managers: even with helmets, gloves and pads, ice hockey is dangerous.

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But there are no rewards without risks, and for all involved, the upside of the Napco Spencer Cup hocket tournament — fun and raising money for risk education — far outweighed any safety concerns. After all, the four-team round robin tournament raised $12,000 for the Spencer Educational Foundation, a nonprofit that grants scholarships to college students pursuing degrees in risk and insurance.

According to Napco CEO David Pagoumian, who played in the game along with RIMS Director of IT Mike Peters (pictured above), his company has been sponsoring the event since 1997, when it took over from the retiring executives who founded the Spencer Cup in the 1970s to “keep the spirit going.

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The Oakland A’s Billy Beane Addresses RIMS 2012

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As the saying goes, “Winning isn’t everything.” That is unless you’re the general manager of a Major League Baseball team. Then it’s probably the main thing. But in the baseball world, winners and losers are often separated by millions and millions of dollars. The smaller market have-nots can’t easily compete with their wealthier large-market counterparts that can spend much more money acquiring star players. Famously, however, the Oakland Athletics’ GM Billy Beane was able to buck this trend in the 1990s by using data analysis to craft a winning team on a relatively small budget. The subject of the book and movie Moneyball, Beane recounted his story in his keynote address this morning at the the RIMS 2012 Annual Conference & Exhibition in Philadelphia.

Beane talked about how his unsuccessful playing career first gave him experience with the proper valuation of assets. As a young prospect, Beane was a first-round draft pick and projected to be a star. But it turned out he was an “overvalued asset” and as he said, he just didn’t have the skills. Beane only played for a few years, compiling a meager .219 career batting average. As an executive, Beane didn’t want to make the same mistakes, particularly since his team didn’t have the money to spend on a pick that didn’t pan out. His cash-strapped team had to get the most bang for its buck, and in order to do that the Athletics needed to identify and invest in undervaled assets that other teams missed.

“The biggest risk for the Athletics was doing things like everybody else,” he said. Beane and his assistant, Paul DePodesta, looked at years of baseball statistics and found that many teams were “paying for skill sets that didn’t correlate with winning.” By concentrating on these areas, such as on-base percentage rather than stolen bases, for instance, Beane put together a baseball team that may not have been glamourous, but it was effective. Throughout the 1990s and early 2000s, the A’s became a frequent contender, depsite their low payroll.

Throughout his career, this adherence to data-driven decision making has meant that Beane has had to make some unpopular and seemingly illogical personnel choices, including trading some of his best players. “The riskiest thing as an A’s fan is to buy a jersey with your favorite player’s name on the back,” he said.

Ultimately, however, the metrics are what rules out. His strategy may not always be popular with the fans, but for Beane, it’s all about what benefits the team. Kind of sounds like what many risk managers have to go through, doesn’t it?

Four Industry Luminaries Inducted into Risk Management Hall of Fame at RIMS 2012

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Last year at the RIMS 2011 Annual Conference & Exhibition in Vancouver, RIMS and Chartis launched the Risk Management Hall of Fame. John Pinner, Eldrich Carr, Douglas Barlow, Donald Barrett  and Cheri Hawkins were the first five inductees. Today, they were joined by four others who have spent their lives and careers advancing the discipline: Marc Darby, David Haight, Edith Lichota and Ronald Strine.

“With nearly 150 combined years in the risk management profession, this year’s group of inductees have achieved professional excellence while demonstrating a genuine commitment to advancing the discipline,” said RIMS Executive Director Mary Roth. “It is with great honor that we recognize the careers of these four individuals and welcome them into this elite group.”

Peter Eastwood, president and CEO of Chartis for the Americas, agreed. “This year’s inductees have not only served their companies, but have helped shape the risk management discipline,” he said, “and we are proud to congratulate them on this achievement.”

Below are some highlights from each of their careers.

Marc Darby

Marc Darby’s career at Bombardier spanned almost 30 years before he retired in 1998 as director of risk management and insurance. He increased the profile of the risk manager at the company and helped form a multi-discipline risk management team as Bombardier evolved from a manufacturer of recreational vehicles to a world-leader in the aerospace and rail transit industry. Marc was the president of RIMS from 1983-84, president of Quebec Risk and Insurance Management Association (QRIMA) from 1975-76, winner of the RIMS Harry and Dorothy Goodell Award in 1997 and named to the Business Insurance Risk Management Honor Roll in 1992. He remains an active member of RIMS and QRIMA.

David R. Haight

Before retiring in 1998, David R. Haight has spent more than 35 years as a risk professional at companies including Gould Inc., Ceco Corporation and CF Industries, Inc. He helped form the Northeastern Illinois Chapter of RIMS in 1978 and later served as president. He also served a term as president of the Minnesota Chapter. He was an active RIMS member from 1964-98 and now holds an honorary membership with the organization.

Edith F. Lichota (1929 – 1994)

Edith Lichota began her risk management career in the mid-1960s with a small company in western Ohio, Work Wear, tackling product liability litigation issues. In the 1970s, as assistant treasurer of Carborundum Corp. she fought against the New York State Insurance Department Regulations that would have limited corporations’ risk financing options. In the early 1980s, Ms. Lichota became vice president of government affairs with INA, during which time she supported development of the then-new captive law in Vermont. In 1987, she became the first woman ever named “Risk Manager of the Year” by Business Insurance, one year after having been named “Woman of the Year” by the Association of Professional Insurance Women. Before she passed away in 1994, she also won the highest awards handed out by RIMS, the RIMS Richard W. Bland Memorial Award, and the RIMS Harry and Dorothy Goodell Award.

Ronald E. Strine

Ronald Strine retired from Aetna Life & Casualty in 1992 after 26 years of service, 14 as senior casualty underwriter for Fortune 500 companies and 12 as the director of corporate risk management. In 1979, afte promoted to the position of manager of insurance, safety and security, Ron immediately changed the department’s name to “Corporate Risk Management” and was subsequently promoted to the position of director, a responsibility that included overseeing insurance, safety and security for over 45,000 employees and 100 affiliated companies around the world.

In 1988, Ron was appointed by then Secretary of State George Shultz to the newly created Overseas Security Advisory Council (OSAC) where he was the only risk manager among the council of senior security directors. After earning his CPCU designation in 1970, Ron began a 25-year relationship with The Insurance Institute of America (now The Institutes) as a grader for CPCU and IIA examinations. He also taught RM 54 for many years at the University of Connecticut and later developed the University of Hartford Graduate School curriculum for their course in risk management. He retired in 2005, having served 44 years in the industry.