Having risk management designated as a “center of excellence” within IBM works well for everyone throughout the corporation.

Under the center of excellence concept, “you take the subject matter experts and make them into a hub wherever that expertise resides. For ours, it's at the corporate headquarters” in Armonk, New York, said Kathleen M. Ireland, IBM's vice president of global risk and insurance.

At IBM, once the center of excellence is set up, that center acts for the benefit of the whole organization, she said. “What we've done is eliminated all of the questions in the field as to "What do I do if I have a claim?' "How much insurance do I buy?' "Is this covered or not covered?' or "How do I address this particular risk?' “ Ms. Ireland said.

She said everyone at IBM recognizes that to be a part-time insurance purchaser doesn't make any sense. “When you're operating in isolation, no one entity could see the overall view of the risk for the corporation and make the right educated decisions as to how much risk to retain and how much risk to transfer,” Ms. Ireland said.

“Because we are a center of excellence, we have the global control and global view of all events, so we're better able to predict what makes sense, what risks to retain and what risk to prevent,” she said.

The first advantage of a center of excellence has the same advantages as you would find in a consolidated insurance program, she said.

“You have the subject matter experts housed in one place,” she says. “And they're able to drive all of the factors and all of the decisions on that particular area.”

The center of excellence approach also allows risk management to have direct, frequent communication with all of IBM's business units and executives, Ms. Ireland said. The risk management team comprises only seven people plus Ms. Ireland, but it interacts with real estate operations, finance, the treasury team, merger and acquisitions, deals directly with IBM's business units — hardware, software and services — and human resources for employee issues in regard to workers compensation. Risk management also deals with security, global fleet, research and development, supply chain and all of the company's country chief financial officers.

“We manage the overall processes, we have a global framework in place and continual risk identification with all of the tools,” she said. “You have a defined, concentrated group that focuses 100% of their time and energy on this particular specialty for the corporation.”

And size matters. Because risk management is a small team, its size and proximity allows it to cross-train, “so all seven of us are sitting in one unit,” she said.

“We can speak pretty quickly,” she said. If a claim comes in, the team hears about it and can look at it from several angles such as a workers compensation perspective, a casualty perceptive or a property perspective. This helps the team increase communications, work quickly and coordinate responses to all loss and risk events, decision-making and strategizing to effectively leverage insurers along multiple lines.

“Also it's dynamic in the fact that if there's a solution or type of coverage enhancement, we can see all lines together,” Ms. Ireland said. “We can see an application of a certain enhancement that might work on other types of coverages. It's very easy for us to cross over and make those connections and to be able to do it very quickly.”