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Risk management advances create new opportunities

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Risk management advances create new opportunities

Advances in technology, changes in relationships with insurers and a looming demographic upheaval are all affecting the practice of risk management, according to a panel of high-profile risk managers.

The three risk managers — all of whom have been honored as Risk Manager of the Year® — discussed the state of the industry during a breakfast recognizing the Business Insurance 2015 Risk Manager of the Year® Kathleen M. Ireland, vice president-insurance and global risk at Armonk, New York-based IBM. Also recognized were the members of this year's Risk Management Honor Roll®: Laurent Barbagli, group risk and insurance manager for Lafarge S.A. in Paris; David G. Cammarata, assistant treasurer for risk management and insurance in the Basking Ridge, New Jersey, office of New York-based Verizon Communications Inc.; and Brian W. Merkley, global director of corporate risk management for Salt Lake City-based Huntsman Corp.

Business Insurance Editor Gavin Souter launched the panel discussion by asking how risk management has changed in the past five or 10 years.

“There's less of a focus on insurance” than once was the case, said John J. Marren, director of global risk and insurance management for Melbourne, Australia-based CSL Ltd. and its subsidiaries, bioCSL and CSL Behring, based in King of Prussia, Pennsylvania.

“Risk management is truly risk management” in understanding the risks that confront organizations every day, said Mr. Marren, who was 2012 Risk Manager of the Year®. This means practicing enterprise risk management and using more data to quantify exposures.

In addition to how the use of technology and data has changed the way risk managers do their jobs, William M. Zachry, vice president of risk management at Safeway Inc. in Pleasanton, California, and 2014 Risk Manager of the Year®, said he has gotten more involved in legislative and regulatory matters. In California, for example, he become involved in a legislative effort that helps employers reduce workers compensation costs.

The third panelist, Debbie Rodgers, 2010 Risk Manager of the Year® and senior vice president of global risk management at Aramark Corp. in Philadelphia, agreed that insurance is “less an important part of our role.” She added that the relationship between insurer and insured has also grown less adversarial than it was when she entered risk management. Insurers and policyholders now work together more often, she said.

The insurance community has made a very good attempt to understand what its customers need, she said. “Overall, there is good dialogue,” Ms. Rodgers said.

Ms. Rodgers also pointed to greater reliance on big data as a change with which risk managers are dealing. Analytics have become a “very key part” of the risk manager's job, she said. “Big data has been enormously helpful” in dealing with such matters as predicting claims, she said.

All of the panelists expressed some concern about how much transparency exists in the way brokers are compensated, as some brokers are accepting contingent commissions from underwriters. Mr. Zachry said he's paying the fee to the broker for its services, and he doesn't want it taking one dime from another source, because the broker is working for him.

Another concern is an aging workforce. Looking out at the breakfast attendees, Ms. Rodgers said that a greater effort needs to be made to include the next generation in such events. “There's a lot of gray hair out there,” she said. Without greater engagement of younger people, “there's going to be a terrible gap” in a short time, she said.

“We need to make what we do relevant for a new generation,” Mr. Marren said. “There's a lot of opportunity to do a lot of different things” in risk management, he said.