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ARC: ATTAINING RISK MANAGEMENT NIRVANA

Disaster preparedness, ERM should be part of same process

But funding, politics can hamper efforts by risk managers

Emergency Evacuation Route

Linking a city's disaster and resilience planning with enterprise risk management can reduce exposures, saving the city money, but implementation can be difficult.

The ERM process can merge disaster preparedness efforts that are often disconnected among city departments and the community and can help city managers make decisions about how to spend and allocate money and resources, industry experts say.

But strained budgets and lack of risk management expertise within cities and municipalities often stifle innovative approaches to managing disaster recovery efforts, they say.

Matt Hansen, director of the risk management division for the City & County of San Francisco, said that when linking ERM to disaster planning and resilience, communication among various city stakeholders is vital.

“The main challenge is simply the magnitude of the issues and the interplay between both policy operations at almost every level within our organization and our partners,” Mr. Hansen said.

The City of San Francisco partnered with the Cambridge, Mass.-based John F. Kennedy School of Government's Acting in Time Initiative in 2008 to initiate a disaster-planning process that would aid recovery from a catastrophic event.

As a result of the partnership, the city launched the ResilientSF initiative in 2010, which offers a forward-thinking framework of how the city can react, respond, rebuild, repurpose and become resilient post-event or -events, Mr. Hansen said.

Mr. Hansen described the City of San Francisco's ERM and disaster recovery efforts as “a work in progress,” noting that funding the initiative and deciding where to allocate resources is the current focus.

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“Projects like this, as with ERM, may stall out for a time because there are other priorities that come up and push them aside,” he said. “That's OK. It gives you time when you get back into the groove to re-look at the process.”

For other U.S. cities, risk management budget contractions and loss of staff, particularly in the public sector, has dampened innovative approaches to various risks and exposures, including other mitigation efforts such as disaster planning, experts say.

“People in government have a very unsophisticated notion of what risk management is and what it can be,” said Arietta Chakos, a San Francisco-based independent urban resiliency policy consultant.

Accomplishing an operational ERM approach to disaster planning and resiliency can involve teams of people depending on the complexity of the local government, which can involve various city enterprises such as airports and public utility groups, Ms. Chakos said.

Dorothy M. Gjerdrum, executive director of the public entity and scholastic division for Arthur J. Gallagher Risk Management Services Inc. in St. Paul, Minn., said it is more difficult for public entities to innovate around management and strategic thinking because elected officials change every two to four years.

“Just by virtue of being newly elected every two to four years does a bit to limit their time horizon,” Ms. Gjerdrum said, noting that it's difficult when hooking ERM with resiliency to continue to prove the viability of the initiative and keep people engaged.

“In the public sector, they have some unique pressures on their managers (owing) to things like elections, politics and changes in staffing,” she said. “It's hard for them to really strategically plan for five or 10 years ahead because an existing city council cannot buy into the future.”

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Despite the challenges, linking ERM to disaster planning makes good sense, experts say.

Drew Zavatsky, section manager for the loss prevention program in the Office of Risk Management for the Washington State Department of Enterprise Services in Olympia, Wash., said linking ERM to resiliency enhances resiliency systems and allows for the general adoption of ERM.

But if a city wants to implement ERM across its agencies, it should build it off an existing platform that affects the community, he said.

“If you want to get anything done in government—whether it's local, state, or federal—find a burning platform, and then demonstrate how what you have to offer helps put it out,” Mr. Zavatsky said, noting that for San Francisco, the burning issues to rally around were disaster planning and resilience.

The state of Washington published 10 priorities on its website that set the path of government and link all state agencies to those priorities, he said.

“Their strategic plans end up becoming much closer aligned with those priorities of government, and because that's linked to budget, the money in the funding—especially in times of recession, which is already scant—ends up going much more directly to the things that folks prioritized,” Mr. Zavatsky said. “If you have a goal, you can use ERM. It is a completely scalable tool.”

Linda Conrad, New York-based director of strategic business risk for Zurich Insurance Co. Ltd., said ERM is a tool that helps public entities identify and determine the issues that could affect their strategic goals and creates a process that fosters communication across key stakeholders.

“So it's a microcosm of resiliency and disaster management,” Ms. Conrad said. “Resiliency...starts proactively by first identifying what are the issues that could cause us disruption, and then (says) how are we going to manage it. ERM provides a framework that provides common language. It will allow various stakeholders to come into common plan,” she said.

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