Huntsman Corp.'s risk management philosophy is to retain risk when it makes good economic sense, and to transfer it to insurers when that makes sense, said Brian W. Merkley, global director of corporate risk management for the Salt Lake City-based firm.

Huntsman retains risk where it is consistent with its financial ability to retain risk and with other requirements, such as debt covenants, Mr. Merkley said.

But the chemical manufacturer also chooses “to transfer those risks to third parties like insurers where it makes sense to do so,” he said.

There are three instances where this happens, he said: to stabilize cash flows in the event of a catastrophic risk; to satisfy regulatory or contractual requirements where buying insurance is the only option; and where the insurance's value exceeds its cost, such as in cases where the coverage is bundled with a service, such as loss adjustment.

“As a large organization, we do use a variety of risk financing mechanisms and insurance to meet the business' complex needs,” Mr. Merkley said. There are 15 key programs that fall into five major types: property, corporate liability, marine, aviation and management liability.

The company has fronted programs, for example, for its U.S. and international primary general liability programs, while other programs have high deductibles, such as its U.S. workers compensation and owner-controlled insurance programs.

The company has a Utah-domiciled captive, International Risk Insurance Co., that Huntsman moves lines of business into and out of depending on market conditions, Mr. Merkley said. The captive was redomiciled from Vermont to Utah, where it does not have to pay premium taxes, in 2006.

Three members of Huntsman's risk management team work out of the company's headquarters in Salt Lake City, and the remaining two are in The Woodlands, Texas.

Beyond the risk management team, Huntsman Corp. follows an “insurance champions” approach, with a champion for each of the company's five operating divisions: advanced materials, performance products, pigments, polyurethanes and textile effects. There are additional champions for India and China.

“Insurance is not the full-time responsibility of these champions, but they serve as key liaisons between corporate risk management and the business, and serve as a channel through which we gather information, disseminate instructions and coordinate key claim matters,” Mr. Merkley said.

He said there are separate liaisons for China and India because “those insurance markets have unique characteristics relative to some of our global programs. We place local underlying coverages in those countries currently, and we need someone on the ground to coordinate local brokers and with our local offices.”

These insurance champion executives “wear different hats” within the corporation, Mr. Merkley said. They could have a controller function, an environmental health and safety responsibility, “or even engineering or capital coordination.”

Those who are selected from each division “seem to be the best individual fit for that role,” said Mr. Merkley of the system, which has been in place for at least a decade. A few have held that role from the system's inception, he said.

The insurance champion approach is part of Mr. Merkley's “workable intelligence system,” which includes both external partners as well as the company's various groups and businesses. The concept behind it is to see to it that “we're getting a good flow of information on key risk issues,” said Mr. Merkley, who joined the company in 2005 and was named Huntsman's global director in 2010.

Mr. Merkley receives high praise from those who work with him. “He has the utmost integrity,” said Edwin Watts, senior account manager for Norwood, Massachusetts-based FM Global, who has known and worked with Mr. Merkley for five years. “He's got the most tools of any risk manager than I've ever dealt with in my 44 years in the business.”

Steven R. Danielsen, senior vice president and global account executive for Aon P.L.C. in New York, who first met Mr. Merkley in 2008, describes him as highly competent and intelligent.

“Honesty and ethics are right at the top, and transparency was always the rule of the day, whether it's working with brokers, underwriters and the insurance industry in general,” Mr. Danielsen said.