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LAKE BUENA VISTA, Fla. -- Risk managers are finding it is more important than ever to prove their value to their employers.
"Results and a results focus have become much more important in the last few years," said Christopher E. Mandel, senior director-global risk management at Tricon Global Restaurants Inc. in Louisville, Ky. "What risk managers have to do is really show how they can add the most value by being able to communicate their results in a way that senior management understands," he said.
He told risk managers at the seventh annual Risk Management Forum sponsored by Liberty Mutual Insurance Co. last week that risk managers should be able to "quantify the contribution that you and your partners make and whether or not, quite frankly, it's a function worth funding and staffing vs. handling some other way."
Reducing a company's cost of risk still is a worthy objective and a way for risk managers to prove their worth, Mr. Mandel noted. "But equally important now, in my organization, is becoming integrated with all the different functions that really are our constituency as risk managers," which, he added, "could be any aspect of the organization."
It is important that risk managers work on developing relationships with key people in all areas of a company, Mr. Mandel suggested, as a way of raising their profile and making it easier to practice what has become known as "enterprise risk management."
A risk manager with a high profile is one who is likely to still be around if a suitor comes calling, Mr. Mandel pointed out.
"Being known within the company for the role that you play and the contribution you make" can help a risk manager survive a merger or acquisition, he said. "Establishing those relationships with key decision-makers who are going to be directly involved on the front lines with M&A activity before it ever becomes public knowledge is the first point of orientation."
That way, when it comes time to do the due diligence that is necessary to complete a deal, the risk manager will be called on to help, Mr. Mandel said.
Senior management still needs to be taught that risk managers do more than buy insurance, agreed Martin J. Ross, New York-based associate publisher of Business Insurance and a panelist at the session. It's more important than ever that "the CEO and CFO understand the role of the risk manager," he added.
Both panelists agreed that risk managers should educate themselves as a way to prepare for their evolving roles and prove their value to their organizations.
"Education is very important," Mr. Ross remarked, and as risk managers increasingly participate in areas such as capital markets and integrated risk programs, "there is more of a demand for knowledge, understanding what is taking place in this global environment."
Risk managers, he said, need to be better prepared than ever and to "almost have the answer before the question is asked. Risk managers have to be a step ahead when a situation arises."
Messrs. Ross and Mandel emphasized the importance of educational programs provided by the Risk & Insurance Management Society Inc. as a resource for risk managers.
Edward G. Troy, executive vp-national accounts market at Liberty Mutual Insurance Co. in Boston, participated in the session and moderated it.