BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Risk managers, CEOs need to get in sync


A new survey by Chubb Corp. that examines attitudes toward global risks by U.S. senior management and risk managers finds some surprising divergence in what each group sees as top concerns.

This differing perception of risk suggests that some risk managers in U.S. multinationals either need to do a better job of understanding their organization's international priorities, or perhaps improve the level of communication they provide to their top management about overseas exposures.

The survey findings also suggest that the risks of greatest concern to top executives may not be the typical insurable risks with which risk managers are familiar, providing added impetus for U.S. risk managers to adopt a broader view of risk, as embodied in an enterprise risk management philosophy, to truly contribute to protecting their organization.

The Chubb survey, released last week on the eve of the Risk & Insurance Management Society Inc.'s annual conference, reports that a majority of respondents regard international risks as an equal or greater threat to their company as domestic risks. Among all respondents, 42% said the two posed an equal threat, while 16% said international risks were of greater concern.

The surprise was that 43% of top executives--a mix of presidents and COOs, CEOs and CFOs--regarded international risks as a greater threat to the company than domestic risks, compared with only 16% of risk managers. I find that gap in perception startling and believe it is important for risk managers to do all they can to narrow it.

In general, the external financial risks of greatest concern to survey respondents doing business globally illustrate a widening perception of corporate threats. These include: Increasing competition, cited by 22%; rising fuel costs, 15%; the devaluation of the U.S. dollar, 14%; rising interest rates and international trade restrictions, each cited by 12%; and increased government regulation, cited by 9%.

Apart from these external forces that could impact a company's earnings, Chubb also asked respondents to name the top risk to overseas business operations. No. 1 was terrorism, cited by 18% overall. Here again, there was a divergence of opinion between top management and risk managers. While 24% of top management cited terrorism as the top operating risk overseas, among risk managers, the top vote getter, also at 24%, was natural catastrophe exposures.

The survey's findings suggest that even as some U.S. companies plan for increased international expansion, they may not be managing their exposures as effectively as possible. That's because risk managers who find themselves out of step with top management have a problem--they are either investing time and money in managing exposures that are not a high priority in the C-suite, or are not contributing to solving the top issues that senior management is concerned about.

To the company whose assets overseas were just unexpectedly expropriated by a foreign government, the fact that their earthquake coverage was intact may not be of much comfort.

The risk manager in this situation should act to close that gap by beginning a dialogue with senior management and an assessment of all the exposures they may face. Obtaining consensus will better protect the organization and demonstrate to top management that risk management can be a key to successful international expansion.

Associate Publisher and Editorial Director Paul Winston's commentary appears monthly. E-mail: