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Arendall created department from scratch

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Arendall created department from scratch

How do you build a risk management program and department from scratch?

That was the question facing Carol Arendall in May 2005 when she became head of risk management at Naperville, Ill.-based OfficeMax Inc.

That she managed to do so—and do so effectively—in such a short time has earned Ms. Arendall, now OfficeMax's senior director-risk management, a place on Business Insurance's 2007 Risk Management Honor Roll.

OfficeMax was finding its sea legs when Ms. Arendall came aboard. Boise, Idaho-based Boise Cascade Corp. had acquired Cleveland-based office supply retailer OfficeMax in 2003. Then, in late 2004, Boise Cascade changed its name to OfficeMax, and sold the paper and forest business associated with the name Boise Cascade.

The new OfficeMax focused itself as a retail and business-to-business contract provider of office supplies and services.

"We started from scratch and we had the opportunity, with a clean slate, to establish risk management and other programs using some best practices," said John S. Jennings, senior vp and treasurer. "One of the challenges I had was to bring somebody on board who could enable that best practices transition from, one, the Boise Cascade operations and (two), the Cleveland retail headquarters to consolidate our risk management operations here in Illinois."

"OfficeMax Inc. today is the combination of our two operating segments—OfficeMax retail stores—we've got 912 of those, and OfficeMax contract, which is the B-to-B delivery of office products in three different markets," determined by the number of employees, said Mr. Jennings. The company also has international operations, primarily on the contract side of the business, in Canada, Australia/New Zealand and Mexico, he said. It currently employs more than 36,000 people worldwide, with about $10 billion in sales, split roughly between contract and retail business.

"The first thing I did was assemble a team that included someone to lead our risk management effort," and that leader was Ms. Arendall, Mr. Jennings said.

"The most difficult part was understanding what their new risk philosophy would be, because they really didn't have one prior to her arrival," said Elsa M. Lynch, senior vp at Marsh USA Inc. in Chicago, which is OfficeMax's broker.

Ms. Arendall said a key aspect of her risk management approach is listening to others.

"Probably the turning point in my career was when I realized I wasn't the smartest person in the world," she said. "And when I realized that the key thing is not who has the best idea, the key thing is being the best listener and understanding that when you listen to the people around you, when you listen to what their ideas are and you're willing to take their idea and make it your own, or take their idea and manipulate so it's a combination of yours and theirs, you're essentially doubling your brain power."

"Carol paid careful attention to the low-hanging fruit that we all needed to grab with respect to showing improvement in our operating expense," said Mr. Jennings. "It wasn't just a matter of organization alignment; it really had to do with grabbing the low-hanging fruit so we could deliver some cost savings."

Ms. Arendall "has a true vision of what a risk management department should look like. That stems from her 20 years' experience in this field," said Ms. Lynch.

Noting that Ms. Arendall previously led risk management efforts at Saks Inc. in Milwaukee, Ms. Lynch said, "the Saks experience really helped her know what's important and where to focus her energy. When she started, there was so much to do that it was overwhelming, and we worked very closely together to try to prioritize and to take it one step at a time."

"She's just really a savvy risk management professional," said Ms. Lynch. "She's savvy and realistic and she doesn't just wait around—that's what makes her so unique."

"She also mentors other people. She's left a lot of people with a really strong foundation of risk management through her mentoring," she said.

"One of the words I think of is 'tenacity,"' said Mr. Jennings. "It has to do with the passion she brings to the job every day, which enables her to embody some of the core values around a sense of urgency, but she's always thinking of the company first and our customers first—again, another core value for OfficeMax."

"Today, while we always have room for improvement, we've accomplished quite a bit on our risk management functions," he said.

Ms. Arendall admits she continues to confront a major challenge.

"You don't know what you don't know," she said. "You hope you've done your due diligence, you hope that you understand everything that's out there and you hope you haven't missed something."