Upon returning from the annual Risk & Insurance Management Society conference in Honolulu, Paul Winston, associate publisher and editorial director of Business Insurance, talked with Jack Hampton, former executive director of RIMS, who himself had just returned from a very different conference. The following is a summary of that discussion.

Winston: Jack, I understand that you had a schedule conflict with the RIMS conference two weeks ago. Is that right?

Hampton: On the same dates, AACSB and EFMD [The Assn. to Advance Collegiate Schools of Business and the European Foundation for Management], the two leading accreditation and resource bodies for global business schools, held a joint annual meeting of business school deans in Paris. I chose to attend.

Winston: You indicated that the Paris conference was not a vacation from your work on emerging risk strategies, particularly ERM. What did you learn?

Hampton: For two days, we listened to speakers and engaged with panelists in discussions on the risks a changing world poses for business schools. I have been to many AACSB conferences over the years. This one contained the most references to uncertainty and the strongest encouragement ever that we need new solutions.

Winston: So in its way, it focused on the world of enterprise risk. Was there a highlight at the conference?

Hampton: Two highlights. One was a plenary presentation by James Goodnight, CEO of SAS, one of the world's leading business intelligence software providers. He described his company's efforts to develop analytical tools to convert data into information and knowledge for the 4.5 million companies that use SAS systems.

Winston: What was his main point?

Hampton: He dealt largely with the risks facing a knowledge organization. Sure, companies needs computers and data. According to Mr. Goodnight, it is more important to have intelligence, creativity, and courage. He tied together technology and the right people to reduce the risk of reaching the wrong conclusions or failing to understand customers and markets. Technology risk and human resources risk in one viewpoint? Sounds like ERM to me.

Winston: You said there were two highlights. What was the other?

Hampton: It was a second plenary presentation, this time by Herman Mulder, senior executive vice president and group risk manager at ABM AMRO--the global Dutch bank.

Winston: A risk manager as a plenary session speaker at a major conference of business school deans. Is this a sign of changing times?

Hampton: A sign of the times, indeed, but a caveat: For two days, we discussed risk and used the term risk repeatedly. Yet, in side conversations, I never found a single dean who was familiar with the term enterprise risk management.

Winston: Not a one? Was it mentioned at all in any sessions?

Hampton: Only once--by me. I asked Mr. Mulder for his view on an issue in his presentation, which incidentally was on corporate social responsibility. I mentioned that enterprise risk management is concerned about reducing risks for stakeholders and I am working on a new hypothesis. It is that shareholders or customers are not the primary corporate stakeholder from an ERM perspective. Rather, the most important stakeholder is the employee. If the company reduces its human resources risk, loyal employees will take care of everything else. Customers will be satisfied, profits will be generated, and shareholders will benefit from a rising market capitalization. After explaining the viewpoint, I asked if he agreed.

Winston: And, did he?

Hampton: Well, yes. He said "You are spot on." He then made several statements about the importance of the point. And concluded with "Let me say it again. You are spot on."

Winston: So you did not miss the RIMS conference?

Hampton: One always enjoys the exchange of ideas and camaraderie at RIMS. Still, I found it refreshing to be listening to two speakers--a CEO and a risk manager--who raised the same points we find in RIMS ERM sessions. They both argued that corporate social responsibility transcends compliance and regulatory pressures. Mr. Mulder more pointedly proposed the future role of the risk manager: It is to help organizations to "do the right business right." Organizations need a wake-up call so risk management can deal with performance, stakeholder engagement and inspiration. A narrow agenda will not work. Too risky.

Winston: Any concluding thought?

Hampton: Just one. Herman Mulder gave a great ERM example, without using the term ERM of course. He described a project that was partly financed by his bank in a developing country. The project worked in terms of the economic analysis but lacked a proper risk management assessment. It carried too many negative social and environmental exposures. The bank received complaints from 1,000 non-governmental organizations. These NGOs are independent non-profits that pursue social, cultural, and environmental goals. They were all bank customers. Naturally, ABN investigated.

Winston: What did it find?

Hampton: The risk analysis trumped the economics. ABN told the group's leader that that the bank will not take such a project in the future. Also, the bank would meet with the NGO group in the future to discuss new guidelines. And finally, ABN would sell the credit on the existing project as the bank no longer wanted to be associated with it.

Winston: A full and complete response. That should have pleased the NGOs.

Hampton: Almost. One surprise reaction. The NGO leader did not want the bank to sell the credit. Rather, he asked that the bank continue the construction financing while putting pressure on the local government and developers to improve their environmental practices.

Winston: That suggests increasing sophistication in emerging economies. Perhaps another factor to be included in ERM. Any final thoughts?

Hampton: We have a long way to go to create an awareness of enterprise risk management but the message of ERM, if not the name, has moved far beyond RIMS and risk management conferences. The challenge for RIMS, internal auditors, actuarial societies, and other interested parties is to help organizations and their clients understand that an ERM program can help them focus on the breadth of risks facing organizations. Maybe these groups should also make a more concerted effort to introduce ERM to business school deans.

John J. Hampton, the KPMG Professor of Business and Director of Graduate Business Programs at Saint Peter's College in Jersey City, N.J., writes a column in Business Insurance on Emerging Risk Strategies. He specializes in business ethics, legal liability, and enterprise risk management. He is a former executive director of RIMS. Readers are invited to share their observations in online discussion forums at www.BusinessInsurance.com or send e-mail to jhampton@spc.edu.