John J. Hampton recently talked with Roger Egan, chief executive officer of New York-based Integro Insurance Brokers. Mr. Egan has spent more than three decades in the brokerage field and is a well-known advocate of the importance of qualified risk managers in the leadership structure of modern enterprises. He reflected on Lance Ewing's career as examined in Mr. Hampton's July 10 article in Business Insurance, and Mr. Egan shared his views on the role of the broker when engaged with modern risk managers. Mr. Ewing is not a client of Integro.

Hampton: Lance Ewing has dedicated himself to, and is an outspoken advocate of, pursuing continuing risk management education in order to keep up with a constantly evolving risk landscape. How can brokers assist risk managers in this effort?

Egan: It starts by thinking differently about risk and the need to re-evaluate the broker's role in managing risk with its clients. Across the globe, multinational corporations are facing an unparalleled spectrum of interrelated risks, such that the need for advice, analysis and problem solving is greater than at any time in recent history. Brokers must regularly and effectively communicate new and emerging trends and their impact to clients. Additionally, to develop proactive solutions, it remains critical to offer clients the collective experiences and successes of the firm, along with a full suite of risk management tools, customized analyses, and state-of-the-art technology. The result is of significant value in developing risk strategies for complex organizations.

Hampton: Lance Ewing brings a diverse background of educational and experiential skills to the risk management role. As my column discussed, if education provides the tools, experience gives you the knowledge of how to apply these tools. How can the diverse skill sets of a broker be leveraged effectively for risk managers?

Egan: A broker can really add value for its clients by effectively tapping the myriad of individual skills and experiences of its employees and bringing these forward in a consistent way. First, it is critical for the broker to have a well-functioning, truly integrated team to deliver advice and services. The diverse range of brokerage specialists should support the risk manager and his or her colleagues throughout the entirety of the relationship--not simply at the onset or at the placement phase. This integrated concept creates two notable, distinct advantages. First, it produces a consistent dialogue that allows for the sharing of information, both with clients and within the brokerage group. Second, it combines multiple skills and provides perspectives from legal, underwriting and other areas that allow the broker to contribute an insightful, up-front risk analysis as well as a recommended approach to managing it.

Hampton: In the column, Lance Ewing commented on his experience as an underwriter. He noted that his clients did not want insurance. Rather, their goal was to see actions that resulted in a reduction in losses and consequential costs. How can the brokerage community help clients in this regard?

Egan: By reminding all parties of a simple concept--the goal of the broker and the joint focus between broker and risk manager should be to manage the total cost of risk. This goes to the heart of the advice that every broker should provide. All actions taken in creating the global program design, and managing losses and related costs, should support the reduction of the total cost of risk. Plus, let's recognize we are dealing with multiple buckets, not just traditional insurance coverages. Hence, although the concept has been around a long time, the tools to evaluate total cost of risk are constantly developing and evolving.

Hampton: What kinds of new tools do brokers have to support an evaluation of a client's exposures and loss cost reductions?

Egan: I'm glad you asked that question, as many new tools have emerged. In a complex risk situation, brokers can provide advanced analytics that add dimension to many different types of exposures. In addition, by effectively leveraging technology, brokers can bring to clients an ever-increasing range of potential solutions--each customized to the specific situation. Today's world is all about specialization. The role of the generalist is being increasingly marginalized by an array of specialists that can deliver unique solutions to create meaningful total cost of risk reductions. It is the role of the broker to develop the tools, evaluate the full spectrum of options and deliver these to its clients.

Hampton: And the tools actually work in practice?

Egan: Definitely. Brokers develop new analytical models every day, which address the risks in various industries and lines of business. They examine benchmarking, including the places where it works and where it can potentially be misleading in the risk management process. At Integro, we have base models and customized or advanced tools to help risk managers, CFOs and CEOs understand volatility and other measures of exposures. These tools are not only what companies need, but increasingly, what they demand.

Hampton: Lance Ewing's experience at GES Exposition Services highlighted the fact that risk management is much more than loss control on insurable risks. Rather, it extends into all aspects of the organization. How have brokers reacted to this broadened perspective?

Egan: Brokers recognize that their job is not to focus solely on the placement of insurance coverage. It plays an important role, but total cost of risk is best minimized when we combine risk retention--both known and unknown--along with risk transfer. This needs to be completed while recognizing that a key value brokers provide is customized services. As brokers, we need to be responsive with customized agendas and solutions to meet the needs of risk managers.

Hampton: Risk managers like Lance Ewing?

Egan: Yes, he is amid the growing and increasingly sophisticated number of professionals who are taking over the risk management functions of modern organizations.

John J. Hampton's columns on Emerging Risk Strategies appear in Business Insurance. An archive of his columns as well as interviews and discussions with risk management and insurance industry leaders can be found at www.BusinessInsurance.com/EmergingRiskStrategies. To post questions or comments about the issues raised in Emerging Risk Strategies, please visit BI's Community Forums at www.BusinessInsurance.com.