John Hurrell steps down as Airmic CEO at this year’s conference in Birmingham, after nine years in charge. We speak to him about his time in charge.
Mr Hurrell has helped transform Airmic into a highly professional and effective organisation. He has dealt with some major challenges along the way, starting with the Spitzer enquiry and ending with the profession’s input into the new Insurance Act. He can be extremely proud of what he has achieved, handing over an organisation in fine fettle to John Ludlow.
Mr Hurrell speaks to Adrian Ladbury about what he set out to achieve when he left his job at Marsh to take on the role, how the profession has evolved during his period at the helm and how Airmic has worked to allow its members take the next step forward.
Adrian Ladbury (AL): Why did you decide to take the job at Airmic in the first place? What attracted you to the role?
John Hurrell (JH): I was part of the senior management team at Marsh when I received a call to come in and talk to Airmic, and found the opportunity and challenge very attractive. Airmic at that time was in need of an overhaul. It needed to take the next big step forwards and become a proper business, with a robust P&L, strategy and modern approach.
The potential to promote the interests of the UK risk management community was obvious. But it was hampered by Airmic’s lack of formal structure and resources at the time. The association decided it needed a full-time CEO who would be given the authority and scope needed to get the job done, and the board was very open to a new approach and fresh ideas.
The decision did not take long when I was offered the job. It was a very attractive proposition to move to such an exciting opportunity. We could make the decisions that needed to be made and implement the required strategies without bureaucracy or politics. The key goal was to build an executive team and secretariat able to deliver what the members needed. I jumped at the chance.
Raising the bar
AL: What were the main challenges?
JH: The Airmic committee and membership saw a lot of things that needed the input of the risk and insurance management community within the insurance market and risk management world. But the association did not have the resources or business model to really tackle these challenges and opportunities. The key thing was to build what we have now – a fabulous team – to deliver what the membership needed.
The starting point therefore was to work out how to generate the resources needed to fund that team, how to raise the revenue needed to move on a stage. This basically meant the need to increase the level of sponsorship and the financial contribution from the annual conference.
Some of the Airmic purists at the time were not sure that raising the involvement of sponsors was a good thing because it could conflict the independence of the association. But nine years later, I cannot think of one instance where this has occurred and become a problem.
I think that the support we received from the entire insurance market with the Insurance Act – which fundamentally attempts to shift the balance of power from the insurers to the risk managers – is further proof of the mature attitude of the market nowadays.
They know that what is in the best interests of the Airmic membership is in the best interests of the wider market. It is in no one’s interest to have a conflicting relationship between buyers and sellers in any market. I like to think that the rising strength and professionalism of Airmic over the years has helped to contribute to this attitude.
AL: So, what strategy did you adopt to fulfil this big goal?
JH: It was a series of steps. First, we had to put Airmic onto a proper business footing. To do this, I used a lot of the basic business disciplines that I learned at Marsh. Next, we needed to rapidly build the revenue base to help fund that. Then we had to put a team in place.
Critically, we needed to build the technical capability and were lucky enough to have Paul Hopkin on board. Paul is an outstanding individual who did fantastic work, particularly on the publications such as Roads to Ruin and Roads to Resilience.
The next big step was to turn the conference into a highly successful event – the market meeting place in the UK. We needed to up the level of professionalism. This meant, for example, moving from somewhat old-fashioned but cheaper venues such as Brighton and Bournemouth to newer and very impressive venues in Liverpool and Birmingham.
AL: What were the big market issues that Airmic needed to focus on to truly help its members?
JH: When I left Marsh to join Airmic nine years ago, the market was still reeling from the effects of then New York Attorney General Eliot Spitzer’s inquiry into contingent commissions. Broker remuneration and transparency was – and remains – clearly an important matter, and the customer view at national and European level needed to be heard. The same applied to the European Commission’s discussions about the renewal, or otherwise, of the Block Exemption ruling on cooperation between insurers over terms and conditions.
On this macro insurance market level there was also a need – and continues to be a need – for the risk management community to work with the insurance market to ensure there is an adequate level of innovation to meet our members’ risk transfer needs, again at national and European level.
However, the wider question facing the risk management community at that point, and today, is how to elevate recognition of the significance of the discipline at board level, how to elevate risk higher up the board agenda. A lot of our training and education efforts over the years have focused on these core objectives and this remains pretty much the core objective that John Ludlow inherits as new CEO.
AL: I have been talking to risk managers about elevating the profession up the corporate agenda for two decades now. Why has it not happened, or is this a constant evolution?
JH: It is an evolution and a journey without a final end. We are definitely further down the track than we were when I came on board at Airmic. Have we got further to go? Certainly, yes. Julia Graham [Paul Hopkin’s successor as Airmic’s technical director] and I decided to hold a breakfast meeting with senior board directors, working with The Chairman’s Forum, to discuss the importance of risk management and, to be honest, did not expect to hold more than one meeting. The response, however, was quite dramatic and we ended up holding five such meetings.
It seems obvious from these meetings and other discussions that risk governance is really not fit for purpose in the fast-moving digital economy. Risk governance of cyber, for example, has really not changed in five years. The recent ransomware attacks that hit the NHS so hard and different cyber-related exposures that caused major problems at BA, for example, surely underline how this risk needs to be firmly on the board agenda.
The problem is that if you look at most organisations you will see silos, like risk management, that are attempting to manage such risks, but are not sufficiently well integrated with the rest of the organisation – to areas such as treasury, legal, HR and the like.
This is a big challenge for our members. Someone needs to play a continuous role that integrates the enterprise-wide identification, measurement and management of these critical business risks. This role offers a great opportunity for our members. For too long, our profession has been defined as risk prevention when actually it should be all about risk facilitation. That is what boards want. I do think that Roads to Ruin and Resilience have helped the dialogue and the battle is being won.
AL: What do you regard as the big challenges ahead for the profession?
JH: We have had a great few years, but frankly I feel that all we have done is get to base camp. This is an ongoing journey in which we help the members equip themselves to play a more strategically important role on both the risk and insurance fronts. We have to do whatever we can to help members and the wider market innovate more quickly. Airmic members are playing an ever more important management role and in naturally enterprise-wide areas such as cyber, brand and reputational risk.
AL: Do you think that reputational risk is really a job for the risk manager? Is this not actually a fundamental business risk that is the responsibility of the CEO and main board?
JH: It is a fact that many Airmic members feel hesitant about management of brand and reputation risk. But actually, John Ludlow did a great job in this area when he was head of global risk management at InterContinental Hotels Group and has a lot to offer in this area in particular.
The majority of Airmic members would say that reputational damage is not a risk on its own. It is a consequence of another event. This is absolutely true. Something else needs to happen to trigger this risk. So most organisations have their risk map of the top 20 risks and reputation is not on this list in its own right. There is a column alongside the other risks that asks what impact they have on reputation.
The problem is that this means the thing that really hammers your reputation – like throwing a fully ticketed passenger off your plane – is probably not on your list of top 20 risks. This is where there is a need for a new risk map that asks what the top ten things are that would damage your reputation against each of the most critical stakeholder groups such as regulators, customers, media, staff, shareholders, suppliers and the like.
This helps to identify the interdependencies and assess the most profound threats to corporate reputation. What is also really important in this area is to have the right culture where people at all levels feel able to tell senior management that there is a problem, and this is not always the case.
AL: So how do you see the role of the risk manager evolving in the longer term?
JH: Most organisations still manage risk in an incredibly siloed manner that simply does not reflect the reality of the threats they face. In the old days, the main concern was a fire at the factory or a product failure, but it has all changed now. Risk is virtual and it depends upon supply chain, technology and distribution channels. Part of it you may own and part of it you may not own. Businesses have developed, with someone now responsible for HR, legal and so on, but do not operate on an integrated basis and thus do not take an integrated approach to risk.
Every week you see another example of how this silo mentality does not work, and it needs to change. This represents a fabulous opportunity for the risk manager. They do not need an insurance or legal background. They can pull everything together and work out how the risks might be managed in a more integrated way, how the insurance industry can help, how the captive can be used and make sure the whole array of risk transfer tools are applied in the most effective way. This is exactly what John Ludlow did at InterContinental Hotels Group and what Julia Graham did at DLA Piper.
Part two of this interview with John Hurrell will appear in the July/August issue of Commercial Risk Europe, along with a full report from Airmic’s annual conference in Birmingham.