Risk managers struggling to articulate role and value

Risk and insurance managers are still struggling to fully explain to their bosses the role they fulfil and benefits they bring to an organisation, according to leading industry professionals. Attending the Risk Management Forum at the annual Brokerslink conference in Marrakesh, they urged their counterparts to make more effort to communicate their true value and drive the profession forward. “A big danger is a lot of risk and insurance managers can’t articulate what their role is – by this I mean the purpose of their role rather than their day-to-day activities. We are here to manage risk, provide financial protection and ensure the business strategy is going to be protected. But we don’t often explain that very well. “Often when you are in front of the risk committee, and therefore the board, you have to spend a while explaining what you do. Other functions don’t have to do this and we need to get to that position. Put simply, we need to sell the profession and be clear and confident about what we do,” said Franck Baron, president of the Pan-Asia Risk and Insurance Management Association (Parima). “We are not helping ourselves here. Often risk managers are just assessing their performance on their ability to manage costs, particularly around insurance placement. How often do CFOs and treasurers gauge their performance with management by explaining they were able to squeeze the bank’s interest rate? No, they explain how they were able to deliver money for the business. But as insurance buyers we are often asked how much we are able to squeeze out of insurance programmes. This is not right. We are not good at promoting our performance value – neither risk managers, brokers or insurers. “We are providing organisations with financial protection and we should be seen as critical, rather than a technical function,” added Mr Baron, who is also risk manager at International SOS. Manuel Padilla, director of risk management at MacAndrews & Forbes Incorporated and a prominent RIMS member, said it is the responsibility of risk managers, both as an industry and individually, to let management know exactly the value they provide. They need to make clear the full range of tools they bring to the table and, importantly, their specific input into the risk management process, he added. “The way I do this is to speak with my boss once, twice or three times a day, and say: ‘this is the problem, this is how the coverage will not apply to the risk analysis we completed’. I then identify which portions of the exposures are potentially not covered, and then offer a solution and clarify the method of loss control activity that may be needed to minimise the impact. Executives can then see the full risk management process, which is not a decision only based on premium. You must add loss control, risk analysis and oversight. This is the more complete version of the risk management activity. That is the description of the risk management profession that we need to sell,” said the American. “The worst thing a risk manager can be is a secret agent. If the company doesn’t know what you are doing, it is not good. Unfortunately, there are risk managers that operate in this way,” he added. Parima’s Mr Baron agreed that being honest to management about the risks that may or may not be covered by an insurance policy is important and can generate discussion on other mitigation measures. “Insurance policies are black and white, but claims can often be grey. As a profession, we have to get better at explaining to managers that the insurance we have bought was the best we could get to ensure coverage matched the risk profile. We then need to explain there are areas where we don’t know yet how the policy will respond. When you give this analysis, managers understand the vagaries of insurance and are more likely to talk about the subject and other risk mitigation measures,” said Parima’s president. Cristiane Alves, president of Brazilian risk management association AGBR and risk manager at Companhia Siderúrgica Nacional, was in full agreement with her colleagues and advised how she explains the virtues of risk management to key colleagues across her company. “We present a vision of our risk management and insurance programmes. We bring the CFO to speak with risk management. We bring human resource to speak with risk management. We bring someone from compliance to speak with risk management. We try to familiarise them with our job so they clearly understand what we offer. The more you can do that, the better off you are,” she said. Zaiella Aissaoui, director of risk and insurance at Bouygues Construction, said that although there is more work to do, CEOs are beginning to show growing interest in risk and insurance management. “Things are changing…they are beginning to show an interest,” said the active AMRAE member. “Even if you have one meeting with the CEO and top management, you can explain what you do and this improves the partnership and you can become a trusted adviser,” she advised her fellow risk managers. “It is all about communication.” Mr Padilla stressed that risk and insurance managers must make the message clear and communicate across the organisation. “You have to make it easy to understand because when colleagues hear the word ‘insurance’, they can turn off. Most of my operations people around the world know that the risk management and insurance discipline has a person responsible for coordination and the topics come back to me. That is because I communicate with them on a regular basis. What you then start seeing is that they became your eyes and ears on the ground,” he said.

Risk managers struggling to articulate role and value

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