Good overview of how risk management can assist organizations in finding money during a tough economy.

1. Corporate Risk Management
Making an Impact in a Tough Economy

2. Challenges of the Current Risk
Management Environment

3. Challenges in the
Current Risk Management Environment
AON Survey (2009) of CEOs
Risk
Economic Slowdown
Regulatory Changes
Business Interruption
Increasing Competition
Commodity Price Risk
Damage to Reputation
Cash flow/Liquidity
551 Companies—40 Countries
% “Ready”
60%
65%
79%
71%
77%
58%
75%

4. Challenges in the
Current Risk Management Environment
Insurance Industry
Issue: Carrier Performance
1. Declining operating performance
2. Lack of investment income
3. Lack of new capital
Results:
1. Potential change in program structure
2. More selective underwriting
3. Potentially decreased insurance capacity

5. Challenges in the
Current Risk Management Environment
Company Level
• Fear of layoffs
– Failure to self report minor injuries
– Incentive to report fraudulent injuries
• Increased stress levels
– Increased instances of alcohol/drug use and domestic
violence
– Mental distractions leading to injuries
• Organizational changes
– Staff reductions
– Program reductions

6. Challenges in the Current Risk Management
Environment Are Tough to Swallow

7. Current Business Perceptions
• 95% of management teams say they are customer-focused
• 80% of those managers believe their company provides
“outstanding value and a superior customer experience”
• 8% of their customers agree
• Who are your risk management customers? Would they agree
or disagree with the above statements?
Bain and Company Survey

8. The “Myth of Excellence”
(by Fred Crawford and Ryan Matthews)
• Five Customer Touches—Price, Service, Access,
Product, and Customer Experience
• No company (even excellent companies) can perform
at a level of excellence in all five areas at once
• Dominate in one area, differentiate in one area, and
meet the industry par in the remaining three areas

9. The “Myth of Excellence”
(by Fred Crawford and Ryan Matthews)
• Five opportunities to engage customers—Price,
Service, Access, Product, Customer Experience
• Consumer Relevancy of each of the five “touch
points” is on three levels:
– Acceptance: customer views as “par” for the industry. No
sense of loyalty, transactional relationships
– Preference: customer prefers your company to another
due to a deeper level of respect, access, and quality
– Seeking: customer will seek you out above the competition

10. The “Myth of Excellence”
• The Trap: Complacency
“73 percent of executives think their firms have an edge on
their competitors” (Chief Executive/Arthur D. Little poll)
• The Myth: No company (even excellent companies)
can perform at a level of excellence in all five areas at
once
• The Goal:
– Dominate in one area
– Differentiate in one area
– Meet the industry par in the remaining three areas

11. Rate Your Risk Management Platform
(1 to 5: 5= dominate, 4= differentiate)
Acceptance
Preference
SeekingSeeking
Value/Efficiency
of Service
Quality of
Service You
Provide
Product
Client
Experience
When Dealing
with You
Access

12. Goals
(“Without a vision the people will perish”)
• Do you have a clear vision for your risk management
platform? Do you know what you want to achieve?
• Can your leadership team articulate your vision?
• Does your leadership team support your vision?
• Have you established performance goals and metrics
that support your vision?

13. Keys for Survival
• Understand your company’s strategic objectives
• Understand your supervisor’s strategic objectives
• Design your strategies around the objectives of your
organization and your boss
• Develop appropriate metrics to demonstrate how you
are adding value
• Communicate frequently
• Ask for periodic feedback

14. Where Do you Fit?
Gets involved with
other activities that
moves the
organization forward
Good Team Player
Gets Results
Not a team player
Needs much attention
High Maintenance
Gets Results
Gets things done
Does not need much
of management’s time
Does not get results
Not a team player
Needs much attention
Constant follow up
Poor Results

15. Strategy/Positioning
• The real questions are—
What will you excel at?
What won’t you do?

16. Why Bother—What’s in it for Me?
Goldman Sachs/JBWere Study
(October 2007)
“Research shows that over the period November 2004 to October 2007
companies who did not adequately manage workplace health and safety
issues underperformed those who did…
“investors could have increased returns over the past four years had they
incorporated WHS measure into their investment strategies (+38%)…
“This approach is also appealing because “blow ups” caused by something such
as poor WHS or governance may pose unacceptable risks due to the
reputational risks being often disproportionately large for issues of this
nature.”
Hint: Think Company Valuation

17. Summary
• Excellence in Risk Management requires a clear vision with
defined performance metrics
• Risk Management strategy requires identifying an area of
domination and an area of differentiation with a focus on
customer acceptance
• Risk Management can and should be measured financially in
terms of financial performance and profit margin