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 Companies40 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 TouchesPrice, 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 customersPrice, 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 companys strategic objectives Understand your supervisors 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 managements 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 wont you do? 16. Why BotherWhats 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