Risk Management Reports

August, 1999
Volume 26, No. 8
Reader Insights

Are some "risk managers" dinosaurs? Recent prognostications from England suggest that possibility. Gordon Dickson, of Glasgow Caledonian University, and Larry Phillips, of the London School of Economics, predicted at the March 1999 AIRMIC (Association of Insurance & Risk Managers in Industry and Commerce) Annual Conference, in Nottingham, that what we now know as risk management may be superseded in the near future by decision technology in the new "risk society." Today’s insurance risk managers may lack the skills and savvy to survive. Their fears were echoed by Clive Thursby, of Tillinghast-Towers Perrin, who argued that the failure of insurance risk managers to communicate their work and their worth to their organizations might accelerate their replacement. This is not saying that risk management will disappear, only that some of its purported practitioners may slip by the wayside.

The focus has changed, from separate silos of risk and traditional insurance "financing" to greater emphasis on integration, risk assessment, and constructing realistic controls and contingency plans. The techniques are different and the practitioners must follow. More organizations are seriously considering a "Chief Risk Officer." Finance and public policy risk managers now lead the field creatively, leaving insurance risk managers behind. Look at GARP, the Global Association of Risk Professionals. As of July 1999 GARP has 6800 members in 85 countries and continues to grow rapidly. It will pass RIMS, the US-based Risk & Insurance Management Society, in membership by the end of this year to become the largest global RM organization.

Two of my readers, one from Lancaster, Pennsylvania, and the other from Sydney, New South Wales, echo these thoughts.

Stuart Bassett, of Marsh Inc., in Sydney, writes: "I must admit that our discipline is severely afflicted with a case of deja vu. It is a bit like hearing an old joke recycled. Everyone is talking about ‘integrated risk management’ when it should be described as ‘integrated management’ or simply ‘good management.’ In a small business the concept is not new. If you fail to identify and manage all your risks, you go out of business.

Perhaps those organizations that promote proprietorship — a sense of personal ownership amongst all staff — are best placed to push for integration and get it right." If risk management is actually a part of good general management, do we need a separate specialist for the function?

Jerry Belfiglio, the risk manager at Armstrong World Industries, in Pennsylvania, is equally critical of his own society: "In my humble opinion, both you and Susan (Meltzer, the president of RIMS: see RMR April and June 1999) missed the most critical issue for RIMS and 90% of its 4,500+ members — our chosen profession is an anachronism. We’re still a buggy whip manufacturer when the horse died some years ago. Our management doesn’t know what we do, the press doesn’t know what we do, multiple other ‘professions’ have taken our title and mantra, and we can’t speak the language of those who stole our professional title, never to give it back! To one like you, who moves freely among the likes of GARP, academia and RIMS on all continents, the distinction may be blurred, but to the legions of risk managers who are the most typical members of RIMS, the language of emerging risk is not even Greek, it’s more akin to Martian. This is the real challenge to RIMS: how to remain a viable and value-added force for its constituencies while continuing to speak the language of a profession that no longer has any time on the meter. Perhaps, like the country doctor of old, who today is joined by hundreds of specialists from foot to follicle, the risk manager will be joined by multiple fellow practitioners into the new millennium and beyond. Should the profession ‘morph’ into a blend of the old and new? Perhaps, but like the steelworkers of the ‘70s, it may be too late. For the next 15 years, the challenge to RIMS on behalf of its membership will be to maintain some part of the pie for the skill set so typical of the vast majority of members, while serving as the change agent for the emerging profession. I am a member and I see no part of the Society to be a player in this area."

Jerry and Stuart make solid points. Remember that the small and flexible outlive the large and cumbersome. Possums, horseshoe crabs and cockroaches survive today. Dinosaurs are gone.

Copyright© 1999 by H. Felix Kloman H. Felix Kloman and Seawrack Press, Inc.

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