on energy regulation offers a good
example. If corporations are not held
to standards that call for them to
reduce emissions of greenhouse gases,
and if subsidies for “green” companies
are done away with, it provides greater
freedom for businesses in every
sector to choose how they produce
and consume energy. More choices
and fewer compliance hurdles are
unquestionably good for business.
But without environmental
regulation, the long term effects of
climate change could also elevate risk
for every sector over the long term.
And as other countries invest in clean
energy resources, the U.S. could lose
competitive standing in that industry.
“You have to play it out from both
sides,” Kashlak said. “What will we
gain, and what will we be missing?”
Unfortunately for risk managers,
confusion among the political ranks
and strong influence exerted by the
general populace on both sides of these
issues make it difficult to know just
which way the winds will blow.
PLANNING FOR THE UNKNOWN
Balancing short and long term
goals against potential risks in the face
of so much uncertainty will be a key
challenge for risk managers.
“One of the biggest challenges
facing any decision-maker is
developing long-term strategies while
still recognizing the need to deal
with the short term,” said Howard
Kunreuther, James G. Dinan professor
of decision sciences and business and
public policy at the Wharton School
and co-director of the Wharton
Risk Management and Decision
Processes Center at the University of
Pennsylvania.
“We all tend to be myopic by
focusing on short term impacts. But
corporations, more so than individuals,
also recognize the need to develop
short term and long term strategies.
There is thus a need to build in short
term incentives to enable long term
planning,” he said.
Short term impacts include end-of-year balance sheets and bonuses. But
Kunreuther suggested that insurers
should change their way of thinking
to broaden what “short term” means.
They can, for example, move away
from annual property policies and
toward three- to five-year terms, which
would promote longer term thinking in
a way that is still manageable.
Darin Goodwiler, chief compliance,
risk and ethics officer at CFA Institute,
said that reliable information and
intelligence monitoring is the key to
being prepared to react to change over
the long term.
“Risk managers need trusted and
defendable information, and the faster
you get it, the better equipped you
are to respond to any event,” said
Goodwiler, who will also be presenting
a session at RIMS.
The challenge, though, lies in the
vast amount of information to be
gathered, and the question of where to
get the best quality, most dependable
facts.
“Today, the risk manager is expected
to have a keen awareness of a host of
issues that range from international
trade policies, regulatory updates,
immigration laws and import/
export tax changes,” Addis of Beyond
Insurance said. Risk managers will have
to expand their own understanding
of political and economic issues, and
identify both internal and external
resources and experts to fill in the gaps
your company respond? Are these
repeatable events?
That analysis tips off risk managers
to pre-event indicators. In the face of
uncertainty, it’s important to be able to
tell when an event or change is coming
and start a proactive response to
mitigate the full negative impact — or
in the best case scenario, leverage it to
create a positive impact. Know who the
decision-makers in your organization
are, and have a plan to get information
into their hands as fast as possible.
OPPORTUNITIES FOR RISK
MANAGERS
On the upside, this level of
uncertainty opens an opportunity for
risk managers to become strategic
partners in their organizations. They
can take a leading role in data and
intelligence gathering, in formulating
plans to identify critical upcoming
changes and response plans, and in
educating senior executives and boards
of directors on long term risks.
“The risk manager is in the midst of
a ‘risk revolution,’ evolving into a risk
strategist who is required to have plans
to deal with both controllable and
uncontrollable matters,” Addis said.
Recognizing that trend, this year’s
RIMS conference features a new
Executive Leadership track, which
Roth said, “is positioned for senior
professionals that are engaged in
driving strategy throughout their
organization.” Sessions in this track
will examine “international strategic
planning and ERM, the threats and
opportunities of Brexit, and risk and
resiliency in the changing world.”
“As leaders in risk management and
representatives of the risk management
community, we feel it’s imperative to
engage our members and attendees
in that dialogue and look at ways that
others are addressing these changes
and challenges,” she said. “We have
to provide a forum for individuals to
find out what best practices are out
there and how other risk professionals
are addressing the challenges they’re
facing.” &
KATIE SIEGEL is a staff writer with Risk
& Insurance®. She can be reached at
ksiegel@lrp.com.
when necessary.
Goodwiler suggested that the
best way to start planning for the
future is to look back. Examine your
organization’s past 20 years; what
events made a significant impact,
either positive or negative? How did
“One of the biggest challenges
in any decision is developing
long-term strategies while still
recognizing the need to deal
with the short term.”
— Howard Kunreuther, co-director, Wharton Risk
Management and Decision Processes Center,
University of Pennsylvania
J
ose
ph
Fe
rn
a
ndes
Risk Revolution at RIMS
The 2017 RIMS Annual Conference and Exhibition will be held
April 23 to 26, at the Pennsylvania Convention Center in Philadelphia.
The opening reception at The Franklin Institute on Sunday, April 23,
coincides with the conference theme, Risk Revolution, by giving visitors
a chance to see how disruption can stimulate innovation. Attendees will
discover how the disruptors of today create groundbreaking ideas that
change how we think, behave and do business.
On Monday, April 24, the opening keynote speaker will be
Derreck Kayongo, CEO at the Center for Civil and Human
Rights. Kayongo is a renowned expert in environmental
sustainability and global health. With his Global Soap
Project, he uses his knowledge to change the way hotels
dispose of the barely used complimentary soap.
Later that day, Allison Massari, executive coach and
visual artist, will give the leadership keynote address at
the RIMS award luncheon. Massari, a survivor of not one,
but two, life-threatening car crashes, shares her story of
absolute loss, forgiveness and finally success. Her talk
o;ers applicable tools to help anyone rise above obstacles
and find peace, purpose and happiness in turbulent times.
Award-winning actor Michael J. Fox will give the
conference finale keynote talk on Wednesday, April 26 at
3 p.m. Fox, a tireless advocate for living with Parkinson’s
Disease, shares his story about the remarkable lessons he
learned after life threw him a curveball.
The opening reception at the RIMS conference will be at the Franklin Institute
in Philadelphia.