Risk Management is a Team Sport

This week, ClearRisk is proud to present a guest blog post by Allan R. Morton, Jr. CIC, CRM.

Allan is the managing partner of Morton Insurance & Risk Management.  15 years in the industry is marked by his passion to drop money to their bottom line and increase negotiating leverage with insurers via proactive risk management.  He is a Certified Insurance Counselor as well as Certified Risk Manager.

One of the biggest challenges I have is how to keep a prospective client’s eyes from glazing over when the phrase “Risk Management” is mentioned.  It’s almost like those two words are part of a magical incantation which puts many in upper management into trance-like states.  It confounds me. There is something utterly unglamorous about it I suspect.  It’s not exciting, flashy, or as sexy as landing a big deal.

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25 Quick Tips To Get Started With Your Risk Management Planning (Part 2/5)

This is the second installment of five blog posts that summarize the 25 quick tips from my eBook, “Insurance Premiums Are Killing My Business”.  This risk management ebook is a great start for small to medium-sized business owners that are curious about starting the risk management planning process.

The tips below have been written with small to medium-sized businesses in mind, although the same principles should be employed by very large businesses.

Click here if you want to review risk management tips 1 – 5  before going on.

Risk Management Tips 6 – 10

6. Periodically check for unnecessary coverages.

Work with your insurance broker/agent to make sure you have all the coverages you need without paying for bells and whistles you don’t need.

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Big Companies Get It, Why Don’t SMBs?

Aon just released a study that SMBs need to pay attention to. It showed that those organizations that adopted a more advanced focus on risk management saw benefits that include enhanced shareholder value, a reduction in their total cost of risk, strengthened business resiliency and increased operational efficiency.

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Exploring Enterprise Risk Management and Organizational Culture: Part One

Tom Cooper is currently an Assistant Professor at Memorial University in the area of strategic management. As a member of the ClearRisk Board of Advisors, Tom’s research and blogging focuses primarily on the interplay between strategy, risk and compliance as well as their effects on corporate responsibility. This week Tom is shifting from his discussion of strategic risk to enterprise risk management and organizational culture.

As we all know, the concept of risk management is gaining prominence in both the corporate and academic arenas. This series of blogs explores the importance of how a risk culture achieves effective risk management practices. Focusing on how organization risk cultures develop, we need to consider the personal and organizational influences on risk culture.

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Examining Strategic Risk – ‘Strategic’ Risk or ‘Strategic Risk’ Management?

Risk management is much wider than simple financial or operational risk. Concepts such as ‘strategic risk management’, ‘integrated risk management’ and ‘enterprise risk management’ now describe the wider application of such thinking, tools and techniques.

There is a common view that strategic risk is about managing risk ‘strategically’ rather than examining strategic risk as a category similar to operational, financial and other risk areas. This common view causes confusion and may be one of the reasons that strategic risk is not further researched or specifically managed.

As outlined in my previous strategic risk blogs, one of the reasons for a lack of research is that there is no commonly accepted standard definition of strategic risk.

Much of this is no doubt due to the complexity of the concept of strategic risk, which suggests that no single quantitative measure will prove satisfactory in all strategic situations. Those risks that can be precisely quantified receive most of the attention from academic researchers, as well as corporate risk managers, while ‘soft risks’, however significant, often receive little notice (cf. PricewaterhouseCoopers 2005). In order to further the literature, the need for a common understanding on strategic risk must be developed.

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Examining Strategic Risk – What is it – Why Should We Care? Part 1

Within the management literature, most organizations have viewed the process of risk management primarily as an issue of compliance with statutory or regulatory requirements. Risk management within organizations has traditionally occurred within specific areas – technology, regulatory, financial, environmental etc. – with little or no coordination. Major ‘risk’ events such as September 11, Enron, WorldCom and the recent financial crisis made it increasingly apparent that the processes, policies and procedures of managing organizational risk must be a cohesive, constant analysis of both the internal and external organizational environment.

After the major ‘risk’ events of the last twenty years, the literature suggests a concentration on compliance with statutory regulatory requirements as the driver for risk management within an organization may not be an effective motivation for the management of risk.

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VC or not VC….THAT is the Question!

I recently visited Silicon Valley to present a risk management workshop. If you are an owner of a technology company and you find yourself in Silicon Valley and you don’t explore business opportunities, you shouldn’t be in business.

Silicon Valley is the heart of technology innovation and venture capital (VC) of the world. That’s not by accident; it’s by design that has evolved over several decades. Now I’m no expert on SV after a few days, but I did learn a few things. The reason there are so many technology companies there, both established and start-up is because that’s where the VCs are. The reason that the VCs are there is that’s where the companies that they own a stake in are. So it really is a self perpetuating situation. You see, VCs want to be close to their money. They want to pop in to see how it is being spent and closely monitor the business growth (hopefully).

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Where were the risk managers?

As a former management consultant in the financial services practice at PricewaterhouseCoopers in London, United Kingdom and now primarily an academic who teaches strategy and risk management to business students, one of the questions I am asked about the financial crisis is ‘where were the risk managers’?

In the seven and a half years I spent dealing with large, global banks and insurance companies I met all kinds of risk managers. Highly compensated, professional, and thorough were the usual adjectives I would subscribe to the vast majority. However, where the big difference was in how much influence they had in the organization. Most banks would argue that they were in the business of risk – just as insurance companies were in the business of managing risk. The difference between being a ‘risk-taking’ versus a ‘risk management’ business was huge. Walking the floors, speaking to staff members and meeting top-executives it was not too difficult to see who were ‘risk takers’ versus ‘risk managers’. Yet, what is unclear is what made certain risk managers succeed versus others.

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