MANAGEMENT
PRACTICES
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1.
DEVELOP A
PROPERTY
CONSERVATION
POLICY
42
We put a step-by-step game plan together to overhaul the sprinkler system. Clearly, top management
and shareholders in the company believed in the sprinkler program because our people were at stake. For
me, that was very satisfying. We never even talked about money, they just said we have to do it, and we
went ahead and plotted the entire program, put in the budget and proposal, and did it. It demonstrated
real commitment from the corporation, top management and shareholders, that they care about our
people sitting in our part of the world, thousands of miles away from them.
Changes managed proactively and continuous risk improvement will help to ensure
that the business is robust
in the face of materializing
threats. This will translate into
the protection of the revenuegenerating operations and,
hence, the bottom line.
ANDY BRYSON
GROUP INSURANCE AND RISK MANAGER
COBHAM PLC
2.
Risk management is not an academic exercise, our panel warns. A quality risk management
program continuously works to lower the risks a company faces. Risk improvement begins with
identifying key risks and hazards and then making a compelling case for proposed improvement
measures. If a risk manager has been successful in gaining upper management support and driving a culture of loss prevention, then implementing individual risk improvement programs will
be a much easier task.
Increasing the sensitivity to loss exposures helps build a loss prevention culture throughout
the company. Publicizing case studies of real losses, prominent industry losses and the companys own loss history or near misses can help pave the way for investments in risk improvements.
In establishing priorities, our panel of experts recommends attacking easily accomplished
improvements first. This can establish risk improvement as an achievable goal. It also helps to
widely convey the results of a risk improvement program, share success stories and recognize
those involved in the program.
Creating incentives for risk improvements is also important. This can be done by offering financial incentives for risk improvements or fostering healthy competition between
plants or facilities. This can be accomplished via benchmarking using a simple
internal grading system, a program like RiskMark, safety incident rates
or other applicable tools.
A risk manager should be able to detail how risk
improvements will positively impact revenue, market share,
reputation or environmental concerns. The risk manager should also identify needed benchmarking data
and establish success metrics so the impact of the
improvements can be quantified.
Continued support from upper management
will help maintain risk improvement as a priority. Anticipating obstacles and objections, setting expectations with senior officers, project
managers and loss control personnel, and
obtaining executive sponsors for top priorities are proven ways to keep risk improvements on the front burner.
ACHIEVE
RISK IMPROVEMENT
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3.
LEVERAGE INTERNAL
AND EXTERNAL
RESOURCES
FABRICE FUENTES
DIRECTOR, TREASURY PENSION AND INSURANCE, PHILIP MORRIS INTERNATIONAL
The one thing I absolutely love is how hands-on FM Global is with our
properties, through inspections, through walking the sites, especially
during construction. They are such an asset to what we do. Brandywine is really moving forward in construction and development, and
there are a lot of unique challenges were coming up against. Brandywine has always been a commercial real estate company, but now we
are dabbling in student housing, luxury residential, multifamily, pools
on rooftops, green roofs and automated parking. So there have been
a lot of unique things weve started that FM Global has come in and
helped with.
KIRSTEN SHAWN
RISK MANAGER, BRANDYWINE REALTY TRUST
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4.
COMMUNICATE
AND IMPLEMENT
A PLAN EFFECTIVELY
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5.
An insurance and risk management program
must be global. It cant only be focused on
domestic offices or ignore remote locations.
A worldwide program, with all its complexities, is a must, our experts agree. Once
again, support from top levels of management is vital in mandating worldwide compliance with an insurance and risk management program. Be sure your constituencies
understand the expectations, as well as the
benefits, of a global program.
Our panel recommends employing
strong corporate policies to centrally place
insurance and assign responsibility. These
policies will ensure local entities will not
establish their own policies. Risk managers
should nurture solid relationships with local
entities and convey to them that premium is
not necessarily the most important attribute.
Our panel explains that consistent terms and
conditions are often whats key.
Risk managers should also cultivate
relationships with controllers, as they usually have the pulse of an organization. Risk
managers can then leverage these relationships when managing acquisitions and
divestitures globally.
Our experts recommend protecting
stakeholders by gaining senior management
sign-off for any activities that go beyond
corporate risk management. They recommend using brokers and insurers to augment
the companys internal capabilities. Brokers
and insurers can help deliver the companys
risk management message and ensure the
program is compliant and has adequate
capacity. They can also stay on top of regulatory changes and conduct annual reviews
of global risk management programs.
Finally, our panel recommends sharing
claims stories internally with all stakeholders, no matter their location, so everyone can
learn from a loss experience and feel ownership in the risk management function.
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JON KING
MANAGER, RISK CONTROL AND LOSS PREVENTION, PHILIP MORRIS INTERNATIONAL
6.
MEASURE AND
REWARD SUCCESS
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[What keeps me awake] is mitigating losses, ensuring business continuity and running cost-efficient
programs. Theres a tendency to feel at ease, to be
complacent. You need that spark to stay abreast of
changes, constantly improving processes and use
of our resources. Its a complex environment, so we
need to keep pace with those changes and make
sure we can respond in a most effective manner.
FABRICE FUENTES
DIRECTOR, TREASURY PENSION AND INSURANCE
PHILIP MORRIS INTERNATIONAL
To leverage trends, you first must identify them. Our panel recommends expanding an organizations risk horizon to investigate risks
that are typically beyond insurance, such as geopolitical concerns or
brand reputation.
Identifying important trends and understanding the issues relevant to them can help a risk manager develop appropriate ways to
mitigate these new risks. To be successful, risk managers must be
integrated into the business phases of the planning process, which
will require establishing credibility with senior executives and operations leaders. Risk managers should seize every opportunity to gain
the ear of these most influential audiences, and use that access to
explain the most compelling risks and offer mitigation measures.
Risk managers should look two to three years ahead, and recognize core and noncore risks. Among the fastest-growing trends
concerning todays risk managers are cyber risk, political risk and
climate change (specifically, the effect of a dwindling water supply
on business continuity and resilience).
Risk executives should view all new technology through a
prism of risk management. For instance, privacy concerns are currently top of mind as large-scale information breaches are rampant.
The widespread use of cloud computing is fueling such concerns.
Risk managers should ask, What risk does this technology present
to my organization? and Which suppliers hold critical data relative
to my business?
Risk managers also need to manage supply chain risks. They
should critique the business continuity plans of suppliers, and their
suppliers, and look for gaps. The same should be done for critical customers. Risk managers should execute detailed analyses in
cases where a supplier or customer will significantly impact
the companys business. Just-in-time supply chains
require exceptional resiliency.
Once an organization has outsourced elements of its manufacturing operations to third parties, it reduces the influence it has
on the risk management process. If theres an effective business impact analysis (BIA) conducted, it will highlight the most
significant of these outsourced nodes, but once you get to tier
two or three, even an effective BIA will struggle to achieve that
granularity.
ANDY BRYSON
GROUP INSURANCE AND RISK MANAGER
COBHAM PLC
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7.
STAY ON THE
LEADING
EDGE OF TRENDS
8.
BEST PRACTICES
FOR THE PART-TIME
RISK MANAGER
Part-time risk managers should also utilize internal and external resources whenever possible. Brokers, insurance carriers and FM Global account engineers can be valuable resources. Our panel also recommends utilizing benchmarking and Risk Reports to
highlight risk, influence decision-making and prioritize risk improvement capital expenditure allocation.
Esterline looks for partnerships with our brokers and our different
carriers to match our needs across the world. Its really important for
us because we have a very small risk department, so we push a lot
of that out to the business units. We partner with different carriers like
FM Global that can help. They can be there to guide us, be there as a
sounding board, and be there to help us when we build or remodel.
We use our partners a lot.
KRISTEN CARNEVALI
DIRECTOR OF TREASURY AND RISK
ESTERLINE CORPORATION
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