Expert Commentary

Risk Management and Insurance Priorities 2002

February 2002

With help from IRMI Update readers, IRMI President Jack Gibson adds to his list of priorities for risk and insurance professionals in 2002.

by Jack P. Gibson
IRMI

The terrible events of September 11, 2001, caused people in all walks of life to think about risk management. Indeed the events of that day—and their aftermath—brought the world a new reality. Business and other organizations were awakened from a false sense of security and are realizing the necessity to make many adjustments in their risk management programs. Of course, the firming of the insurance market that began before September 11 has accelerated since then, which presents an additional set of challenges.

In my IRMI Update January 22 editorial, I proposed a list of priorities for risk and insurance professionals in 2002 and asked readers to add their suggestions to my list. In no particular order, the following is a new and expanded list of priorities for you to consider.

  • Take advantage of the opportunity presented by the current environment to get risk management principles integrated into the operational and financial infrastructure of the organization.
  • Identify, evaluate, and treat the risks arising from interdependencies on infrastructures or other organizations that could be affected in catastrophes such as 9/11.
  • Consider decentralizing where possible to obtain a spread of risk.
  • Make certain that you are doing business with financially stable insurance companies with a long-term commitment to your industry.
  • Evaluate security programs/systems and improve them as necessary in light of 9/11.
  • Review contingency and disaster plans to assure they contemplate worst-case scenarios like 9/11.
  • Test disaster recovery plans.
  • Make sure that information technology systems have the strongest possible safeguards against virus, worm, and other cyber attacks.
  • Identify and evaluate political risks and assure they are properly managed.
  • Review risk financing options in light of the new insurance market realities.
  • Risk managers should prepare early for insurance renewals and be very proactive in communicating with underwriters.
  • Agents/brokers and underwriters should keep in touch with their clients to stay abreast of developments in their businesses and the implications for their risk and insurance programs (e.g., financial problems, new operations and exposures).
  • Agents/brokers should keep clients apprised of insurance market realities to avoid surprises (e.g., higher deductibles, sizeable premium increases, coverage limitations).
  • Review safety and risk control programs and determine where improvements can be made.
  • Develop contingency plans to respond to a complete breakdown of the insurance marketplace.

Many thanks to all these readers who contributed to this list:

  • Bright Amu, Enterprise Insurance Co. Ltd., Ghana
  • Jodie L. Brandi, CIC, Vice President, Sternberg, Kozera and Gleicher, Inc., Hartsdale, NY
  • Sonny Chan, Director, Risk Management, Blyth, Inc.
  • P. Chandrasekar
  • Joseph J. Launie, PhD, CPCU, Professor Emeritus, Calif State Univ., President, Launie Associates, Santa Barbara, CA
  • Jeffrey Scott Lockhart, Wausau Insurance Companies
  • Randall Mohammed
  • Barry Port, Executive Director, PURMA, Southborough, MA
  • Steven B. Steinberg, CPCU, President and Principal Consultant, Entrust Risk Management Services, Houston
  • Dee Webster, Risk Manager, A. G. Edwards & Sons, Inc.