Hard times: the economy is not the only worry for risk managers, who play an increasingly vital and difficult role in the overall security of their companies. (Cover Story: Risk Management).

When the Risk and Insurance Management Society Inc. convenes its 41st annual conference and exhibition in Chicago this month, the talk will be of hard times--not only in the economy but in the insurance market, which is harder than it's been in years.

The conference, planned for April 610 at McCormick Place, Lakeside Center, is the premier event for risk managers. Last year's event in New Orleans drew nearly 10,000 people, representing 65 countries, and was about equally divided between participants in the conference and exhibitors.

Lance Ewing, executive director of risk management at Park Place Entertainment Corp., will be installed as president of RIMS at the conference. He fielded questions from Best's Review about what issues will be high on the conference agenda and about the current state of the risk-management field.

Q: What issues are going to be uppermost in the minds of people attending the conference?

I think we've entered the age of risk. I think that foremost in their minds probably will be the issue of the hard market. Whether it's political risk or financial risk or whatever risks are actually facing their corporations, I think that truly will be the focus, and how do I protect that in this hard insurance market? You've got volatility risk, and currency and equity risk, and operational risk, and political and liquidity risk, and risk modeling. A lot of it is determining what that risk truly is and then how to address it.

Q: What new issues are on the horizon for risk managers that might not be widely known yet?

What's probably on the horizon for a risk manager's role is a broadening of those responsibilities. You've got Sarbanes-Oxley [Act of 20021 and you have ethics issues and integrity issues, and those are areas with which I feel risk managers should become more familiar, so that the risk manager's role becomes not just the proverbial insurance buyer, but also the conscience of the corporation. Whether they're the last American Boy Scout or Girl Scout, I really think that the risk manager has to step up and fill that gap--risk managers need to be above reproach. From a leadership standpoint and an integrity standpoint, those would be two areas that I see opportunities for risk managers to grow into. Chief financial officers and chief executive officers are now putting their names--so are boards of directors putting their names and quite frankly their fortunes--on the integrity of numbers and of corporations backing those numbers. The risk manager has a role to review that risk and be the one to step forward wit h the bad news, if that's the case. But also step forward with some solutions along with that bad news.

Q: New risks seem to be cropping up continually, and the old ones aren't going away. How are risk managers handling the load?

Stress has always been part of the risk-management world, and risk managers now are being told--in a lot of cases, in a lot of corporations--you need to do more with less. That's always been somewhat of a mantra in the risk-management department, so being much more nimble and being much more quickly responsive is really going to be the key for risk managers from a qualitative standpoint. However, that's the softer side.

On the harder side is that we really have to hone our negotiation skills as we continue in this roller-coaster marketplace that we've got right now. And I don't mean a roller coaster where it goes up and down like the old cycle used to be. I'm talking about one of these that throws you upside down and swings you around unexpected curves, and your premium goes skyrocketing to the sky and all those things.

Q: One equity analyst recently suggested that corporate management would be relying more on brokers and less on risk managers. What do you see happening in this regard?

I'll take the opposite of that. I see more and more corporations being interested in risk management, and yes, they have to rely on their outside service providers. The role of the broker, service provider, outside vendor, does in fact have a place. There's room at the table for everybody. But a corporation that's going to embrace an enterprise or holistic approach--and I know that's been beaten to death, that term--corporations have now had to raise the bar relative to risk management, and if you continually just rely on external forces, I don't think that you truly get the full value, nor do you get the full pricing that could come with knowing the intricacies of the corporation overall.

We renewed our directors and officers insurance policy, and one of the truly blessed things that I had was upper management took a distinct interest in that, for obvious reasons. Not only my CEO, but also my general counsel, accompanied me on all of the presentations to our underwriters. I don't believe that relationship between risk management, legal and finance would have been as positive had it come from an outside service provider saying, "Oh, I dragged these two people along. It's important." A lot of times with service providers, some companies say, "Here's a problem. You fix it. Come back to me with a price and I'll pay it." Where risk management Eresidesil internally within an organization, they have the best interest of self-preservation from the corporation's standpoint.

Q: It sounds as if there's a whole new skill set being added to the requirements for risk managers. Would that be fair to say?

The traditional risk manager now has to wear many hats, but in each of those you're looked at as the resident expert or at least the resident resource within the organization to get the answer. This discipline and this profession has always had to continually reinvent itself over a long period of time, and that reinvention has included education, experience, new opportunities. In this hard insurance market, many people are looking at alternative risk financing such as captives, pooling entities, separate financing for claims-those are areas that before you hadn't had a strong hand in. Obviously, being well prepared before the storm comes is usually better, but many risk managers are now faced with that educational learning curve, and I think that will continue throughout our profession.

Q: What are the issues you're facing in your own operations?

I'm in an industry, the gaming industry, which is also actually the entertainment industry more than anything else. Issues that will be of concern for me in 2003 are the hard insurance market and how we respond to that, and whether that's through a captive opportunity or whether that's through some alternative financing, or something along that line. That's certainly on our radar screen.

Property renewals are obviously something that we're very concerned about. We have more than $10 billion in assets for property renewal. Terrorism--we're in a concentrated area in both Atlantic City as well as here in Las Vegas--those are issues that would be facing us. However, based on the upper-management support that I've received so far, they're not insurmountable tasks, and I'm certainly getting all of the support that I could ask for from a risk-management standpoint. D&O is behind me, and that's always a concern. When I say it's behind me, it's like the rear-view mirror, a lot closer than it seems to be.

Q: Anything else you'd like to say?

I think that risk managers have for the most part weathered a lot of this storm that has occurred in regard to ethics and integrity, and no frontpage news of risk managers being led away in handcuffs. That's something we as risk-management professionals have to be proud of and continue to foster. And overall, I think RIMS is going to be answering a lot of those questions and those issues that are facing risk managers, not just in ethics and integrity, but about captives, about educationally reinventing themselves over a period of time. RIMS continues to be the premier organization to answer a lot of those questions, both from a risk-management standpoint as well as from an insurance-company stance.