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Risk manager's role to be redefined by the next century, speakers maintain.

Risk Manager's Role To Be Redefined by the Next Century, Speakers Maintain Members of Canada's risk management community put on cowboy hats and headed across prairies and the Rocky Mountains September 10-13 to Calgary for the annual Canadian RIMS conference. "Risk Management in Motion" gave the more than 350 attendees an opportunity to speculate on where they are headed in the near and distant future.

It also gave Canada's risk management community the opportunity to present its annual awards. The Don Stuart Award, which recognizes an extraordinary contribution to the field of risk management, was given to J. Allan Swifte, a property and insurance manager at Manitoba Hydro. Colin Beardmore, risk manager for British Columbia Telephone, was awarded the Canadian Education Award for the highest grades in risk management courses.

The opening session at the conference, called "Twenty-First Century Risk Management," had panelists speculating on what the state of the profession will be at the turn of the century. Felix Kloman, principal & vice president of Tillinghast in Stanford, CT, said the issues of greatest concern to risk managers in the coming years will be those concerning the environment and employee substance abuse.

He also said the role of risk management would be completely redefined, with an emphasis more on risk assessment and risk control and less on risk financing. "The key ingredient in the future is to assume more of the risk in a society that has more risk," he said. "It's a psychological rethinking of how we approach risk. We have to learn to live with risks more intelligently."

In addition, Mr. Kloman said he foresees single-parent and group captives along with other forms of self-insurance growing to command more than 50 percent of the total commercial insurance market within the next five to seven years. "Most companies buy too much insurance, and most insurance companies buy too much reinsurance. Companies will be looking more seriously as to the degree that they need insurance," he said.

The panelist envisioned the risk manager of the future as having a larger staff involved in increasingly difficult problems, solving complex risks and reporting to the CEO rather than to a financial officer. Like Mr. Kloman, panelists also said that the discipline would see more emphasis placed on loss prevention and control than on insurance buying and risk financing.

"The risk manager entering the 21st century will be dealing with mega-mergers as increased demands in time and resources will be placed on the risk manager," said Susan Meltzer, associate director of risk and insurance for Bell Canada in Toronto. "As a result, risk management as a function will be more powerful and specialized within the organization. The department will increase in size, with accountants, lawyers, financial experts and insurance experts. This should cause an evolution in the insurance and risk management service provider role."

The panelists also envisioned continued growth in self-insurance mechanisms and less reliance on the traditional commercial marketplace. They also foresaw more interaction via computers between insured, broker, insurer and reinsurer; larger companies having larger losses in the age of the mega-corporation; and a greater chance for risk management to break the umbilical cord with insurance and finance.

Potential risks that risk managers are likely to be concerned with are pension portability, currency and interest rate problems.

The panelists also envisioned brokers with a new, more diverse role, one which will involve selling a complex number of services. They said the risk manager would most likely have one broker helping with financial needs, another with loss prevention and still another with computers and technological needs.

Nick Colton, director of the R.H.M. Outhwaite underwriting agencies in London, said there would be more insurance written on a net line basis, and that risk retention would be based more on corporate size than on the amount available in a soft marketplace. "It's the risk manager's job to manage the risks at the level at which we can afford to contain them ourselves, and anything after that we can insure," he said.

Other members of the panel included Francois Constantin, vice president of technical risks at the Societe Commerciale de Reassurance in Paris; Robert Cooney, senior vice president of underwriting for EXEL Ltd. in Bermuda, Michael Harvey, chief executive officer of the Elmslie Group in London; and John Wolff, executive vice president of Marsh & McLennan in Toronto.
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Author:Oshins, Alice H.
Publication:Risk Management
Date:Nov 1, 1989
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