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Sessions stress global education.

WHETHER OR NOT their companies presently have overseas exposures, globalization is proving to be a phenomenon that affects all risk managers. "Business is moving global, and risk management has to reflect that in what we do and how we react to it." Richard F. Denning, president of Atlanta-based Risk Sciences Group, stated in a session on making global risk management a reality.

Some potential benefits of global risk management include consistency in catastrophe and retention coverage, elimination of coverage duplication and uniform procedures for allocation of premium. "But give yourself time. It takes five to 10 years before you have a global program running properly," advises Pierre Sonigo, director of risk and insurance for Saint Gobain. Charles Armstrong, manager of corporate risk management for Xerox Corp., finds that a firm's global program will usually be a combination of local solutions and global ones.

Kenneth M. Krenicky, director of risk management for Rhone-Poulenc Rorer Inc., cautioned that the wording in policies including such terms as "replacement value" and "actual cash value" and what constitutes "North America" may mean different things to judges and brokers in different places. Thus, he concludes, "Be careful of what you are buying because many in the insurance industry are new to this also."

Speakers at a session entitled "Scuds, Coups and Clashes ... Intelligent Buying in an Unpredictable World" tried to shed some light on political risk. Jacqueline Deane, vice president for American International Global, sees a gradual corporate trend toward insuring political risk on a blanket coverage basis. Though it may not seem difficult to avoid high risk countries, the risk manager must realize that nobody knows where the next international crisis will occur, a prime example being Kuwait, a wealthy, peaceful, pro-U.S. country. Ms. Deane therefore advises purchasing worldwide coverage, which "can be cheaper than covering the worst three countries individually."

In a workshop session, speakers addressed various aspects of the global insurance marketplace of which risk managers need to be cognizant. Such exposures include: products liability in France, U.K. and Japan; environmental in Mexico, U.K., Germany and Japan; directors and officers in U.K. and France; and worker safety in U.K. and Japan. Other areas of emerging risks facing U.S. corporations include political and export credit risk, as well as taking care of key foreign nationals (local management) and U.S. citizens traveling abroad. Teresa L. Paul, senior vice president for Willis Corroon International, notes that in Eastern Europe, where business opportunities are more plentiful than in the former Soviet Union, the "situation still is one that should be engaged in only by the most seasoned of internationalists."

Focusing on the European Community, we find that companies, foreign or domestic, will now have the right to place their capital and surplus wherever their business units are, in any member country in any currency. However, the community structure "will not produce common provisions throughout Europe regulating the writing of insurance contracts or the fixing of rates and conditions," according to Chris Best, director and editor for Risk and Insurance Research Group Ltd. in London.

When all is said and done, every country in the European Community will continue to operate its own tax system and legal system. Thus, as Mr. Best sums up, "It will continue to pay to consider carefully where and how you arrange your program."

- by Orin M. Kurland
COPYRIGHT 1992 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:global risk management
Author:Kurland, Orin M.
Publication:Risk Management
Date:May 1, 1992
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