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RIMS 1993 Canadian conference.

This year's Canadian risk management conference, which took place in Halifax betweeb September 15 to 18, set a precedent for future events in Canada. For wne, the conference coincided with the 10th anniversary of the founding of the Nova Scotia Chapter. Second, it marked the first time a Canadian risk management conference ever took place east of Montreal. "One of the strengths of a Canadian conference is that, by virtue of its size, it allows the host chapter to inject a personal and regional flair," said Robert Patzelt, conference chair and group corporate counsel and risk manager for Scotia Investments Ltd. in Bedford, Nova Scotia. "At the same time, we were able to develop the conference's educational component so that it was tailored to Canadian risk managers and the challenges they face."

The decision to hold the conference in Nova Scotia coincided with the growing popularity of this maritime province as a business and conference destination. In fact, according to a report in The Halifax Chronicle Herald, when Kim C a m p b e l l , Canada's Prime Minister, sought to visit Halifax during the week of the conference, her office was unable to locate enough vacant hotel rooms to accommodate her entourage. That week the city, it seemed, teemed with risk managers and other insurance industry professionals.

Hospitality and good cheer were in abundant evidence at the conference, including a birthday celebration for the Nova Scotia chapter replete with cake and candles and, on Friday night, a traditional Nova Scotia kitchen party with a nautical theme. Besides the festivities, the conference also featured award presentations. J.A. Yvon Menard was the 1993 recipient of the Donald M. Stuart Award, which is awarded by the Ontario Chapter to a risk manager for outstanding contributions to the fields of insurance and risk management. Mr. Menard, who recently joined Johnson & Higgins Ltd. in Montreal, was formerly risk manager at Marathon Realty Company Ltd. in Toronto and a member of RIMS Executive Council from 1989 to 1993. Don Stuart was the risk manager for Canada Packers and the second president of RIMS. The winner of the CRIMS Educational Award was Kim Rogerson, risk management and insurance analyst from Domtar Inc. in Montreal.

The conference's featured speakers focused on some of the increasingly complex issues confronting risk managers in the globally competitive economy. Noting that the economic and social parameters of risk have expanded dramaticall, Tony Bridger, RIMS president and risk manager for the Bank of Montreal, stated that risk managers must respond in a proactive manner to the myraid changes overtaking the global economy. "There is now a global marketplace due to the wave of business mergers and consolidations resulting in a competitive marketplace with less expensive products," he said. "To survive, let alone prosper, our member organizations face major challenges in generating quality products and service while controlling costs."

To help their companies meet these challenges, Mr. Bridger urged risk managers to use reengineering to bolster their positions both inside and outside the company. "Only if we as risk managers proactively engage in this practice will we deomonstrate our value as an essential factor in our organizations' interests," he said. "Reengineer your responsibilities through continual improvement and propel risk management to the forefront so that risk management can be a make-to-break factor for corporate performance."

Mr. Bridger also exhorted risk managers to examine other areas of concern such as environmental exposures and risk financing alternatives. "Risk managers should look at alternative risk financing vehicles and demonstrate to management that we are not 'caretaker risk managers' tied to the vagaries of the insurance marketplace." He also added that risk managers need to keep current with new trends intechnology that include increasingly sophisticated data bases used to determine risk exposures.

Health care represents another important issue for risk managers. At Friday's luncheon, Jane Fulton, an associate professor of strategic management and ethics at the University of Ottawa who has been working with the Clinton administration on health care reform, spoke on the dramatic changes and "hard decisiwns" both Canada and the United States and Canada beliece myths about each other's health car system," she said. Ms. Fulton noted that oer individual, Canada spends $1,500 a year on health care compared to $2,200 in the United States. "These two systems are far more expensive than our competitors' systems in Europe and Japan, and as many as 37 million people in the United States are without any care." Since many of the decisions regarding health care reform must be tempered by other purchasing decisions such as for military expenditures, "the politics of health care are severe," stated Ms. Fulton.

Citing that administrative costs in Canada equal $150 per person compared to $500 per person in the United States, Ms. Fulton emphasized that streamlining the administrative systems used in health care "to get the paper moved" could result in substantial savings. Other strategies for cost control include ceasing the use of open-ended health care programs, limiting the availability of practitioners and locations for health care consumers, setting treatment criteria, limiting the use of high-cost technology and reducing health care fraud. However, these strategies can become a reality only through legislation and consensus-building among medical practitioners, the government, the business community and health care consumers.

Steven W. Poole, director of corporate communications at Gerber Products Co., spoke on the theme of crisis management and media relations. "Companies should maintain good relations with the media, not only in a crisis situation, but also on an ongoing basis," he said. In 1986, Gerber experienced a glass scare after a woman in Schenectady, New York, claimed she found glass in a jar of the company's baby food. As a first step, explained Mr. Poole, Gerber made efforts to contain the scare in the local newspaper. However, by the end of the week, the incident had snowballed: Gerber was faced with 200 complaints in 35 states, and by the end of the month, the firm had been deluged by 400 complaints in 50 states.

Gerber's first reaction was to check its manufacturing plants to determine if there were any problems with the product or manufacturing process, said Mr. Poole. The inspections, however, failed to reveal any problems, and "no authority discovered any piece of glass" in Gerber's baby food. The Food and Drug Administration, for example, examined 60,000 sealed jars with the same code as the allegedly contaminated jar, yet found nothing to substantiate the claims. Nevertheless, the story received wide media coverage.

Despite the authorities' inability to find a problem, the glass scare "nearly destroyed the company," said Mr. Poole. In January 1986, Gerber had 66.8 percent of the industry's market share. However, after the incident occurred at the end of February, the company lost 14 points: its share of the market dropped to 52.4. The company therefore had to decide whether to recall its product even though no problems were discovered. "It was a serious dilemma," said Mr. Poole. "What do you do when a scare occurs but there is no problem and no manufacturing defects?"

Mr. Poole said that while the necessary steps to take in a crisis include identifying the problem, fixing it, communicating the remedy to consumers and then offering an apology, he cautioned companies against adopting an accusatory tone when communicating the crisis to consumers, even if the company is not at fault. "Take care of the loyal customer," he said, adding that this approach helped Gerber survive the crisis and regain its market share.

By the end of the crisis, six mothers had been arrested for spurious complaints, and Gerber turned the tide after suffering a loss of $10 million in lost sales and the expenditures needed to regain market share. Gerber's successful crisis management campaign has paid off: Currently, the company manufactures 1.5 billion jars of baby food a year -- 72 percent and 20 percent of the U.S. and Canadian markets respectively.

Although adverse media publicity can cause troubles for companies, the press by nture are "insatiably curious agents for the public whose goal it is to provide a reflection of reality like a mirror on a street," said Knowlton Nash, a renowned Canadian journalist. Because the ultimate journalistic sin is "faking the news," he said that companies should be able to expect from the media "a fair account of your point of view."

However, Mr. Nash also said that senior management should be aware of the fragility of their companies' public image. Therefore, each company should develop a plan for dealing with the media in times of crisis, or else risk "getting killed economically." Although some CEOs think public relations is a luxury, they must realize that public perception of the corporate image is of vital improtance, so a public relations staff should be put into place to guide the media through a crisis. Mr. Nash also said that senior management should be available to talk to the media, and to maintain a continuous relationship with media representatives.
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Title Annotation:Canadian Conference; Risk and Insurance Management Society
Author:Oshins, Alice
Publication:Risk Management
Date:Nov 1, 1993
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