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Using internal marketing to enlighten co-workers.

by George Cirasuolo and Eberhard E. Scheuing, Ph.D.

George Cirasuolo is risk manager of Southern New England Telecommunications in New Haven, CT Eberhard E. Scheuing, Ph.D., is professor of marketing and director of continuing management education and the Business Research Institute at the Graduate School of Business Administration of St. John's University in Jamaica, NY.

Risk management is often misunderstood, ignored and underfunded, even though it goes hand in hand with the success of any organization. This dilemma prevents risk managers from achieving their professional objectives and increasing their stature in the organization. Compounding the problem is the fact that risk managers are increasingly expected to expand their focus into more complex, critical areas.

To reverse this situation, risk managers can use marketing strategies within their organizations. These techniques, similar to those employed when marketing a product, can be applied to risk management services. The process involves applying risk management marketing strategies inside an organization to gain the support of other departments and employees. Such a plan involves several basic steps:

* Identify internal customers. Every employee must be viewed as a customer if risk management is to be spread throughout the organization. Nonetheless, priorities must be set. The best approach is start with the lower levels of the organization to build a strong base of believers and supporters. Then work your way up, forming a working group in each level.

* Assess internal customers' needs through one-on-one discussions, focus groups and surveys. Using this information, risk managers can formulate marketing objectives for these target groups. The objectives may include achieving acceptance of the risk management philosophy, creating awareness of risk management capabilities, conducting a successful project with the group, reducing exposures by a certain percentage or saving the group money in the first year.

* Form strategic alliances. In many organizations risk management functions are fragmented. To gain centralized control over decentralized risk management functions, the risk manager must form strategic alliances. The key is to turn internal customers into partners by showing them that the risk manager is a valuable problem solver. Later, the efforts and resources of the decentralized groups can be focused on solving everyone's problems.

* Explain how risk managers can help internal customers shine. Risk managers can do this by serving as a resource in risk-related areas to advise, guide and assist their customers. The risk manager should explain to customers how he or she can strengthen their performance, and therefore their standing in the organization, by applying professional risk management techniques to their jobs.

However, the risk manager should not try to accomplish too much or take on projects with low probabilities of success. Proceed slowly at the start; indeed, success is not won overnight but should snowball if the job is done right. Sometimes it may be necessary to wait. If individuals are not ready to accept the risk manager's help, then back off. This does not mean the risk manager should not try again, but that he or she may not have adequately identified customers' needs.

Strive to be a perfect communicator. This may seem like an unfair expectation, but the reason the process is being undertaken in the first place is because others are not sufficiently knowledgeable about risk management, nor do they have sufficient confidence in the risk manager. Therefore, at least strive for perfection.

Start by putting forth the image of a friendly, helpful problem solver. Do not take sides or bad-mouth customers. Instead, maximize networking skills, be confident, forthcoming and honest and do not say or do anything to make matters worse. Two last tips regarding communication skills: Do not presume to be an expert if you are not, and be selfish about your own interests, but empathetic enough to accept that others will do the same thing.

* Ask the work groups to select one manager to be the contact for risk management questions or actions. This person can be extremely valuable to the risk manager. Indeed, a supportive worker in each work group can magnify positive results far beyond the plan's expectations. Also, this individual can provide the risk manager with information that cannot be obtained elsewhere. However, avoid giving the appearance that the risk manager is creating moles within these groups.

* Expand risk management's acceptance to higher levels in the organization through the concept that nothing succeeds like success. Encourage customers to spread the word about what has been accomplished. Start with lower-level managers and work up to the higher levels of the organization. Continue doing this until there are signs that the corporate culture is changing for the better.

* Periodically remind customers of the benefits of risk management. Hold annual training and orientation sessions with executive decision-makers, participants in the risk management process and group contacts. In addition, the risk manager should add a discussion of risk management to management training courses and orientation programs.

It is also important to utilize publications and reports that demonstrate the success of risk management. For example, create and constantly update a risk management manual, and provide executives with a quarterly status report that includes a discussion of return on investment. By showing this calculation, along with changes that have occurred since the last report, risk managers can demonstrate that they are watching-and impacting-the bottom line.

* Budget and charge back risk costs. Charge back risk costs to the work group responsible for them. This will make internal customers aware of the cost of risk. At the very least, they should know that these costs include insurance premiums, claim payments, loss prevention efforts such as sprinklers, inspections and training, post-disaster recovery operations, miscellaneous charges, including bond and letter of credit fees, and the administrative expenses of the risk management department.

All costs, except for administrative fees, should be budgeted and charged back. Most important, it should be the risk manager who determines the budget and calculates the charge-back fees. This is where true control comes into play. Indeed, if the risk manager cannot affect budgets and charge backs, his or her influence will be diminished to that of an adviser rather than a proactive force.

When a work group takes steps to reduce its risks, and thereby underruns its budget, the risk manager should reward its members. Write a congratulatory letter or invite the group's manager at the risk manager's expense to attend a seminar or risk management conference. At the other extreme, the work group could be allowed to keep part of the savings to fund risk management software, additional loss prevention equipment or training or awards to participants in the loss prevention effort.

* Interact with decision-making authorities. The risk manager should apply for membership on major risk-impacting committees, including fire-safety and environmental action committees, if they are not already under the risk manager's control. In addition, convince the legal department to use the risk manager as a contact in contractual situations when major risks are being assumed by the organization.

* Get insurers and brokers to lend legal, administrative, clerical and systems support to the risk manager and his or her internal customers. This will increase the risk manager's responsiveness to his or her customers. In addition, ask insurers, brokers and consultants for risk management-related materials, then personally distribute them to internal customers. Topics that may be of interest to customers include proposed legislation that would affect the organization's risk management programs, how other firms are solving their problems and loss prevention, initial accident response and disaster recovery techniques.

* Simplify the processes by which others interact with the risk management work groups. Mechanize and standardize risk management forms and processes wherever possible, especially those used to obtain certificates of insurance, bonds and other insurance-specific products or information. This will streamline the communication process among users, risk management personnel and providers. if necessary, the risk manager should fill out the paperwork for his or her customers.

* Monitor the plan and fine-tune the steps as necessary.

* Cultivate new relationships within the organization and continue to strengthen the ties to the risk manager's constituencies.

It is not easy to implement a marketing approach that will instill confidence in risk management and the risk manager. At the beginning, the marketing strategy is basically to educate. The intent is to set up in the various work groups expectations of a product-risk management-that will serve their needs. In the long run, however, it is up to the risk manager to meet the expectations that he or she has created. This requires strong interpersonal skills and careful application of a well-thought out plan. No doubt it is hard work, but the potential for reward is well worth the effort.
COPYRIGHT 1991 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:marketing of risk management services
Author:Cirasuolo, George; Scheuing, Eberhard E.
Publication:Risk Management
Date:Jul 1, 1991
Previous Article:Brokerage service agreements spell out responsibility.
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