A changing landscape


A changing landscape

From the hot topic of TRIA to the implications of the Neal Bill, RIMS’ new president Carolyn Snow expects plenty of talking points at RIMS 14. HRMR reports.

The 2014 president of the Risk and Insurance Management Society (RIMS) Carolyn Snow takes the helm during a period of change and challenge linked to government policy in the US.

Top of mind at this year’s RIMS conference (taking place in Denver, April 27 to 30) will be the Terrorism Risk Insurance Act (TRIA). Signed into law in 2002 by President George W Bush, TRIA created a federal ‘backstop’ for insurance claims related to acts of terrorism. It was originally set to expire in December 2005 but was extended twice and is now set to end on December 31 this year. A further extension is on RIMS’ wish list for 2014.

“We were very disappointed that there was not an extension at the end of 2013,” says Snow. “That is going to have a major impact. It’s going to hit some areas harder than others immediately, but it’s going to have a long-range impact on everyone.”

In particular she is concerned about the impact it will have on workers’ compensation. Pricing and capacity in particular are expected to be affected.

“People don’t fully understand the impact it can have on workers’ compensation; they think of it more as a property exposure,” she says.

Another major area of concern for RIMS members is the Neal Bill, which would place significant restrictions on domestic insurers which cede reinsurance to their foreign affiliates. According to a 2009 Brattle Group study, the legislation would contract the reinsurance market by 20 percent and force US consumers to pay $10 to $12 billion more a year for insurance.

In April last year, RIMS delivered an official letter to the House Ways and Means Committee’s International Tax Reform Working Group to affirm the society’s opposition to the proposed legislation.

“Engaging in offshore reinsurance programs is a legitimate practice that has proven over time to be an effective tool to keep insurance premiums low while providing countless organizations with the capacity to keep their assets safe,” says Snow.

“This short-sighted legislation fails to realize that if organizations are forced to abandon their offshore counterparts, the financial burden of catastrophic risks would fall on the government and policyholders—an alternative that could shatter this country’s economic vitality.” 

Global reach
While US issues such as TRIA and the Neal Bill will undoubtedly colour Snow’s presidency she will also spend time helping the society broaden its reach beyond the US.

“We continue to look at global expansion,” she says. “Last year we opened chapters in Peru and Australia, and while we don’t expect a new chapter this year, we do expect to continue to work towards having new chapters in 2015 in other areas of the world.”

This sits comfortably with the board of directors’ main goal, which is to develop a long-range strategic plan, known as RIMS 2020.

“We want to make sure that the organization is still the most viable and the leading risk management organisation five, 10 years from now,” she says. “As younger risk managers join the organisation and as we embrace social media we have more opportunities for international growth.

“The organization is going to have to adapt to members’ changing needs and we want to continue to add value to our members. That is our number one goal. As part of that we will be looking at the emerging young risk professionals and asking, how do we bring value to them, how do we get them involved in the organization?”

The board of directors is also looking closely at content and content development. “We do a lot of work around white papers, we do webinars, and we want to continually refine the content that we make available not just to our members but to other stakeholders within the organization,” she says.

Snow will also help the society to achieve a key aim outlined in its conference agenda: to ‘elevate’ the profession by raising awareness of the significance and value of risk management within an organization.

“Business leaders around the world realize that this business function can do more than just protect assets,” she says. “Risk practitioners are being called on to identify and create value for their organizations and, now, have a tremendous opportunity to contribute to their companies’ strategic direction.”

She says that in many larger organizations risk managers are working very actively in the strategic risk and enterprise risk area and are demonstrating their value by bringing ideas to the table.

“To me that’s proactive risk management,” she says. “It may involve putting together a crisis management plan or working in supply chain risk. When you have losses you bring value by getting the losses handled in the most efficient and productive way for your organization.

“In risk management you just have to seize the opportunity or make the opportunity within your own organization—seize the day.”

Central to Snow’s message is the need for risk managers to adapt—not only to the needs of their organizations but also to the changing risk landscape. She says that emerging risks will be on the agenda at RIMS 14, and that by their very nature they are difficult to address.

“They are a big challenge, they are emerging risks so you don’t know what might be on the horizon,” she says.

She believes that in an ever-changing landscape a risk manager needs to know her or his organization in detail, to be visible within that organization, and to ensure that they are part of the company’s new developments and strategic plans.

“If you know the new things your company is going to do then you know the things you need to do in your role to support your company’s goals,” she says.

“At the end of the day, a risk manager’s job is to support the business of the company and to help the company achieve its goals.

“It should be a priority for risk managers to become knowledgeable about what’s going on in their companies and to stay informed—to read business periodicals, to see what’s happening in other organizations in other parts of the world, and just be aware of the changes.”

Future risks

Asked to single out the most significant emerging challenges, Snow highlights the ongoing issue of economic risk and the ever-evolving field of cyber threats.

“There’s always an economic risk,” she says. “If something affects the economy, it affects your company, and it affects risk management.

“I would say that most risk managers would tell you that cyber is probably one of their major concerns because of the unknown. There are so many ways that cyber risk can develop—so many new things can happen, even to companies that have really strong IT areas.”

In the field of healthcare risk management, Snow says uncertainty surrounding the impact of the Affordable Care Act (ACA) has resulted in concerns around income.

“If a hospital has worries around income, then that will impact risk management too. You’ve got to be able to have the resources to take care of patient safety. There are some related issues around staffing—we hear rumours of layoffs,” she adds.

The ACA is also a major concern for healthcare insurers, with Aetna CEO Mark Bertolini telling CNBC that Obamacare has failed to attract the uninsured and that his company may have to pull out of the new healthcare exchanges.

“For health insurance companies there’s still a lot of uncertainty,” says Snow. “In general the hospitals and the insurance companies support the whole concept of affordable care but we’ve just got to work through it and see what the results are going to be.”

With the push towards electronic health records and the rise of mobile computing, cyber risks are as much an issue in healthcare as in any field of risk management.

“The more social media you have and the more ways to transmit information, the more concern you have around what information is being transmitted,” she says.

In Snow’s opinion, the insurance industry is receptive in helping risk managers deal with emerging risks. “They’re a great source of knowledge, they’re good partners, and they identify opportunities where they can develop products to help risk managers—even if it’s in a smaller area which not every risk manager might need.

“For the most part insurance companies and risk managers are innovative and supportive in sharing their knowledge.”

Snow is well aware of the importance of chapters to the larger organization. “We always want to make sure we are supporting our local chapters because that’s the bedrock of our organization. We want to continue to support and develop them,” she says.

She has a lot to achieve in 2014—but she also plans to enjoy her presidency. “My other main objective for 2014 is just to have some fun—I’m only going to be president once so I want to enjoy my year.” 

As director of risk management for health insurer Humana, Carolyn Snow has an intimate knowledge of risk. She has been a member of RIMS for 14 years and on its board of directors for seven years. Previously, she served as the society’s treasurer, secretary and director of external affairs. She is a member of RIMS Kentuckiana/Bluegrass chapter.

RIMS, Humana, Carolyn Snow, TRIA, US, Crisis management