A turning point in professionalism

The RIMS 99 Conference & Exhibition, to be held in Dallas, Texas from April 11th to 16th, is an apt lead-up to the 50th anniversary of the Risk and Insurance Management Society Inc. (RIMS). The organization’s international conference also represents a significant coup for Canadian risk managers with the appointment of Susan Meltzer, assistant vice president insurance and risk management at Sun Life Assurance Company of Canada, as president for the 1999/2000 term.

This year’s conference theme “Many Goals, One Direction” embodies where the risk management profession has evolved from and where it going, notes Meltzer. “We [RIMS] have completed numerous studies on where risk management has come from. Now it’s time to take a look at where the profession is going.”

As a risk professional, there are two central issues at stake, Meltzer observes. The first is that an effective mechanism has to be established to provide risk managers with the appropriate skills and tools to advance their capabilities – RIMS was created to serve this task and will continue to develop and introduce professional enhancement products for its members.

The second challenge which has to be embraced by the profession is pressing home the importance of risk management at the corporate level. “We have to get the message across at a corporate executive level that risk management is changing, the basic risk environment we are dealing with is changing. This is the cornerstone of RIMS 99, and we will be voicing this message strongly in the year ahead.”

While traditional insurance has always played a significant role in reducing corporate risk exposures, and will continue to do so, the playing field of risk management has become broader and the rules are adapting as the games evolves, she says. “This isn’t about insurance programs, it’s about developing and managing risk programs. Risk management as a profession has to break free from the view of ‘it’s all about buying insurance’ to be taken in as an integral part of the corporate business process.”

In this regard, Meltzer’s term as RIMS president will see the introduction of two additional national risk gatherings, the emphasis being on corporate and financial risk management.

Meltzer explains that the conferences — the first to be held in Toronto in the spring of next year and the second in New York City in the fall — will bring together risk managers and corporate CEOs. “The conferences aren’t about insurance, the purpose is to create a forum where the thinking processes of both risk management and corporate strategy can be brought together. This will be a very exciting development, a first time attempt to advance risk planning into the executive decision making process. Risk managers and CEOs need to come to terms with the concept that risk management is about balancing risk and financial resources, which all feeds back to the strategic decisions made by the corporate executives.”

Meltzer’s ease at slipping behind the driving wheel of RIMS is not surprising. She became a member of the society nearly 16 years ago when first venturing into the risk management profession. In the early stages, the relationship between RIMS and its Canadian members was strained, she notes.

However, that picture has changed, over recent years RIMS’ Canadian membership has increased substantially and several Canadian risk managers currently occupy prominent posts in the organization’s committee and executive functions. “Cooperation between RIMS U.S. and Canadian chapters has never been better. In terms of the close economic and business ties between the two countries, I think it’s really neat that Canadian risk managers are being taken as seriously from the other side and that the Canadian profession is showing such strong interest in a cross-border development initiative such as RIMS.”

Meltzer’s professional background to risk management is grounded in insurance. She began her career in 1975 working for a national commercial insurance brokerage. Meltzer joined the quasi-government Canada Development Corporation in 1983 as a risk manager, which she describes as, “a very interesting experience,” the nature of the corporation’s activities providing broad exposure to a multitude of business activities and risks. She then entered the employment ranks of Bell Canada as a risk manager for ten years until an “irresistible offer” to create a risk management department from scratch was made by Sun life in 1996.

The ability to “create” was the main appeal of the Sun Life offer, she remarks, this was a major national financial services company embracing the concept of risk management for the first time. “Prior to the establishment of the risk department, Sun Life had an insurance buying function. The challenge of setting up a risk management department was to evaluate the company’s risk exposure and needs, both locally and globally, and maximize on available resources. It took close to a year just to identify these objectives and come up with a game plan,” she notes.

Since then, Sun Life has established a full internal risk management team of seven professionals. The premium savings made by the company over the past two years can fund the costs of the risk department for the next five years, Meltzer observes.

Initially, the process of moving from a conventional insurance buying function was gradual, dealing with specific exposures and bringing the portfolio together as an integral risk program, she adds. “We have since brought the claims management function in-house and leveraged our insured exposures to increase our range of covers whilst marketing our insurance program to ensure the best values. Our objective is now to look at the broader risk exposures, the key is to get the business managers to incorporate the risks taken on with new ventures along with the rewards when making decisions to proceed.”

Meltzer concedes that her higher office at RIMS will occupy more time. “I’m lucky to have an understanding employer, one which understands the importance of risk management and the role RIMS plays in our profession,” she says.

Meltzer is willing to provide a sneak preview of events planned for RIMS 99. The opening day is usually set aside for the society’s meeting of the board of directors, she notes. This year, however, an open session will be held after the meeting to enable members to put forward their own issues, “it’s about bringing RIMS closer to its members”.

The conference opening address on the Monday will see the unveiling of a special RIMS 50th anniversary logo which will be followed by the release of a historical video next year when RIMS reaches its official 50th birthday. The conference will provide details of RIMS’ “Fellow in Risk Management” professional designation and skills training program which was recently launched.

The second annually completed “Quality Score Card” survey of insurance services, which is jointly sponsored by RIMS and the Quality Insurance Congress, will be released at the conference. Last year’s score card results created a minor furor in the insurance industry due to the low rating several leading national brokers and companies received from risk managers. The companies in question suggested that the methodology applied in the survey rating was unfair on a company to company basis.

As such, Meltzer says the rating technique of the score card has been fine tuned to address these concerns, however, independent evaluation of last year’s survey indicated that there were no real problems with the manner in which the results were derived at. “There will probably be a couple of companies not happy with this year’s results either,” Meltzer says, “the real issue is not the independent scoring but the overall result. We all knew last year that service in the insurance industry was not up to standard, the results merely confirmed it. I don’t think there is going to be any significant improvement in the numbers this year either.”

The score card is not intended to point fingers at certain companies, its purpose is to provide a measurement of standards to identify ar
eas that can be improved on, notes Meltzer. “In that sense I think the survey has been highly successful. We just have to look at the recent joint agreement reached between RIMS and brokerage J&H Marsh & McLennan on the disclosure of contingency commissions to customers. I think this was directly motivated by the 98 Quality Score Card. I don’t believe there is a single broker out there who will be able to resist disclosure of contingency earnings.”

Shortly after the J&H Marsh & McLennan earnings contingency disclosure announcement, Willis Corroon New York issued a statement indicating that they will no longer include a client’s premium in contingency calculations if so requested. The insurance market is definitely reacting to the needs of risk managers, Meltzer notes, “it’s just a matter of time before the insurance industry catches up with the standards set by RIMS”.