Energized by Risk

Risk is the fuel that energizes Risk and Insurance Management Society (RIMS) vice president Joseph (Joe) Restoule.

As vice president of RIMS, Restoule, who works at NOVA Chemicals Corporation in Calgary, is in all probability next in line to become RIMS president in January 2009. If he becomes president, he would not be the first Canadian to head up the Society, although he would be the first Western Canadian to do so. Aware of Restoule’s trajectory within the RIMS organization, Canadian Underwriter finally caught up to Restoule in late July for a profile interview.

Restoule is anything but idle, so he is not easy to reach. Leading up to the interview, his travel schedule had him placed in Alberta, Detroit and Sarnia during a 48-hour span. But although Restoule has every reason to sound weary, you can hear the excitement level rising in his voice when he talks about risk management — even though he is being interviewed on the phone from his hotel room only 10 minutes after wrapping up an all-day, eighthour meeting in Sarnia. “If you ever get to meet me, you will find out that I am a really enthusiastic person when it comes to our profession, because I just get so turned on by it,” Restoule says on the phone.

For Restoule, it’s been that way from a fairly early point in his professional background. He grew up in Thunder Bay, Ontario and instead of following his friends out East after high school, he followed the old adage of heading West (to Calgary). He graduated from the University of Alberta with a Criminology degree in 1979, at which point he had two job opportunities from which to choose.

In an alternate universe, Restoule could have opted to work for Alberta Government Telephones (later to become known as Telus), selling new technology that Restoule believed at the time sounded too “crazy” for the average consumer — selling personal computers.

Instead he chose to work in the claims and adjusting department of State Farm Insurance. He worked there 10 years, at which point destiny led him into the hands of none other than William H. McGannon, one of the country’s first risk managers to set up a full service risk management department in Canada.

McGannon established loss prevention agencies and statistical support at NOVA Chemicals Corporation in Alberta in 1979. He is the namesake of a foundation Restoule now leads as president, the William H. McGannon Foundation, which provides grants to advance risk management by means of education, research, mentorship programs and work experience programs. The foundation was established following a 1999 RIMS Canadian Risk Management Council (since re-named RIMS Canada Council) study that identified the need for a Canadian organization to advance the profession of risk management in Canada.

Persuaded by McGannon, Restoule made the jump to NOVA in 1989. Restoule was impressed by McGannon’s loss prevention and engineering work, which Restoule describes as “ahead of the curve” in risk management. Specifically, Restoule admires McGannon for having established NOVA Chemicals’ own actuarial and statistical team to do loss forecasting and analysis in the service of managing risk.

For Restoule’s part, he did a fair amount of mergers and acquisitions work for NOVA Chemicals — work that he says appealed to his sense of “the Art of the Deal.” Not surprisingly, given his outgoing nature, Restoule says he loves working in teams, brainstorming and conflict resolution. All of these skills (and more) he used to close a deal he still remembers from early in his career — building a pipeline through several Latin American countries that required no fewer than 200 contracts to complete.

The role of the risk manager has evolved a great deal since that time, Restoule observes. “When I started in risk management in 1989, my understanding of the financial balance sheet and how to assist in the understanding of the strength of the balance sheet is totally different than today,” he says. “The needs are really different. If you just think of the signing process in 1989, we didn’t even sign off on those financial sheets, right? The auditors did. But now, when a chief financial officer and a chief executive officer sign off, they need to know that all of the risks associated with them doing business have been identified. And so risk managers today are being asked to be involved in the process and sign off.”

Restoule cites a financial issue — the subprime mortgage and asset-backed commercial paper issue — as one of many important emerging issues facing the risk management profession. His list of other hot-button issues is long and includes:

• “silica,” or silicon dioxide, which he observes could become the next asbestos-style exposure (along with nanotech);

• hurricanes (“The winds are starting to blow again,” Restoule says, referring to the first hurricane to make landfall in 2008. “Hello Dolly.”);

• research and development will be generating new risks; and

• the increasingly multi-jurisdictional nature of mergers and acquisitions.

“I don’t know what will be the single biggest one [issue],” he says. “But when you look at all of those, maybe it won’t be one big bang, but it will be an accumulation of a number of these issues that will keep risk managers very busy.”

Clearly on a roll, Restoule’s enthusiasm takes over. He lists cyber-risk and climate change as other major issues to confront both Canadian and American risk managers.

When asked about the risk manager’s role with regard to climate change, Restoule responds: “If you’re not reducing your emissions, directors are exposed to liability, personally exposed. So what sort of coverage do you provide to directors and officer for environmental risks? You can see that directors would want risk managers to talk about purviews of coverage and those types of issues.”

Environmental risk is about more than personal liability, he adds. For example, what might happen if a company does not fall in line with emission reduction targets? “Could your operating permits be constrained, so you’re not getting the revenue you’re expecting because you have to work in a constrained environment?” Restoule asks.

“You can see the impact not only on the governance of the corporation but also to revenue and its ability to generate income.”

Restoule believes risk managers in the future will be called upon to become even more involved with a company’s strategic thinking than they are already with enterprise risk management (ERM). He sees risk managers getting more involved at the company’s executive-level structures, known as the so-called ‘C-suite.’ In the future, he predicts, risk managers will be “working more with the CROs, the CFOs, CEOs and the boards of directors, getting involved in the strategic planning for the organization. Being part of that, to me, is ultimately where we need risk management.”

Participating in RIMS is the perfect vehicle for preparing risk managers for their future, whatever it may be, says Restoule, who also joined RIMS at the behest of Mc- Gannon in the early 1990s. Restoule has been a member of the RIMS board of directors since 2000. He was chair of RIMS Canadian Risk Management Council from 1997 to 2000.

“RIMS as an institution provides a lot of the resources and tools necessary for these risk practitioners to do their jobs and do them well,” he says.

He cites RIMS publication of ERM for Dummies as one example. He also notes that RIMS has provided a number of important industry benchmark and training resources such as the new Professional Growth Model career tool and the Risk Maturity Model for Enterprise Risk Management that, in addition to risk management professionals, is being used by auditors, security executives and other practitioners traditionally outside the risk management discipline.

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“When I started in risk management in 1989, my understanding of the financial balance sheet and how to assist in the understanding of the strength of the balance sheet is totally different than today.”