Risk managers will play a greater role in strategic planning in the near future, according to a report issued on Monday.
That was among the plethora of risk related information delivered at the annual Risk and Insurance Management Society conference on Monday, a four-day conference in Los Angeles, Calif. that includes panels focused on a variety of risk-based topics.
At a joint press conference held by Marsh and RIMS the two entities delivered a study that showed more than half of C-Suite executives and nearly half of all risk professionals responding to the 10th annual Excellence in Risk Management survey agreed that the top reason why risk management is included in strategic planning and executive activities is to identify and assess risks arising from the strategic plan.
However, only 15 percent of the risk professionals and one-fifth of the C-Suite respondents said the risk manager is a full member of the strategic planning or executive teams.
The authors of the report say there is a move toward risk managers doing more within organizations, a trend Carol Fox, director of the strategic and enterprise risk practice at RIMS, said she’d like to see more of.
The opportunity is growing for risk managers to play a role beyond just assessing risk, but for them to seek out more enterprise, serve as problem solvers and offer support.
Those who can do that, “there’s no question you will be thought of as strategic,” she said.
Fox added, “I think these are positive trends.”
The report also revealed the top risks for 2013, which include business disruption, economic conditions, cash flow, regulatory compliance, destruction and loss of physical resources, litigation or claims and natural disaster.
Superstorm Sandy may be behind the rise in concern over business disruption, which moved from being the No. 6 ranked concern in 2012 to the No. 1 ranked concern this year, according to authors.
The topics at the conference varied from construction risk to litigation issues to intellectual property to lessons learned from the 2011 earthquake in Japan.
During an aviation industry session, speakers addressed current risk and challenges faced by companies in that industry.
Panelist Steven Whitlock, senior vice president of AirSure Ltd. in Plano Texas, talked about general aviation issues, and noted that not including military and commercial aircraft, there are more than 360,000 aircraft in that category. Those aircraft conducted more than 35 million flights annually and that category alone accounts for more than 1.2 million employees, according to Whitlock, who noted the category includes fixed-wing and rotary aircraft, hangars, parts suppliers, maintenance operations.
Whitlock said he sees this general aviation category growing as major airlines consolidate and cutback air service to air hubs, and that the number of insurers in this space have doubled recently.
However, despite the increased competition, many insurers are reluctant to take on a wide variety of risks, he said, adding, “They don’t all have an appetite for all of the risk.”
Of growing interest in this sector is diminution of value insurance, thanks to the economy tanking a few years back, Whitlock said.
“Since 2007, 2008 the valuation of corporate aircraft have just fallen through the floor,” he said.
In a session on business continuity plans, two risk experts from Japan came to discuss the lessons learned from the Japan earthquake in 2011.
Shinichi Beppu, a risk manager with Fukuoka Chuo Accounting, and Hitoshi Ueno, a risk management consultant with RM Net Office, noted the impact of that earthquake and tsunami is still unfolding for that country – nearly 60 percent of private business sales were impacted following the event, according to their studies – but the impact and visual evidence of the disaster is on its way in bits and pieces to the shores of the Western U.S.
Several boats, a dock, and even marine life have made their way to the Western U.S., mainly Washington and Oregon, but Ueno said a large rubble pile that is now visible for the Big Island in Hawaii should arrive in the Western U.S. about this time next year.
“March of next year the entire West Coast of the U.S. will see the debris,” he said.
The men talked about preparedness, but said the tsunami that followed the 9.0 megaquake was larger than risk managers believed could be possible.
Risk managers at Toykyo Electric Power estimated that no tsunami over 19 feet could be generated in the area if its Fukushima nuclear power plant, which unleashed a potential worst-nightmare nuclear crisis after the tsunami overran the facility.
“They were wrong,” said Ueno, pointing to images of devastation wrought by tsunamis waves that peaked 50 to 70 feet in some areas.
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