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Column: Risk Management

Becoming Great

By: | March 5, 2018 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

We’ve all heard the re-run of Ronald Reagan’s 1980 campaign slogan — “Let’s Make America Great Again.”

Some tend to examine the word “again” as implying a throwback era where America was “great.”

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One of my favorite business books comes to mind when I hear this catchphrase. “Good to Great” by Jim Collins has acted for many years as a best practice road map to superior risk management. In it, Collins asks: “Can a good company become a great company, and if so, how?”

What makes an organization great according to Collins? After analyzing more than 1,400 companies, he looked for those that have stood the test of time in performance and results. Great companies had 15-year cumulative stock returns at or below the general stock market; but in the subsequent 15 years, the same returns grew to three times that of the general market.

Collins’ study revealed key traits, like having humble leaders, driven to do only what is best for the organization and nothing else. Also finding the right, self-driven people for the job — no matter how long it takes. In Collins’ words: “Get the right people in the right seats on the bus.”

If America is on a journey to becoming “great” again, how are its risk management practices progressing? How good are we at facing brutal facts? Do we have the right people in the right seats on the proverbial government bus? How disciplined  are decisions and behaviors? Are people motivated and held accountable for their actions?

Two other characteristics identified by Collins speak loudly to my risk management experience. He said great companies confront the brutal facts head on and act on them. They also rigorously promote a culture of discipline — where disciplined people have disciplined thoughts and take disciplined actions.

This doesn’t mean dictatorship; it’s not about imposing behaviors or rules but “creating systems and processes that keep teams motivated yet accountable.”  Isn’t that great risk management?

Risk management is a disciplined, logical system that sets context, and analyzes, treats and communicates risks for any activity, function or process — all to help an organization navigate successfully toward its goals. If that is the case, becoming great requires risk management.

If America is on a journey to becoming “great” again, how are its risk management practices progressing? How good are we at facing brutal facts? Recognizing facts? Doing something in response to facts? Do we have the right people in the right seats on the proverbial government bus?

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How disciplined and orderly are decisions and behaviors? Are institutional systems and disciplined processes in place? Are people, within these systems, motivated and held accountable for their actions?

When I think of attempts by Congress to dismantle the Dodd-Frank Wall Street Reform and Consumer Protection Act, I wonder if we have genuine intention for effective risk management.

The Dodd-Frank act brought risk management reforms to the financial system following the 2008 credit crisis, born from high-risk financial products, conflicts of interest and the failures of institutions, such as regulators and credit rating agencies.

If risk management in America is at risk, can America ever be great again? &

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Masters of Risk

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]