Risk Insider: Nir Kossovsky

The Boardroom “Reign of Terror”

By: | May 13, 2014 • 3 min read
Nir Kossovsky is the Chief Executive Officer of Steel City Re. He has been developing solutions for measuring, managing, monetizing, and transferring risks to intangible assets since 1997. He is also a published author, and can be reached at [email protected]

Last week, Target’s Gregg Steinhafel become one of the more than 461 CEOs to step down this calendar year, adding to a body count that is up 17 percent from the same period last year.  This statistic from the global outplacement consultancy Challenger, Gray & Christmas, Inc. may be “interesting.”  Unless you’re a CEO, in which case it is gut-wrenching.

Steinhafel was pushed onto his sword to atone for the security breach in November 2013, and the poor initial management of the emerging publicity crisis. Never mind that (i) the breach was due to a third-party component; (ii) other companies were similarly affected by the component; or (iii) that Steinhafel followed the proven formula for reputation restoration from an operational failure: acknowledge, apologize, and most important, repair the defect.

All to no avail for Steinhafel personally. The gestation period between event and execution was only 20 weeks.

Similarly, everyone knows that activist investors are encouraging four directors of Duke Energy to step down only 12 weeks after the company’s February coal ash disaster. How did accelerated human sacrifice become part of the ritual of appeasing the gods of crisis communications?

For four years, directors and officers have been telling the accounting and audit firm Eisner Amper that reputation risk was their No. 1 concern. They recognize that odds are great their company will experience an operational failure in the area of safety (like GM), security (like Target), sustainability (like Duke Energy), innovation (like AIG), ethics (like Novartis), or quality (like Tesco).

They also recognize that D&O liability insurance covers the litigation costs of stakeholder frustrations. However, as these matters move from the legal system to the court of public opinion, they are left to bear alone the personal reputation losses.

Not even fixing the underlying problem can provide any assurance. In November 2010, one of Rolls-Royce’s engines powering a super jumbo exploded. Oil leaks in other engines were discovered and all fleets powered by the engine were grounded. Rolls-Royce CEO John Rose stayed out of the media, angering those who know that public contrition must be offered quickly.

Instead, Sir John fixed the supply chain flaw that led to the problem, and three weeks into the media storm issued a short notice announcing success.  A few weeks later in January 2011, British Airways vindicated Sir John by purchasing a new fleet of A380 super jumbo aircraft, all powered by Rolls-Royce.

The costs associated with grounded fleets decimated Rolls-Royce’s earnings, but the stock price nevertheless began to soar as orders rolled in.  No matter; Rose was gone in a month.

It is not too hard to understand the Internet-era mechanics of self-inflicted damage precipitated through words and deeds by executives, most recently LA Clippers owner Donald Sterling. But who could explain the sudden upsurge in cultural bloodlust for the otherwise competent high-profile executive?

It is for the executives themselves, their risk managers and their brokers and consultants to understand that a company’s senior executives now require a personal reputation protection strategy.

Read all of Nir Kossovsky’s Risk Insider contributions.

Risk Management

The Profession

As risk manager for a cloud computing and software company, Laurie LeLack knows that the interconnected economy and cyber security remain top risks.
By: | December 14, 2017 • 4 min read

R&I: What was your first job?

One of my first jobs was actually at a local insurance agency when I was a high school student, before I had any idea I was going to get into insurance. After college, I was a claims analyst at Sunbeam.

R&I: How did you come to work in risk management?

I fell into it after college, where I studied international business. I had a stack of resumes, and Sunbeam came to Florida from Rhode Island, so I applied. I interviewed with the director of risk management and just stuck with it and worked my way up.

R&I: What is the risk management community doing right?

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Getting a holistic view of risk. Risk managers are understanding how to get all stakeholders together, so we understand how each risk is aligned. In my view, that’s the only way to properly protect and serve our organizations.

R&I: What could the risk management community do better?

We’ve come a long way, but we still have to continue breaking down silos at organizations. You also have to make sure you really understand your business model and your story so you can communicate that effectively to your broker or carrier. Without full understanding of your business, you can’t assess your exposures.

R&I: What was the best location and year for the RIMS conference and why?

Being on the East Coast, I like Philadelphia.

Laurie LeLack, Senior Director, Corporate Risk and Americas Real Estate, Citrix Systems Inc.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Organizations understanding their cyber risk exposures and how this line of insurance can best protect them. Five to ten years ago, people shrugged it off as something just for technologies companies. But you can really see the trend ticking up as a must-have. It was always something that was needed, but people came to their own defining moments as we got more involved in electronic content and social media globally. Cyber risk is inherent in the way we do business today.

R&I: What emerging commercial risk most concerns you?

The advent of security and contractual obligations. These are concerns as we all play a part in this big web of a global economy. There’s that downstream effect — who’s going to be best insulated at the end of the day should something transpire, and did we set the right expectations?

R&I: Is the contingent commission controversy overblown?

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I think so. At the end of the day, it’s all about the transparency you’re getting from the people you work with. I think some best practices in transparency came out of the situation, but we were working on a fee basis, so it wasn’t as much of an issue for us as it may have been for other companies.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

I’m cautiously optimistic. We seem to be stable in terms of growth, and I’m hoping that the efficiencies and the economies of scale we achieve through technology will benefit us. But I’m also worried about the impact that could have on the number of jobs globally.

R&I: Who is your mentor and why?

Robert O’Connor, my former director when I was first on-boarded at Sunbeam, gave me so many valuable tidbits. I’ll call him to this day if I have an idea I want to bounce off him. He’s a good source of comfort and guidance.

R&I: Of what accomplishment are you most proud?

I have two very empathetic, healthy and happy boys. Eleven and soon-to-be 14.

On the professional side, there were a lot of moments during my career at Citrix where we were running a very lean organization, so I had the opportunity to get involved in many different projects that I probably wouldn’t have had in other larger organizations.

R&I: What is your favorite book or movie?

My favorite movie is Raiders of the Lost Ark.

R&I: What’s the best restaurant you’ve ever eaten at?

A place in Santa Barbara called Bouchon.

R&I: What is the most unusual/interesting place you have ever visited?

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Caverns in Gatlinburg, Tennessee. They were interesting. It was cool to see these stalagmites and stalactites that have been growing for millions of years, and then just above ground there are homes from the 1950s.

R&I: What is the riskiest activity in which you’ve ever engaged?

Riding on the back of my husband’s Harley.

R&I: What about this work do you find the most fulfilling or rewarding?

I like educating people and helping them find their ‘aha’ moment when you highlight areas of risk they may not have thought about. It allows people to broaden their horizons a little bit when we talk about risk and try to explore it from a different angle. I try not to be the person who always says “No” because it’s too risky, but find solutions that everyone is comfortable with given a risk profile.

R&I: What do your friends and family think you do?

I tell my kids I protect people and property and sometimes the things you can’t feel or touch.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]