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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.

The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

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

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

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

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I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

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

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

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

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

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

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?

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Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

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

Favorite movie is definitely “Good Will Hunting.”

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

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

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

The Grand Canyon. It is just so vast. A close second is Stonehenge.

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

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A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

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

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

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

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

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