Risk Insider: Grace Crickette

ERM and the Art of War

By: | April 27, 2017 • 3 min read
Grace Crickette, a leader in enterprise risk management, is special administrator, Finance and Administration for San Francisco State University. She can be reached at [email protected]

This is the 11th post in a series from Risk Insider Grace Crickette on how to gracefully bring together traditional risk management, change management techniques and enterprise risk management concepts. The series is inspired by strategies devised by Sun Tzu, a Chinese military general and philosopher.

Make ERM, Not War

rainbow peace sign copy

Art of War Key Principle: The way to capitalize on the endless opportunities created by ever-changing conditions, is to become engaged as a part of a well thought out plan and be flexible in adapting tactics to those ever-changing conditions within the context of each pre-determined strategy.

Chapter V focuses us in on moving to the Creative or Energy mode, wherein the greatest amount of preparation and on-going effort takes place in implementing Enterprise Risk Management. From our menu of common elements of an ERM Program, let us move onto Measure, Monitor, and Report.

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In my last post we covered forming multi-disciplinary groups and clearly providing these groups with a vision, communications, training, and forums, as well as leveraging actuarial services to support the vision and the groups.   To maintain the momentum and keep the groups energized you need to establish baselines and measure progress.

My methodology is to meet with various departments and disciplines and ask the questions:

How do you know if you are doing well? What data do you have to let you know how you are doing? 

I am looking to get the organization to clearly articulate objectives and then identify the risks that impact those objectives.  Then I want to know if we have the data for measuring and monitoring and if it is timely, or is it primarily ad hoc, annual and manual.  The information gathered through these meetings is critical for understanding and developing the key indicators (KIs) that become an important component of your Enterprise Risk Management program.

What is a Key Indicator?

 Key Performance Indicators: KPIs are derived from critical success factors and define these critical success factors into more meaningful criteria. For example, the critical success factor of “improve productivity” might have KPIs such as cost, service quality, cycle time, streamlining of processes, and reduced duplication and/or rework. Example: Net Promoter Score (NPS): Finding out your NPS is one of the best ways to indicate long-term company growth.  Send out surveys to your customers to see how likely it is that they’ll recommend your organization to someone they know. Establish a baseline with your first survey and then monitor change.

Key Risk Indicators: KRIs are derived from analyzing what could go wrong or has gone wrong relative to another metric.  For example, reviewing claims information relative to the size of the risk (i.e., number of patients treated) or calculating a recordable rate for employee injuries.

# of Injuries        =    Recordable Rate (retrospective)

Personal hours

Key Leading Indicators: KLIs are derived from analyzing data that is a predictor of what is about to happen.  For example a KLI that provides information on customer satisfaction could be used as a predictor for increased sales.  Another example would be a KLI that provides information on employee satisfaction could be a predictor of turnover.  The number of change orders on a construction project can be a predictor of the project not coming in on budget or on time.

# of Change Orders        =    Cost Overspend (predictor)

Project Budget

How often can Indicators be updated?  

Indicators can be updated as frequently as the data they are drawn from is updated. Some examples:

Claims Information … Daily

Payroll Information … Monthly

Construction Scheduling … Quarterly

How is change measured with an Indicator?

Change is typically measured by looking at ratios between time periods relative to the data

After you develop your portfolio of KIs, you need to establish regular reporting.  Whether you produce reports on KIs manually or with a business intelligence system, you need to provide timely, accurate and actionable information.  A common vocabulary supported by a data dictionary is useful.  Each data field must be defined, the original source identified, and the valuation date.  The data dictionary provides a common information infrastructure required to deliver a single version of truth.

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It is common in the early stages of development that users find that their data source is not accurate, but this is actually a big benefit of implementing a reporting program because you improve your organizations understanding and management of data.  Do not wait for perfection though, rather communicate out that the reports when first reviewed may seem “incorrect” and that part of the benefit of your ERM program is to help the organization obtain and communicate better information. Expect also that a Key Indicator that you thought was going to be brilliant may end up not being that useful and you will need to make modifications or abandon that particular KI.

Key Takeaway: Implementing ERM takes Energy and Creativity; measuring, monitoring and reporting data is a key component of an ERM program.  Develop Key Indicators based on your organizations objectives and the risks that impact those objectives.  Deliver the information in a timely manner with a data dictionary that explains the data.  Be prepared to continuously update and improve your data and reporting.

Remember — It’s not Risk Management, its Change Management!

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Wawa’s Director of Risk Management knows that harnessing data and analytics will be key to surviving the rapid pace of change that heralds new risk exposures.
By: | July 27, 2017 • 5 min read

R&I: What was your first job?

My first job was at the age of 15 as a cashier at a bakery. My first professional job was at Amtrak in the finance department. I worked there while I was in college.

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

A position opened up in risk management at Wawa and I saw it as an opportunity to broaden my skills and have the ability to work across many departments at Wawa to better learn about the business.

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

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The advancements in analytics are a success for the industry and offer opportunities for the future. I also find value in the industry focus on emerging and specialty risks. There is more alignment with experts in different industries related to emerging and specialty risks to provide support and services to the insurance industry. As a result, the insurance industry can now look at risk mitigation more holistically and not just related to traditional risk transfer.

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

Developing the talent to grow with the industry in specialization and analytics, but to also carry on the personal connections and relationship building that is a large part of this industry.

Nancy Wilson, director, quality assurance, risk management and safety, Wawa Inc.

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

I have had successes at all of the RIMS events I have attended. It is a great opportunity to spend time with our broker, carriers and other colleagues.

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

I think the biggest challenge facing most companies today is related to brand or reputational risk. With the ever-changing landscape of technology, globalization and social media, the risk exposure to an organization’s brand or reputation continues to grow.

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

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The changing consumer demands and new entrants into an industry are concerning. This is not necessarily something new but the frequency and speed to which it happens today does seem to be different. I think that is only going to continue. Companies need to be prepared to evolve with the times, and for me that means new risk exposures that we need to be prepared to mitigate.

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

I try to be optimistic about most things. I think the economy ebbs and flows for many reasons and it is important to always keep an eye out for signs of change.

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

I am fortunate to have opportunities professionally that make me proud, but I have to answer this one personally. I have two children ages 12 and 9 and I am so proud of the people that they are today. They both are hardworking, fun and kind. Nothing gives me a better feeling than seeing them be successful. I look forward to more of that.

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

This is really hard as there are too many favorites. I do prefer books to movies, especially if there is a movie based on a book. I find the movie is never as good. I have multiple books going at once and usually bounce back and forth between fiction and non-fiction.

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

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I have eaten at a lot of different restaurants in many major cities but I would have to pick Horn O’ Plenty in Bedford, PA. It is a farm to table restaurant in the middle of the state. The food is always fresh and tastes amazing and they make me feel like I am at home when I am there. My family and I eat there often during our trips out that way.

R&I: What is your favorite drink?

I do love a good cup of coffee (working at Wawa helps that). I also enjoy a good glass of wine (red preferably) on occasion.

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

Vacations aside, I do get an opportunity to travel for work and visit our food suppliers. The opportunities I have had to visit back to the farm level have been a very interesting learning experience. If it wasn’t for my role, I would have never been able to experience that.

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

My husband, kids and I recently did a boot-camp-type obstacle course up in the trees 24 feet in the air. Although I had a harness and helmet on, I really put my fear of heights to the test. At the end of the two hours, I did get the hang of it but am not sure I would do it again.

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

The first people that come to mind are those who are serving our country and willing to sacrifice their own lives for our freedom.

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

Every day is different and I have the opportunity to be involved in a lot of different work across the company.

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

My husband and children have a pretty good sense of what I do, but the rest of my family has no idea. They just know I work for Wawa and sometimes travel.




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