Risk Insider: Dorothy Gjerdrum

ERM’s Language Problem

By: | May 18, 2017 • 3 min read
Dorothy Gjerdrum is senior managing director of Arthur J. Gallagher & Co.’s Public Sector Practice and managing director of its Enterprise Risk Management Practice. She can be reached at [email protected]

ERM has a language problem.

Many of us moved from risk management to enterprise risk management (ERM) without updating our lexicon.  We now focus on taking a broader approach to managing risk while we continue to use terminology that limits our ability to implement that approach.  Two of the most important words that need deeper understanding and better articulation are “risk” and “uncertainty.”

It’s not hard to find writing that equates “risk” with negative outcomes.  Indeed, in a quick perusal of “Risk Insider” columns on ERM, there are numerous examples that describe “risk” as a threat and use the terms “risk” and “uncertainty” interchangeably.

It takes awareness and perseverance to update our language when it comes to risk; without that, we tend to fall back on common usage.  Dictionary definitions don’t help, since they typically rely on historic, common usage and that doesn’t support the evolving approach to managing risk.  Insurance dictionaries define risk as a probability or threat of damage, injury, liability, loss or negative occurrence.  Merriam-Webster offers four options: 1) “possibility of loss,” 2) “someone or something that creates or suggests a hazard,” 3) “the chance of loss” (and a few variations on that) and 4) “the chance that an investment will lose value.”  All of these definitions tie risk to negative outcomes.

ISO 31000 defines risk as the effect of uncertainty on your objectives.  It is not the effect alone, or the uncertainty alone, it is the intersection of those uncertainties with your objectives that creates risk.

Some practitioners try to get around that by adding words.  Examples include “risk and reward” or “risk and opportunity” (the connotation of “risk” is still negative in both) or the clumsy terminology “upside and downside” risk.  (The problem is that “upside and downside” describe potential effects or outcomes, not the risk itself.)  These expressions can be confusing and problematic and they do not help change the narrative.


However, even in common language, there are opportunities to expand our understanding.  To “take a risk” or say that something is “risky” acknowledges that the outcomes are uncertain.  Outcomes can be positive or negative, and are often a mix of both.  That starts to sound more like ERM, doesn’t it?

When we drafted the international standard on risk management, risk experts from around the globe spent an enormous amount of time working to get this right.  We knew that the definition itself would expand our thinking and refine our approach.

ISO 31000 defines risk as the effect of uncertainty on your objectives.  It is not the effect alone, or the uncertainty alone, it is the intersection of those uncertainties with your objectives that creates risk.  It’s an incredibly important distinction from the common usage definitions.  It keeps organizational objectives at the heart of the process and recognizes that not all uncertainties will have an impact upon strategy or objectives.  And the uncertainty that does affect strategy, goals or objectives doesn’t always affect the organization in negative ways; the ISO 31000 definition is neutral about the effects of uncertainty.

As our ERM programs evolve and we consider a broader range of uncertainties and outcomes, it is imperative that we become more exact in our use of language.  That will help us (and our clients) view risk – with clarity and precision – from a broader lens.

More from Risk & Insurance

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Risk Management

The Profession

After 20 years in the business, Navy Pier’s Director of Risk Management values her relationships in the industry more than ever.
By: | June 1, 2017 • 4 min read

R&I: What was your first job?

Working at Dominick’s Finer Foods bagging groceries. Shortly after I was hired, I was promoted to [cashier] and then to a management position. It taught me great responsibility and it helped me develop the leadership skills I still carry today.

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

While working for Hyatt Regency McCormick Place Hotel, one of my responsibilities was to oversee the administration of claims. This led to a business relationship with the director of risk management of the organization who actually owned the property. Ultimately, a position became available in her department and the rest is history.

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


The risk management community is doing a phenomenal job in professional development and creating great opportunities for risk managers to network. The development of relationships in this industry is vitally important and by providing opportunities for risk managers to come together and speak about their experiences and challenges is what enables many of us to be able to do our jobs even more effectively.

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

Attracting, educating and retaining young talent. There is this preconceived notion that the insurance industry and risk management are boring and there could be nothing further from the truth.

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

In my 20 years in the industry, the biggest change in risk management and the insurance industry are the various types of risk we look to insure against. Many risks that exist today were not even on our radar 20 years ago.

Gina Kirchner, director of risk management, Navy Pier Inc.

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

FM Global. They have been our property carrier for a great number of years and in my opinion are the best in the business.

R&I: Are you optimistic about the US economy or pessimistic and why?

I am optimistic that policies will be put in place with the new administration that will be good for the economy and business.

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


The commercial risks that are of most concern to me are cyber risks, business interruption, and any form of a health epidemic on a global scale. We are dealing with new exposures and new risks that we are truly not ready for.

R&I: Who is your mentor and why?

My mother has played a significant role in shaping my ideals and values. She truly instilled a very strong work ethic in me. However, there are many men and women in business who have mentored me and have had a significant impact on me and my career as well.

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

I am most proud of making the decision a couple of years ago to return to school and obtain my [MBA]. It took a lot of prayer, dedication and determination to accomplish this while still working a full time job, being involved in my church, studying abroad and maintaining a household.

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

“Heaven Is For Real” by Todd Burpo and Lynn Vincent. I loved the book and the movie.

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


A French restaurant in Paris, France named Les Noces de Jeannette Restaurant à Paris. It was the most amazing food and brings back such great memories.

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

Israel. My husband and I just returned a few days ago and spent time in Jerusalem, Nazareth, Jericho and Jordan. It was an absolutely amazing experience. We did everything from riding camels to taking boat rides on the Sea of Galilee to attending concerts sitting on the Temple steps. The trip was absolutely life changing.

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

Many, many years ago … I went parasailing in the Caribbean. I had a great experience and didn’t think about the risk at the time because I was young, single and free. Looking back, I don’t know that I would make the same decision today.

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

I would have to say the relationships and partnerships I have developed with insurance carriers, brokers and other professionals in the industry. To have wonderful working relationships with such a vast array of talented individuals who are so knowledgeable and to have some of those relationships develop into true friendships is very rewarding.

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

My friends and family have a general idea that my position involves claims and insurance. However, I don’t think they fully understand the magnitude of my responsibilities and the direct impact it has on my organization, which experiences more than 9 million visitors a year.

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