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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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?


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?


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?


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]