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Risk Insider: Chris Mandel

Insurtech or RiskTech?

By: | April 3, 2018 • 3 min read
Chris Mandel is SVP, strategic solutions for Sedgwick and Director of the Sedgwick Institute. He is a long-term risk management leader and a former president of RIMS. He can be reached at [email protected]

I was recently invited to participate at a technology-focused forum at a Siemens location in Houston, Texas. The meeting was centered on the technology that Siemens built to better manage operational risk among energy companies.

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While the meeting was seemingly narrow in its design and intent, the exchange of ideas and discussions became broad and far-reaching as attendees ranged from insurers, reinsurers, brokers, consultants and other risk stakeholders.

The core question posed at this meeting was whether or not Siemens’ insurtech solution could be expanded and applied to the broader energy sector and beyond.

Within this context, my role was to share a more strategic message related to the bigger picture of risk and the increasing challenge it has become to most risk leaders. The ensuing discussion led me to a “light bulb moment” that I believe others will find interesting.

While the big picture of strategic risk is often seen as an enterprise-wide practice that attempts to apply the fundamental risk process to all significant risks, the insurtech world seems singularly focused on technology that solves insurance-related problems.

This is well and good, as I continue to believe that insurance is a critical mitigation and risk transfer tool, whose importance to efficient commerce and economies worldwide cannot be understated.

However, there is a bigger picture, both with respect to risk itself and in the world of technology, and that is risk technology.

My light bulb moment was when I realized that as important as insurance — and by extension insurtech — is, “risktech” is the future of technology that will be the most helpful to risk leaders going forward.

Even today, cyber risk is still often addressed and managed by insurance solutions. And yet while necessary, those techniques are often very limited in their affect.

I am not talking about today’s popular governance, risk management and compliance systems framework, but rather the technology solutions that will help mitigate risk by more effectively navigating the digitization of the risk profile of organizations.

I believe this emerging reality was signaled first and most significantly by the challenges of cyber risk. Even today, cyber risk is still often addressed and managed by insurance solutions. And yet while necessary, those techniques are often very limited in their affect.

For example, most high-profile hacks result in related insurance proceeds totaling a few hundred million dollars; and yet, total loss costs will often exceed $1 billion.

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Admittedly, insurance is not available for much of the consequences of these events. Nevertheless, an organization’s board of directors, shareholders, executives and customers may have bigger expectations.

While I am not saying there aren’t other mitigation techniques available to address cyber events, I am suggesting that we need more of them. More specifically, we need other “risktech” mitigation tools to manage the risks of an increasingly digitized risk profile.

The good news is that these solutions are already beginning to emerge and are broadening the technology solution set that was previously tied to insurable risks.

The remaining question is whether or not risk leaders are up to this new world challenge and how they’ll respond. But, that’s the subject of another day.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

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]