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

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]