Column: Risk Management

Know Your Weakest Links

By: | July 27, 2017 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I worked in the oil and gas pipeline industry as a chief engineer. Prior to placing any pipeline system into the ground, we hydrostatically tested the pipe for 24 hours at increased pressures. We would fill the pipe system with water, hike up the pressure and watch for leaks or weaknesses in the pipe, joints or welds. This was an assurance test.

Advertisement




It warranted that the system, once operational, could take unexpected pressure. It highlighted in advance what weaknesses to expect so we could prepare to take appropriate action.

Fast forward to my days now in risk management. I again find myself conducting similar stress tests with financial institutions.

Instead of using water, we pressure up the organization using risk scenarios and test the effect on business processes and strategies and see if there exists adequate capital to support unexpected perils. We look to see where the organization springs leaks and we plug them.

For non-financial organizations, I think of airlines. Great benefits are derived from stress testing crew scheduling procedures for example.

What happens if you don’t get to stress test in time and your critical system functions and strategic controls come under severe or unexpected pressure?

We can simulate severe weather events and examine the effect on the potential cancellation or delay of thousands of flights.

Individual weather events don’t need to be overly extreme to cripple a crew-scheduling system. It’s good practice to model concurrent and multiple weather events to highlight more probable level of stress on, say, a staffing system.

Important questions to ask to start a stress test are:

  • What are our key business processes that support our strategy?
  • Do we have any new organizational norms or values?
  • What key strategy controls do we have in place?
  • How strong are these controls?

But what happens if you don’t get to stress test in time and your critical system functions and strategic controls come under severe or unexpected pressure?

As of late, one very large organization whose systems seem to be feeling such strategic pressures appears to be the U.S. government. The U.S. Constitution’s checks and balances act as democracy controls intended to tyrant-proof the whole operation.

But have these controls been stress tested knowing that the founding norms and beliefs are changing?

Advertisement




As such, are the Justice Department, law enforcement and regulatory systems still appropriate safeguards? Is the system abuse-proof? Is the system poised to spring a leak?

I am not a political scientist. I am a pipeline engineer who now does risk management. But the rules of good management and stress testing still apply.

Operating in an environment where systems and processes are under risky pressure can be perilous.  When the system starts sprouting leaks, is the plan to simply to put a finger in every hole? And what happens when we run out of fingers?

Risk lives in our weakest links and no matter what organization, it is best to be better prepared. &

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?

Advertisement




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?

Advertisement




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?

Advertisement




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]