2222222222

Risk Insider: Jean Nkamdon

Lessons From The Trenches: Lesson #1

By: | June 21, 2017 • 2 min read
Jean Nkamdon is the Risk Management and Compliance Manager at The Washington Post & Companies, which publishes the Washington Post. Nkamdon, a CPA, CFE and a RIMS-CRMP, has both domestic and international cross industries audit, attest, and risk consulting advisory experience. He can be reached at [email protected]

In my years in risk management I couldn’t help but identify three constant lessons that keep popping up for me — and every time I ignored one of them I paid for it.

The first lesson? Know the odds.

In everything know the odds, the Gods say!!!  In my years traveling as a consultant I often spent a lot of time at the airport. Every time I saw a plane land or take off I couldn’t help but wonder how everything had to go just right in order to make that happen.

Advertisement




Nowadays frequent travelers probably never give so much of a thought to this technological wonder. Passengers, more often than not, are mostly concerned about pretzels, blankets and ever-shrinking legroom.

But I have noticed that pilots, on the other hand, never take any flight for granted. Their caution might seem counterintuitive, because statistically flying has proven to be a rather safe means of transport — safer certainly than train or automobile travel.

Even so, every passenger with an ounce of natural curiosity has listened intently as their flight crew performs its a rigorous pre-flight/post flight checklists. I’ve also observed pilots performing a visual inspection of their aircraft, regardless of the type of airplane or the airport size.

I’d venture to say that the record of safety of air travel hinges upon this meticulous approach to making sure that all the “t’s” are crossed and all the “i’s” are dotted. Plane crashes may be rather rare with the sophistication of technology today. But maybe that’s because pilots and the rest of the crew understand that even one crash is one too many.

For risk practitioners, it would be beneficial to spend the time truly understanding the risks facing their organizations, whether these risks are internal or external. This might mean engaging with management to understand the strategic objectives of the organization. It might mean engaging internal constituents to understand what keeps them up at night.

Plane crashes may be rather rare with the sophistication of technology today. But maybe that’s because pilots and the rest of the crew understand that even one crash is one too many.

Ultimately, it will mean working with external parties such as brokers and insurers to help them see your organizations’ risks from through a shared lens. Only when they have the full picture of the risks facing your organization can risk transfer — if there is a case for it — be tailored to provide the kind of coverage that the organization truly needs.

While understanding the odds does not in itself eliminate risks, it is crucial to the crafting of the appropriate response to any risk that would be onerous for the organization to bear.

Advertisement




This approach, for instance, would help those in charge of risk weigh the facts of their organization’s risk profile on one hand, against its risk appetite in the accomplishment of strategic objectives.

The upside to understanding the odds is that it helps those in charge of risk management in fully grasping the real exposures facing the organization, in understanding from the markets the coverage available or that could be available, and in developing an effective risk transfer partnership and ultimately establishing credibility with the markets.

I’ll cover lesson #2 and #3 in future Risk Insider articles — stay tuned.

More from Risk & Insurance

More from Risk & Insurance

2018 Most Dangerous Emerging Risks

Emerging Multipliers

It’s not that these risks are new; it’s that they’re coming at you at a volume and rate you never imagined before.
By: | April 9, 2018 • 3 min read

Underwriters have plenty to worry about, but there is one word that perhaps rattles them more than any other word. That word is aggregation.

Advertisement




Aggregation, in the transferred or covered risk usage, represents the multiplying potential of a risk. For examples, we can look back to the asbestos claims that did so much damage to Lloyds’ of London names and syndicates in the mid-1990s.

More recently, underwriters expressed fears about the aggregation of risk from lawsuits by football players at various levels of the sport. Players, from Pee Wee on up to the NFL, claim to have suffered irreversible brain damage from hits to the head.

That risk scenario has yet to fully play out — it will be decades in doing so — but it is already producing claims in the billions.

This year’s edition of our national-award winning coverage of the Most Dangerous Emerging Risks focuses on risks that have always existed. The emergent — and more dangerous — piece to the puzzle is that these risks are now super-charged with risk multipliers.

Take reputational risk, for example. Businesses and individuals that were sharply managed have always protected their reputations fiercely. In days past, a lapse in ethics or morals could be extremely damaging to one’s reputation, but it might take days, weeks, even years of work by newspaper reporters, idle gossips or political enemies to dig it out and make it public.

Brand new technologies, brand new commercial covers. It all works well; until it doesn’t.

These days, the speed at which Internet connectedness and social media can spread information makes reputational risk an existential threat. Information that can stop a glittering career dead in its tracks can be shared by millions with a casual, thoughtless tap or swipe on their smartphones.

Aggregation of uninsured risk is another area of focus of our Most Dangerous Emerging Risks (MDER) coverage.

The beauty of the insurance model is that the business expands to cover personal and commercial risks as the world expands. The more cars on the planet, the more car insurance to sell.

The more people, the more life insurance. Brand new technologies, brand new commercial covers. It all works well; until it doesn’t.

As Risk & Insurance® associate editor Michelle Kerr and her sources point out, growing populations and rising property values, combined with an increase in high-severity catastrophes, threaten to push the insurance coverage gap to critical levels.

This aggregation of uninsured value got a recent proof in CAT-filled 2017. The global tally for natural disaster losses in 2017 was $330 billion; 60 percent of it was uninsured.

Advertisement




This uninsured gap threatens to place unsustainable pressure on public resources and hamstring society’s ability to respond to natural disasters, which show no sign of slowing down or tempering.

A related threat, the combination of a failing infrastructure and increasing storm severity, marks our third MDER. This MDER looks at the largely uninsurable risk of business interruption that results not from damage to your property or your suppliers’ property, but to publicly maintained infrastructure that provides ingress and egress to your property. It’s a danger coming into shape more and more frequently.

As always, our goal in writing about these threats is not to engage in fear mongering. It’s to initiate and expand a dialogue that can hopefully result in better planning and mitigation, saving the lives and limbs of businesses here and around the world.

2018 Most Dangerous Emerging Risks

Critical Coverage Gap

Growing populations and rising property values, combined with an increase in high-severity catastrophes, are pushing the insurance protection gap to a critical level.

Climate Change as a Business Interruption Multiplier

Crumbling roads and bridges isolate companies and trigger business interruption losses.

 

Reputation’s Existential Threat

Social media — the very tool used to connect people in an instant — can threaten a business’s reputation just as quickly.

 

AI as a Risk Multiplier

AI has potential, but it comes with risks. Mitigating these risks helps insurers and insureds alike, enabling advances in almost every field.

 

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