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Risk Insider: Chris Mandel

Predicting the Unpredictable

By: | May 15, 2017 • 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]
Topics: Risk Insider

One thing that has become commonplace in the last 15 years is the unexpected: 9-11 was unexpected. Hurricane Katrina was unexpected. The rise of ISIS was unexpected. Target Corporation’s point of sale hack, now valued at more than $1 billion total impact, was unexpected. Donald Trump’s 2016 election to president of the United States was unexpected (just ask Hillary Clinton).

Thus the unexpected, or commonly considered “emerging risks,” are now less unexpected. Another way to think about this is that those “black swans” that were at one time unknown to exist, have increasingly been discovered in their hiding places, often too late to prevent and sometimes too late to effectively mitigate their impact.

While most risk practitioners have come around to agreeing that one of the better synonyms for risk is “uncertainty,” there is little agreement about how to better get ahead of the new reality of this increasing uncertainty.

We must become more capable of fulfilling the growing expectation of being reliable, strategic advisors to management and governance in ways that directly and indirectly improve the chances of success through mission accomplishment.

Yet the most common question I used to receive from senior management and boards was “tell me what I don’t know or can’t see or have no idea is coming that could destroy the plan or even the organization itself.”

Perhaps they thought I had a crystal ball? I did not; I do not.

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And so risk leaders are increasingly challenged with the expectation of identifying and addressing those risks that few, if anyone, can see or understand and yet can either be massively destructive or, on the flip side, sizable lost opportunity.

A paucity of information is usually a key hurdle. Reluctant risk ownership is another. Convincing decisionmakers of their relevancy can be the showstopper, especially in our common environments of constrained resources. Yet as risk leaders, we are expected to be strategic and have vision for things others can’t see or even imagine.

Scenario and stress testing may be helpful. Monte Carlo simulations may be less so. This by its very nature is a challenge that I think calls for more qualitative than quantitative solutions, more acceptable in some environs than others — less scientific, more nuanced. Both will be important to the solution.

No matter the magnitude of the challenge, the big win for risk leaders of the future will be the ways in which uncertainty can be lowered by reducing the number and impact of unexpected risk events. While no small task, with emerging tools such as those enabled by artificial intelligence (AI), we can do this.

We must become more capable of fulfilling the growing expectation of being reliable, strategic advisors to management and governance in ways that directly and indirectly improve the chances of success through mission accomplishment.

This does not mean we must have the precisely right answer to every potential risk. It does mean we need to improve management’s understanding and awareness of the possibilities and what can be done about them, moving measurably beyond the probabilities that have normally been undergirded by historical data enabling reliable prediction.

We can do it. We will be expected to do it to earn our keep. We must do it to validate the discipline as the true profession to which it has for so long aspired.

More from Risk & Insurance

More from Risk & Insurance

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]