Risk Management

The Profession

Jacques Arragon on earning management’s trust, focusing on education, and Roger Moore as the best James Bond.
By: | August 4, 2014 • 4 min read

R&I: What was your first job?

I interned at Guy Carpenter in New York City, which was a memorable learning experience. After graduating from Temple, I was hired as a risk analyst in Ford Motor Co.’s global risk management department.

R&I: How did you come to work in risk management?

My majors were Risk Management & Insurance and Finance. I became very focused on the risk side at Temple, which produced my first job opportunity in that field.


Jacques Arragon, vice president, risk management, Penn National Gaming, Inc.

R&I: Did you come to the U.S. solely to attend Temple? What attracted you to the school?

I came to the U.S. to finish my undergraduate degree at Temple… . Temple at the time was No. 1 or 2 in the country for the risk management & insurance major, which was the main reason for choosing it. My American Business School in France (CEFAM) partnered with various colleges in the U.S., including Temple.

R&I: What is the risk management community doing right?

The focus on risk management education is tremendous — which is critical for our industry’s succession planning. … Many insurers are realizing that their workforce is aging and succession planning is critical to remain competitive in business. As such, many companies are hiring college graduates and teaching them underwriting, broking, risk management, etc. … RIMS and other risk management foundations provide more and more opportunities for current college students to find internships.


R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The gradually evolving role and increased visibility of the risk management function. Risk management morphed from just being perceived as an insurance purchase function to a valued business function.

R&I: What emerging commercial risk most concerns you?

Cyber risk is most definitely in the forefront today due to the increased reliance on technology for many business functions.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?
The U.S. economy has been slowly improving; however, I believe that we are in a new normal. Confidence levels are nowhere near the levels of a few years ago. Hopefully, business and political leaders have learned from their past errors in judgment.

R&I: Who is your mentor and why?

The most influential individual in my career was Dan Sobscynski, my first boss out of college at Ford Motor Co. He was extremely focused on risk management/insurance education and excellence, and believed risk managers can make a difference. The most important takeaways were to always set high level of expectations for yourself and your insurance partners, and as risk managers, always know more than your brokers! He unfortunately passed away in 2010.

R&I: What have you accomplished that you are proudest of?

Personally, marrying my soul mate and raising (continuous process) two daughters. Professionally, successfully bringing risk management awareness at all levels at Penn and earning management’s trust.

R6-14p42_Profession.inddR&I: How were you able to get management’s attention?

It was result-based. We experience many claims of various natures in our industry and our experience has been very positive with our insurance partners.  However, even when we faced adversity, we were ultimately successful in achieving our goals. It is my belief that trust is a byproduct of positive outcomes of real-life risk challenges.


R&I: How many e-mails do you get in a day?

Too many! Between 70 and 80.

R&I: What’s the best restaurant you’ve ever eaten at?

The best restaurant for its atmosphere and eclectic menu was Pomegranates in London — it unfortunately closed a few years ago.

R&I: What is your favorite drink?

Sparkling water (I know — very boring).

R&I: What is the most unusual/interesting place you have ever visited?

I loved Rome for its endless history.

R&I: What is the riskiest activity you ever engaged in?

Zip lining in Costa Rica in June!

R&I: What is your favorite book or movie?

Any James Bond movie!

R&I: Who is the best James Bond?

Roger Moore would be my favorite.

R&I: What about this work do you find the most fulfilling or rewarding?

Knowing that I have an impact on preventing employees and guests from injury as well as protecting the company when unfortunate circumstances occur.

R&I: What do your friends and family think you do?

They are still not sure.

R&I: What insurance carrier do you have the highest opinion of?


It would be unfair to pinpoint just one. I have a few insurers around the globe with which I enjoy true partnerships whereas they are committed to long-term relationships, spend time understanding my risks, and are there when I need them the most and treat me fairly.

R&I: How much business do you do direct versus going through a broker?

All my placements are through brokers however … I am constantly in direct communication with my major insurance partners.

The R&I Editorial Team can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of gtnews.com. He can be reached at riskletters.com.