Risk Management

The Profession

"Every experience — good, bad or indifferent — led me here and has put me in a position to make a real difference in our organization both personally and professionally."
By: | March 3, 2017 • 4 min read

 
R&I What was your first job?

I had a two-week stint at McDonald’s my freshman year of high school; so that probably doesn’t count. After that I worked as a server at a local restaurant.

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

I began as a multiline claims adjuster right out of college for three years. I then branched out and worked for a broker as a claims analyst and account executive for six and a half years before moving over to the employer side, first as the insurance and claims manager of a third party logistics’ risk management department and now as the risk manager of Staples.

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

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We are finally recognizing the value in going back to basics in the training and management of claims; as well as the importance of educating a corporation, from the executive level to the associate level, that risk management is more than just the department that secures insurance and manages workers’ compensation. We are now seen as the department that can actually improve the profitability of the organization.

R&I What could the risk management community be doing a better job of?

Risk managers have to think outside the box to determine how we can pay for the programs and tools necessary to effectively manage the organization’s total cost of risk. We need to take the time to figure out what tools or programs truly make sense and will mesh into our company’s culture. Throughout my career I have seen many programs and initiatives quickly crash and burn because they were not properly vetted. When deciding what tool, program or initiative we want to pursue, we have to realize we have one shot to sell the message to make it a reality.

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

The focus on big data and data analytics. It was a long time coming and I am glad it is here, but we do have to ensure the data we are relying upon is accurate, which I believe is the next evolution in data analytics. I think we are all seeing there are many inaccuracies, various perspectives and gaps in the data we are relying upon.

R&I What emerging commercial risk most concerns you?

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I think the evolution of cyber risk will always concern me. I always say, “if only they would use their powers for good, they could cure cancer!”

However, with the fast-paced nature of change, [the challenge of staying] relevant is right up there with cyber. Our brand is so important. At the end of the day, it is the reputation of our company at stake. We have to ensure that each associate, no matter what position they hold in our organization, understands their importance. Every one of our actions and decisions individually and collectively impact our brand every day in some way.

R&I Are you optimistic about the U.S. economy or pessimistic and why?

I look at the direction Staples is headed and I cannot help but be excited and optimistic. Other companies are in our position and their associates are just as dedicated to the success of their respective organizations as we are.

R&I Who is your mentor and why?

My father is my mentor. He worked hard all his life and learned to make a way out of no way. I feel blessed and take pride in everything I do because of the lessons he taught me and continues to teach me every day.

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

I would say the evolution of my career to bring me where I am today. Every experience — good, bad or indifferent — led me here and has put me in a position to make a real difference in our organization both personally and professionally.

R&I How many emails do you get in a day?

Is this a trick question? In this day and age, I think all we can do is prioritize and manage email. My team is in the process of utilizing RMIS to automate a lot of processes in our department to cut down on the email traffic.

R&I What is your favorite book or movie?

“The Godfather,” hands down, is my favorite movie. If it is on, I have to watch it.

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

Rabot 1745 in London. All meals have a cocoa-based theme … yum!

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

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I love the Caribbean and love St. Martin (Dutch), Curacao and Puerto Rico. The landscapes and cultures throughout the Caribbean are very interesting to me.

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

Driving down to a local beach in Mexico at the age of 18 with two friends, and not turning back when we came upon Mexican military [stopping visitors at the entrance] to the beach. We then proceeded to camp out on the beach with strangers. I look back and realize how incredibly lucky we were that nothing happened to us!

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

I can make a positive difference to Staples and to our individual associates.

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

A majority of my friends and family know my job has something to do with insurance and claims but they don’t firmly grasp all that I am responsible for as a risk manager.




Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Cyber Liability

Fresh Worries for Boards of Directors

New cyber security regulations increase exposure for directors and officers at financial institutions.
By: | June 1, 2017 • 6 min read

Boards of directors could face a fresh wave of directors and officers (D&O) claims following the introduction of tough new cybersecurity rules for financial institutions by The New York State Department of Financial Services (DFS).

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Prompted by recent high profile cyber attacks on JPMorgan Chase, Sony, Target, and others, the state regulations are the first of their kind and went into effect on March 1.

The new rules require banks, insurers and other financial institutions to establish an enterprise-wide cybersecurity program and adopt a written policy that must be reviewed by the board and approved by a senior officer annually.

The regulation also requires the more than 3,000 financial services firms operating in the state to appoint a chief information security officer to oversee the program, to report possible breaches within 72 hours, and to ensure that third-party vendors meet the new standards.

Companies will have until September 1 to comply with most of the new requirements, and beginning February 15, 2018, they will have to submit an annual certification of compliance.

The responsibility for cybersecurity will now fall squarely on the board and senior management actively overseeing the entity’s overall program. Some experts fear that the D&O insurance market is far from prepared to absorb this risk.

“The new rules could raise compliance risks for financial institutions and, in turn, premiums and loss potential for D&O insurance underwriters,” warned Fitch Ratings in a statement. “If management and directors of financial institutions that experience future cyber incidents are subsequently found to be noncompliant with the New York regulations, then they will be more exposed to litigation that would be covered under professional liability policies.”

D&O Challenge

Judy Selby, managing director in BDO Consulting’s technology advisory services practice, said that while many directors and officers rely on a CISO to deal with cybersecurity, under the new rules the buck stops with the board.

“The common refrain I hear from directors and officers is ‘we have a great IT guy or CIO,’ and while it’s important to have them in place, as the board, they are ultimately responsible for cybersecurity oversight,” she said.

William Kelly, senior vice president, underwriting, Argo Pro

William Kelly, senior vice president, underwriting at Argo Pro, said that unknown cyber threats, untested policy language and developing case laws would all make it more difficult for the D&O market to respond accurately to any such new claims.

“Insurers will need to account for the increased exposures presented by these new regulations and charge appropriately for such added exposure,” he said.

Going forward, said Larry Hamilton, partner at Mayer Brown, D&O underwriters also need to scrutinize a company’s compliance with the regulations.

“To the extent that this risk was not adequately taken into account in the first place in the underwriting of in-force D&O policies, there could be unanticipated additional exposure for the D&O insurers,” he said.

Michelle Lopilato, Hub International’s director of cyber and technology solutions, added that some carriers may offer more coverage, while others may pull back.

“How the markets react will evolve as we see how involved the department becomes in investigating and fining financial institutions for noncompliance and its result on the balance sheet and dividends,” she said.

Christopher Keegan, senior managing director at Beecher Carlson, said that by setting a benchmark, the new rules would make it easier for claimants to make a case that the company had been negligent.

“If stock prices drop, then this makes it easier for class action lawyers to make their cases in D&O situations,” he said. “As a result, D&O carriers may see an uptick in cases against their insureds and an easier path for plaintiffs to show that the company did not meet its duty of care.”

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One area that regulators and plaintiffs might seize upon is the certification compliance requirement, according to Rob Yellen, executive vice president, D&O and fiduciary liability product leader, FINEX at Willis Towers Watson.

“A mere inaccuracy in a certification could result in criminal enforcement, in which case it would then become a boardroom issue,” he said.

A big grey area, however, said Shiraz Saeed, national practice leader for cyber risk at Starr Companies, is determining if a violation is a cyber or management liability issue in the first place.

“The complication arises when a company only has D&O coverage, but it doesn’t have a cyber policy and then they have to try and push all the claims down the D&O route, irrespective of their nature,” he said.

“Insurers, on their part, will need to account for the increased exposures presented by these new regulations and charge appropriately for such added exposure.” — William Kelly, senior vice president, underwriting, Argo Pro

Jim McCue, managing director at Aon’s financial services group, said many small and mid-size businesses may struggle to comply with the new rules in time.

“It’s going to be a steep learning curve and a lot of work in terms of preparedness and the implementation of a highly detailed cyber security program, risk assessment and response plan, all by September 2017,” he said.

The new regulation also has the potential to impact third parties including accounting, law, IT and even maintenance and repair firms who have access to a company’s information systems and personal data, said Keegan.

“That can include everyone from IT vendors to the people who maintain the building’s air conditioning,” he said.

New Models

Others have followed New York’s lead, with similar regulations being considered across federal, state and non-governmental regulators.

The National Association of Insurance Commissioners’ Cyber-security Taskforce has proposed an insurance data security model law that establishes exclusive standards for data security and investigation, and notification of a breach of data security for insurance providers.

Once enacted, each state would be free to adopt the new law, however, “our main concern is if regulators in different states start to adopt different standards from each other,” said Alex Hageli, director, personal lines policy at the Property Casualty Insurers Association of America.

“It would only serve to make compliance harder, increase the cost of burden on companies, and at the end of the day it doesn’t really help anybody.”

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Richard Morris, partner at law firm Herrick, Feinstein LLP, said companies need to review their current cybersecurity program with their chief technology officer or IT provider.

“Companies should assess whether their current technology budget is adequate and consider what investments will be required in 2017 to keep up with regulatory and market expectations,” he said. “They should also review and assess the adequacy of insurance policies with respect to coverages, deductibles and other limitations.”

Adam Hamm, former NAIC chair and MD of Protiviti’s risk and compliance practice, added: “With New York’s new cyber regulation, this is a sea change from where we were a couple of years ago and it’s soon going to become the new norm for regulating cyber security.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]