Risk Management

The Profession

Director of risk management Joseph Mazza says heightened visibility is good for risk managers, but cyber remains a top challenge.
By: | October 15, 2015 • 4 min read

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R&I: What was your first job?

During my senior year in high school, [I worked] as a custodian every night and full time on Saturdays for $1 an hour. I had the run of the school. It turned into a summer job at $1.25 an hour after senior year!

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

Having started as an insurance agent in life, health, and then property and casualty in 1975 at John Hancock … I wanted to explore company exposures beyond the insurance field. … I worked for a multiline commercial insurance agency and then a national retailer insurance program for franchisees with Ace Hardware for 20-some odd years. I enrolled in the Associate in Risk Management (ARM) program in 1997 and 1998, and was hired the next year by DaimlerChrysler.

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

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For risk management, the biggest change has been heightened visibility and a better understanding of what it is and how it can drastically impact the bottom line of any entity. For insurance, it’s the speed and communication between underwriters and the producer with the advent of technology. Keep in mind I started in the “write back” days of waiting and waiting for snail mail to arrive.

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

As everyone currently considers data breaches a primary concern, I will go with that one too, and have implemented an insurance policy for my district accordingly. … The main focus here would be protection of data for employee records, student records, financial aid records and other important data we have in our computer systems. If we had a breach, it would be devastating.

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Joseph Mazza, Director, Risk Management/ ADA Coordinator, MiraCosta Community College District

R&I: How would you rate the insurance industry’s response to cyber risk?
Excellent so far with corresponding rate increases coming now that more purchasers are coming on board. Those insured losses need to be paid by someone. I think the frequency of cyber risk is increasing, and that frequency can cause a big severity problem.

R&I: Who is your mentor and why?

Most recently, Edwin Hall, a former regional manager with DaimlerChrysler, who had a great way of understanding and managing people. For my insurance career, it was Al Klipstein, who was an agent when I was with John Hancock. His personality matched mine and I learned so much about the business from him as he was highly successful and a great source of information.

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

Building relationships with colleagues in and out of my entity is the main one. I have been able to implement important driver authorization programs for district drivers. Serving as the San Diego RIMS chapter president for two years in 2012 and 2013 and being awarded the Risk Professional of the Year designation for my chapter in 2008 are very special to me too. I have found that my sense of humor has really helped break the ice and build rapport and it makes my life and career more enjoyable.

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

I like both ACE and AIG as they are both equally high-quality carriers, with AIG returning to an important spot in the marketplace since the financial crisis.

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

Being a born optimist, I am hopeful that the free market system really gets back to the growth days we saw several decades ago.

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

Antoine’s Restaurant in New Orleans. My wife and I once had a meal there in the early ’90s that ended with the server pouring a liquor-based sauce for dessert on the white tablecloth and lighting it! No one got burned and it was just a wonderful dinner. I’m not sure they still do that, but it was special.

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

Cumberland Falls State Park near Corbin, Ky., has a moonbow, the only one in the Western Hemisphere. You know what a rainbow is — here there is an actual “moonbow” at night!

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

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Forcing myself to speak publicly, for someone with the fear of doing so, is very risky. It was dreadful the first few times. After that, I learned to find a few people to focus on in the front row and to make eye contact with them. If there’s a large group I will stand at the front door and introduce myself as the speaker or presenter. Now you aren’t speaking to a room of strangers; you’re not going in cold. It’s a technique that a lot of people can use.

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

Since we are an educational institution, what is most fulfilling to me is serving faculty and students in a support role and making our district a great place to learn and succeed.

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

They know I was the “insurance guy” for years and then when risk management came along they did not understand it … . At one time, I told them I was in the witness protection program and earned a good living doing that — just kidding!

Janet Aschkenasy is a freelance financial writer based in New York. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]