Risk Management

The Profession

Foster Farms’ director, corporate treasurer knows that risk managers need to graduate from a “necessary evil” to a true business partner in their companies.
By: | August 31, 2016 • 4 min read

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R&I: What was your first job?

I first started working in high school scanning accounts payable invoices and washing cars on the side. I consider my first career job to be when I graduated college as an internal auditor.

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

Just natural career progression. Parts of risk management have been a function of my positions throughout my career and even more integrated into my current position at Foster Farms.

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

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Using data to better understand and assess risk, which I think is making the overall process more efficient and cost effective.

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

I think we need to continue progressing as a value-added partner to the business and support for the C-suite. As an internal auditor for a large public company, we spent a lot of time improving our processes and procedures to show that we were a business partner and not a “necessary evil.” As risk managers, we can bring a lot to the table and are an important part of the business’ success and sustainability.

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

Expectation and flexibility. I think the expectation of risk management has continued to evolve and the role has continued to expand, especially as we continue to push for becoming a stronger business partner. I’ve also continued to see more flexibility with the insurance carriers in structuring programs to meet the individual needs of the business and key risks. There is more of a partnership between the carriers and the business in managing the risk and developing strong programs.

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

Right now, I am most concerned about increasing regulatory and social risk. The evolving USDA standards and requirements on food companies, along with the consumers’ expectations and how quickly they can influence new trends and social movements are both challenges for us.

“I like to question the processes, procedures and challenge the status quo, which has generated savings and overall improvements for the company.”

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

That varies by line of coverage. Based on more recent changes, SwissRe and Zurich have been great partners for us and continue to hold lead positions on different programs when others were exiting the space. They both continue to participate in various programs and support our business.

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

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We work 100 percent with a broker.

R&I: Is the contingent commission controversy overblown?

I think so. It seems a lot of controversy comes from the thought that brokers may not be making the best decision for policyholders when placing coverage in order to earn additional commission. But if the risk manager stays involved in the annual renewal process and is the ultimate decision-maker, I think the risk is minimized.

I generally require a marketing of our programs every year and review both pricing and coverage options, and instruct our broker where to place business. If that decision happens to earn the broker some additional commission from the volume, it doesn’t really cause concern for me.

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

I am optimistic for the longer term given the resiliency of the U.S. economy, but a little pessimistic for the shorter term. There are big decisions coming down the pipeline that are dividing the nation, and who knows how the markets and economy will react once the dust settles.

R&I: Who is your mentor and why?

Jana Owens, my first boss out of college. She really helped formulate my attitude toward business, developing relationships and setting goals to become better. We still keep in contact and have worked off and on together over the years.

R&I: What accomplishment are you proudest of?

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From a career standpoint, I’m happy that I have always been able to find ways to improve the areas I have been given responsibility over. I like to question the processes, procedures and challenge the status quo, which has generated savings and overall improvements for the company.

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

Generally over 100 emails. That number will quadruple when I take a vacation, because for some reason everything happens when you try and take a day off.

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

There is a little place called Frisco Deli in Jackson, Miss., that has the best ribs. It was a surprise because there are a lot of sandwiches on the menu, hence deli in the name, but the ribs are amazing and it’s a must stop when I am in the area.

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

That’s a good question. They think I am always out having fun, so they have a lot to learn!




Katie Siegel is a staff writer at Risk & Insurance®. 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]