Fork in the River

At the juncture of the Red and Assiniboine Rivers sits “The Forks”, an area of Winnipeg steeped in traditions 6,000 years old as an aboriginal trade center. Here, the nomadic Cree, Ojibwa and other First Nations met to trade, followed later by European fur traders who gave the gathering place its name in the mid-18th century.

Come October, The Forks will once again welcome traders of a sort when risk managers, brokers and insurers descend on the city of Winnipeg for the 29th annual RIMS Canada Conference. Risk managers are in many respects at a “fork in the river”, coming off a short but intense hard insurance market and the corporate governance scandals which have captured headlines over the past three years. Now, they sit on the cusp of a softening insurance market and must decide which path to take in the future. Hence, the theme of the conference, “portage”.

“Portaging has historically involved overcoming obstacles by using alternative routes and hard work. Risk managers are currently facing circumstances where they have to find new ways of doing things,” explains conference co-chair John Rislahti, director of insurance & risk management for the finance department of the Province of Manitoba. “Difficult insurance markets are forcing individuals, organizations and industries to find risk financing alternatives. They are working hard at making the ‘management of risk’ an integral part of their organizations. Organizations that fail to apply these tools may be ‘swept over the rapids’ by coming events or competition.”

Co-chair Mike Maida, corporate risk manager for Agricore United, agrees. The role of risk management continues to evolve and it is being shaped and influenced by governance changes, and worldwide events. Risk managers need to meet these challenges head on and portage around them, seizing opportunities that each challenge brings.” This kind of creativity and initiative have helped many risk managers heighten their profile within their organizations “to levels unimaginable only a few years ago”, he adds.

HEALING TIME

The trade relations between insurers and risk managers have been strained since 2001, with premium rates increasing substantially across many commercial lines, and terms and conditions tightening. Many risk managers were forced to take much higher deductibles, and some have seriously considered implementing alternative forms of risk transfer (ART) such as captives.

Now, quarterly surveys of risk managers and their brokers are showing a market in transition from hard to soft. Rates are flattening, even decreasing in some lines, and some “troubled” lines such as directors’ and officers’ (D&O) covers are seeing rate increases drop off and market capacity return. Thus the Winnipeg conference represents a chance for fences to be mended between insurers and their commercial clients, organizers say. “I believe there is still some apprehension and cautiousness in the climate between insurers and risk managers. Most risk managers are still hurting from major premium increases and reductions in coverage imposed by insurers and reinsurers,” says Rislahti. “This is an ideal time for the three groups [risk managers, brokers and insurers] to gather together and have some face to face discussions.”

The conference also provides opportunities to those risk managers who continue to seek alternatives to traditional insurance, organizers note. Not only will these alternatives be featured in the conference program, but a two-day, post-conference “RIMS Fellow” workshop is also planned to feed risk managers’ with more information on ART.

ENTERPRISING IDEA

While the shifting insurance market has dominated headlines, Rislahti says this issue is not the only risk managers will be focused on at the conference. “I think the most frequent discussions will be about insurance rates, but the longest and loudest discussions will be about integrated or enterprise-wide risk management (ERM) and how to implement it.”

ERM has been bandied about for several years with little focus it seems.

But, with the increased profile of corporate risk management following 9/11, corporate failures, and new legislation in Canada placing greater emphasis on employer responsibility for employee safety, risk managers are taking this opportunity to push ERM at the board level. Both Rislahti and Maida strongly support this movement, with both actively involved in implementing ERM within their own organizations.

Furthermore, the International Federation of Risk & Insurance Management Associations (IFRIMA), of which Canadian Susan Meltzer is president, recently released a white paper on ERM, not only laying out the reasons why ERM should be implemented across organizations, but stressing the need to have risk professionals placed high enough up the corporate ladder to make this happen. A survey conducted after last year’s RIMS Canada conference in Victoria found that risk professionals placed the highest importance on ERM and corporate governance as issues they want to see highlighted at the Winnipeg conference. To this end, Maida explains, an expert panel of risk managers is being gathered for this year’s event to discuss its practical implementation across industries from an international perspective. Meltzer will also be on hand in Winnipeg, to lead an interactive panel discussing issues chosen by delegates through electronic voting the same day.

Again this year the conference program will feature a healthcare specific stream, but organizers point out that the conference has also become a meeting place for risk managers – representatives from the electrical industry, municipal governments, provincial governments and the federal government all use the conference as a chance to hold meetings. However, the conference will also stress the need for risk managers to learn best practices for interacting with other players in the corporation, in keeping with their need to spread the risk management message, and the role risk management should play as an integral part of overall corporate strategic planning. “The conference will promote the ideals of teamwork and the benefits of cross-pollination with other professions such as the accountants and auditors,” Maida explains. “We all have a role to play and each is unique, we need to ensure we’re part of the team that can provide solutions.”

VETERAN FORCE

Both Maida and Rislahti have long histories with RIMS Canada and its Manitoba chapter, each having served as chapter president in the past. Rislahti was last year’s recipient of the Don Stuart Award, recognizing his lifetime commitment to the profession, including his many years teaching other risk managers.

Rislahti’s career path was a winding one, following his graduation from the University of Manitoba with a science degree in 1970. After a few years spent studying and traveling, he joined Insurers’ Advisory Organization (IAO) in 1975 as a commercial insurance inspector. This was followed by a turn as risk manager for Inter-City Gas Corp. in the early 1980s, before joining the provincial government in 1986.

Maida also took an indirect course, similarly finding risk management by way of the insurance industry. After obtaining his degree in business administration from Red River College in Winnipeg, he spent several years in the insurance sector in various roles, including a stint as an auditor with Manitoba Public Insurance (MPI). In 1995, he turned to risk management, first with Manitoba Pool Elevators and then transitioning to corporate risk manager with Agricore – the merger of the Manitoba and Alberta wheat pools.

Both risk managers are naturally proud to host the industry’s largest conference in their hometown, and say they welcome the chance to help delegates experience the best Winnipeg has to offer. But, they also hope risk managers will gain insights to help them chart the future direction of their organizations. “I hope that delegates will walk away ready to make positive changes and contributions to the risk management effort at their respective organizations,” comments Maida. “I hope they leave energ ized challenged and motivated.”