Strengthening the Base

Risk and Insurance Management Society (RIMS) president Scott B. Clark describes himself as an “odd duck.” Certainly he is a rare breed in the sense that he knew from a very early age he wanted to go into the insurance and risk management business.

Clark was literally following in the footsteps of his father, who took over from his own father’s insurance business in 1961. At that time, Clark said, he “became somewhat interested” in the work of his father and grandfather. He subsequently went on to become the youngest person in the area to obtain his insurance license. Clark later received his Bachelor of Science in Business Administration from the University of Illinois.

As Clark’s professional career developed into the mid-1980s, he developed a background in insurance sales and marketing, underwriting and select claims work. He particularly took a liking to drafting insurance contracts. When asked if he ever considered going into law because of his interest in drafting contracts, he laughs and observes he often directed counsel on how to interpret contract terms; hence, he didn’t feel he needed to become a lawyer to understand them.

Clark also developed an interest in creating self-insurance programs. This led him to discover the world of public education. About 25 years ago, the superintendent of the Miami-Dade County School Board tried to recruit Clark into the public service fold. “I said I would give him two years,” Clark said. “That was 25 years ago.”

Clark is currently the risk and benefits officer for the School Board of Miami-Dade County, Florida. The school board is the fourth-largest in the United States, with more than 50,000 employees and 340,000 students. Clark’s responsibilities at the board include the management of its traditional risk operations, including property, casualty, employee benefits and loss prevention programs, in addition to the creation of an Enterprise Risk Management platform.

Clark said his initial attraction to working for the school board was the ability to “mould” a risk management model for the school board rather than inherit an existing one. Over his 25 years at the board, he has worked with 14 different superintendents, each of whom Clark describes as generally supportive of his efforts.

Clark likens his work in the public sector to doing risk management in the private sector. Except whereas the “bottom line” for risk managers in the private sector is measured by stockholder equity, Clark’s “bottom line” is the safety and education of the children, as well as developing a benefits program for a wide spectrum of school board workers, from bus drivers to cafeteria employees.

Clark says one of his biggest challenges is to develop a program to protect students, employees and almost $82-billion worth of school board facilities in an area highly exposed to hurricane risk. He noted after Hurricane Andrew hit in 1992, two domestic insurance carriers pulled out of the area, causing the board to change its insurance-buying strategy. The board proceeded to seek out insurers in the global market with more geographically diverse portfolios.

Clark’s experience in harmonizing the needs of a diverse array of people within the larger school board mirrors his efforts to support a stronger representation of various South Florida areas within RIMS. He is a founder of RIMS Greater Miami Chapter, where he served as president in 1992-93 and 2003-04.

In working to create the Greater Miami Chapter, Clark found himself working closely with the RIMS organization in New York. This experience put him in a position to serve as a member of the RIMS board since 2000. He became the treasurer of RIMS in 2007-08, secretary in 2009 and president in 2011.

As president, Clark’s priority is to strengthen the national organization’s chapter base. These efforts might in fact have a spillover effect in Canada.

For example, Clark notes that RIMS in the United States has created a political action committee called RISK PAC. This was done at Clark’s first meeting as RIMS president in January 2011.  RISK PAC will raise money to be used for helping RIMS lobby efforts on Capitol Hill as well as electing public officials sympathetic to the advancement of risk managers’ goals. At the moment, RIMS is creating “chapter toolkits” to be submitted to each RIMS chapter. These will make chapter presidents and members aware of the goals of RISK PAC and the purposes to which its funds will be used.

“The RISK PAC, the political action committee and the work that we’ve done on [Capitol Hill] doesn’t really resonate that much in Canada,” Clark says. “But there is discussion about … seeing if that would be a possible model to implement in Canada. That’s possibly on the horizon and obviously we will be working with RIMS Canada to look at what pieces of our [RISK PAC] structure we could use in Canada to further the RIMS name in the Canadian provinces as well. Canadian [RIMS] board members felt we would have to augment it a bit, but it very well could take the legislative platform [of RIMS PAC] and emulate that in Ottawa.”

One could imagine a type of Canadian RISK PAC operating at the federal level in Ottawa. Provincial RIMS chapters would help provide direction to the federal PAC, based on their provincial legislative agendas.

“It would seemingly be a pretty good fit,” Clark said of the analogy between the structure of RISK PAC and the potential provincial/federal structure of a proposed Canadian model. “You’ve got to make sure that the right subject matter and the right support are provided so we don’t go up there with an initiative [in Canada] and have it fail.”

In the meantime, RIMS has a number of political issues on the go. Supply chain risk is a key issue facing risk managers now. The March 2011 earthquake and tsunami in Honshu, Japan brought the concern into high relief, says Clark, who arrived in Japan for a visit with the Japan RIMS chapter the day before the earthquake happened.

“We’ve all seen with the economy changing, there’s been a major change in how our members’ corporations – in manufacturing, in particular – have changed their supply chain methodology,” says Clark. “The risk of that became very apparent after the earthquake and tsunami in Japan, when their suppliers didn’t have much inventory from which to draw. Obviously that had a worldwide effect on automobile manufacturing, computer chip manufacturing – all of those things we’ve seen fall out because everybody was manufacturing and shipping without much inventory.”

Cyber risk is another hot issue. “We believe in working very strongly with both the insurance markets and IT professionals and being able to look at the core causes of data breaches. What should our risk mangers, our members, be involved in within their organizations to bring this to the forefront and not just rely on IT people to do the right thing? There needs to be a much more strategic approach. This is a great place for a risk manager to be, quarterbacking the cyber-risk emerging risk.”