Chapter 1 - The Risk Manager

Question 1

What does a risk manager do?

Answer 1

The role of the risk manager is to implement and manage an organization’s risk management program through risk identification, analysis, control, financing and administration techniques, ensuring that the organization’s assets and financial statements are protected.

Question 2

What are the typical responsibilities of a risk manager?

Answer 2

• Developing risk management policies and procedures.
• Claims and ligation management
• Risk financing through transfer and retention
• Contract and lease reviews
• Management of the risk management team
• cost of risk allocations
• Overseeing safety training and loss control programs
• Accident investigation
• Risk Management Information Systems (RMIS)
• Crisis management and business continuity programs.
• Regulatory compliance

Question 3

Types of risk managers

Answer 3

1. Strategic risk managers
2. Risk and insurance managers
3. Credit risk managers
4. Financial risk managers
5. Technology risk managers

Question 4

Technical Skills - the risk manager needs to have expertise in

Answer 4

1. Efficiently identifying risks
2. Analyzing losses and exposures
3. Selecting and implementing appropriate safety and loss control programs.
4. Managing claims and investigations
5. Managing the organization’s insurance program: matching identified risks to available coverages, selecting best provider option - agent/broker/insurer, performing cost benefit analysis for retention vs. transfer options.
6. Reviewing contracts for risk-related implications
7. Accounting and finance
8. Ensuring compliance with regulations
9. Managing relationships between the industry and organization

Question 5

Soft Skills - the risk manager needs to have expertise in

Answer 5

1. Emotional intelligence - the art of dealing with people in a sensitive and effective way: a. The capability of individuals to recognize and understand their own and other’s emotions; to manage and/or adjust behaviors to navigate social complexities and to make informed decisions. b. Enhances communication and interactions of a daily basis.
2. Diplomacy a. The art of negotiation and conflict management b. Tactfulness.
3. Facilitation (intermediary) - a. Promote an open exchange of information b. Encourage cooperation c. Encourage efficiency and effectiveness of processes through communication d. Support and encourage risk management efforts.
4. Communication - a. adapt message to the audience b. practice active listening.
5. Leadership skills - 1. ability to stay level-headed/objective in a crisis 2. Proactive 3. Accepts responsibility 4. Solution-minded 5. Innovative and inquisitive 6. Motivational 7. Trustworthy 8. Awareness that leadership does not necessarily equate to management or authority
6. Managerial Skills - 1. Experience with policy and strategy development and implementation 2. Experience with general management and project management.

Question 6

How does a risk manager add value to the organization?

Answer 6

1. Elevating the importance of risk management by: a. establishing senior management’s proactive support of risk management objectives and policies, b. creating understanding and acceptance of risk management policies and procedures across the organization, c. illustrating the value risk management discipline brings to the organization, d. Reinforcing a positive organizational risk culture (a set of understandings, habits, beliefs, values and knowledge) towards risk.
2. Supporting measured risk-taking to:
   a. Achieve business objectives
   b. Improve planning and budgeting
   c. Reduce frequency and severity of incidents, accidents, losses and claims.
   d. Increase awareness of indirect losses and connections between risks.
   e. Prioritize resources for proactive preparation vs. reactive response
   f. improve morale and productivity among the workplace
   g. improve processes and technology
   h. Protect the organization’s reputation and brand
   i. impact financial results

Question 7

Using knowledge of the Management Model, participants will argue the value of implementing it.

Answer 7

POLE the resources of people, funds, materials and time to protect the organization’s assets and positively affect the organization’s performance:
Planning - determine course of action
1. Identify goals
2. Establish a roadmap necessary steps to meet your goal
3. Consider economic and resource variables
Organizing - the allocation of resources and responsibilities
1. Bring together necessary resources to meet objectives - physical, human financial
2 Assign responsibilities or delegate authority
3. Coordinates activities of external and internal team members
Leading - motivating people to take action
1. Provide clear direction and goals
2. Use sound judgement to make effective decisions
3. Work within formal and informal networks to foster open communications - Builds relationships at all levels of the organization
4. Promote teamwork and cooperation
5. Remove obstacles to employee performance
6. Reward, inspire and help develop potential
7. Be a positive role model
Evaluating - measuring achievement against established goals
1. Establish benchmarks and performance standards.
2. Compare actual performance to the standards.
3. Take corrective action where necessary
4. Submit reports and communicate results to senior management

Question 8

Definition of Implementation of a Risk Management Program

Answer 8

The part of administration where the desired actions and plans of the risk management department are initiated.
1. Present the risk management policy and procedure manual to the organization and other applicable service providers.
2. Communicate risk management goals and objectives throughout the organization.
3. Demonstrate the organization’s commitment to risk management principles. (belongs to client).
4. Create an organizational chart or flowchart showing risk management’s interaction with other departments.
5. Establish and communicate individual responsibilities and accountabilities for the success of the risk management program.
6. Partner with various levels of the organization: a. Executive Management (actively involved in the rollout of the program & thank them for providing resources to achieve program objections.) b. Middle management/supervisors (this is where soft skills are important —- provide necessary support to achieve risk management goals and objectives. Active engagement of this group is required for executing loss control programs, claims gathering information, observations, ideas and feedback). c. All other employees (Daily activities are affect by risk and loss control measures, therefore their cooperation, input and insight are needed. Engagement determines the effectivenesss of the risk management policies an loss control procedures.)

Question 9

Definition of Monitoring a Risk Management Program

Answer 9

The part of the administration where risk management examines and evaluates the results of the actions and plans and then uses that feedback to monitor the process.
1.Evaluate the effectiveness of the program
a. Significant incidents/accidents
b. Open/closed claims
c. Litigated claims, large loss claim reports
d. Risk Financing options with an analysis of the deductible/SIR levrels and limits
e. Total cost of risk and allocation
f. Loss trend analysis
g. Contractual issue
2. Periodically review risk management policies and procedures
a. Changes in operations/acquisition/divestiture
b. new products and services
c. new laws and regulations
d. annual quality control
3. Report on results, opportunities, threats, successes and recommendations. Frequency of reports can be Time Driven, Event Driven, Issue Driven
4. Reviews and adjustments - feedback, process experience, changes in needs, and management, document reviews.

Question 10

Requirements for Long-Term Success

Answer 10

The risk manager must:
1. Have objectives that align with the needs of the organization.
2. Be an active participant on the organization’s leadership team.
3. Find advocates or influencers who reinforce commitment and encourage resource allocation.
4. Create adaptable processes and approaches - evolving over time to fit new needs, best practices and emerging risks.
5. Never change for the sake of change - utilize existing processers that have effective risk management elements and continue utilizing those processes instead of creating duplicate/alternate work.
6. Select appropriate technology that supports the risk management process - don’t let software dictate your process.
7. Seek continued professional development through education and training - job specific, trends and best practices.