Risk Insider: Nancy Chambers

Sharing Knowledge and Experience

By: | August 9, 2016 • 2 min read
Nancy Chambers is the Director, Risk Management & Insurance for Bentall Kennedy (Canada) LP, one of North America’s largest real estate investment advisors, and a former RIMS president. She can be reached at [email protected]

While attending San Diego RIMS 2016, I met a lawyer who had been appointed risk manager for her company. I told her that involving myself with RIMS and professional risk management organizations was instrumental in my personal and professional development.

Risk managers who are new to the function or wish to develop their skills may see the same benefits I did.

Getting Involved

I attended a chapter meeting and was hooked! I served on chapter committees. I applied to speak at RIMS national and Canadian conferences. I took advantage of RIMS’ new officer training.

I then served on RIMS national education and conference committees. This gave me a broad view of the spectrum of issues important to risk managers as well as some effective ways to respond.

I was invited to serve on RIMS executive council as treasurer (two terms), VP conference, first VP audit and investments, president and past president.

During this time, I received invaluable executive training on many topics that help me in my professional career, including media, nonprofit board operations, budgeting, public speaking, dispute resolution, and so much more.

I learned from the best – my risk management colleagues and expert RIMS staff.

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I also had the pleasure of serving on the Spencer Education Foundation Board and the International Federation of Risk and Insurance Management Associations (IFRMA). Representing RIMS worldwide, I traveled to Britain, France, Tasmania, and Japan, and attended chapter meetings and conferences throughout Canada and the U.S.

Getting Company Support

Getting the support of my company was very important. I took great care to ensure the senior executives understood and supported my involvement. I completed a trip report for every meeting … detailing location, attendees and agenda. I sent it to my director, CFO and board chair. These reports helped demonstrate the value of participation and the lessons I learned.

I used vacation and overtime to offset time out of office.

I copied every magazine article that named my employer, highlighting the publication and reference, and sent it to my CFO, board chair and mayor of Kitchener, Ontario. I facilitated greetings between the mayor and officials in Japan, which helped substantiate the benefit of RIMS membership and participation.

My involvement with RIMS enabled me to meet many influential people including Gen. Colin Powell, Sen. Robert Kennedy Jr., Lord Peter Levene, former chairman of Lloyd’s, U.S. Rep. Newt Gingrich, and U.K. Prime Minister John Major … to name a few.

Some other highlights included:

  • Socializing with some of the most senior insurance industry executives during a private, no-agenda breakfast at the Saint Regis Hotel in New York;
  • Meeting New York Insurance Commissioner Greg Serio during the contingency fee controversy;
  • Joined other risk managers for “RIMS on the Hill” in Washington to meet with U.S. senators and representatives;
  • Dined with representatives of the (then) newly formed Department of Homeland Security; and
  • Was the first woman and first risk manager to ever be invited to speak on a panel with Lord Levene.

These experiences gave me more insights and connections than I ever imagined. My advice for those entering risk management is to get involved with professional organizations. Get to know your risk management colleagues. Volunteer on a committee, or moderate or speak at a conference. Share experiences and put the best of them to use in your own organizations.

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RIMS 2016

Manage Expectations, Manage Reputation

Molding the expectations of customers and shareholders through ERM is critical to reputation protection.
By: | April 13, 2016 • 4 min read
Topics: Reputation | RIMS
RIMS reputation

The art of managing reputation risk really comes down to shaping the expectations of shareholders, customers, vendors, creditors and investors.

“Not an easy thing to do,” said Nir Kossovsky, chief executive officer, Steel City Re, speaking at the annual RIMS conference in San Diego on April 12.

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“Managing expectations involves behavioral economics – shaping what people expect from you and then meeting those expectations.”

He said expectations typically revolve around six key areas: safety, ethics, quality, security, sustainability and innovation. Failing to meet any of those expectations creates vulnerability for a company, opening up an opportunity for shareholders or special interest activists to come after the board of directors as the culpable party.

Increasingly, directors and officers are the true casualties of reputation damage.

Dissatisfied customers or partners know that “the court of public opinion is much more effective than the court of law,” Kossovsky said, so they will bring allegations against the board and force a public response.

“Managing expectations involves behavioral economics – shaping what people expect from you and then meeting those expectations.” – Nir Kossovsky, chief executive officer, Steel City Re

The best way to mitigate reputation risk, then, is to proactively communicate the board’s awareness of a company’s exposures, and acknowledge its duties to deliver on expectations related to the six key areas.

“Communication is critical,” said Todd Marumoto, director of risk management, Mattel, Inc. “There needs to be some sense of a plan for how the board will respond to a reputation event.”

Without a quick response, the silence is filled by the white noise of unsubstantiated opinion, Kossovsky said. That weakens the board’s credibility.

“Facts are available without much of a down payment. Allegations brought against the board don’t necessarily have to be true and can’t always be validated.”

Conflicting expectations make reputation risk management even harder.

Customers expect, for example, near impossible standards of quality and customer service, while shareholders expect strong profit and growth, and creditors expect swift payment.

While many believe that marketing and press coverage can be the tool for the messaging needed to mold expectations through public perception, the most effective way to mitigate reputation risk is through enterprise risk management that strives for excellence, the speakers said.

In other words, expectations should be set by a company’s performance.

Kossovsky offered the example of BP, which claimed to be “beyond petroleum.”

Despite impressive initiatives to use cleaner energy, BP was still, in fact, heavily reliant on petroleum. The Deepwater Horizon spill of 2010 sparked so much anger because people expected BP to be above such environmentally dangerous accidents.

ExxonMobil, on the other hand, acknowledged to its shareholders that a spill was always a real threat, but demonstrated the steps it was taking to minimize the risk. Shareholders thus had more realistic expectations of the company and are harder to disappoint.

Presenting to the C-Suite

Risk managers can bring the importance of reputation risk to the C-suites’ attention by demonstrating its financial impact.

“Expenses could come from having to replace a vendor, from a government penalty, litigation and class action lawsuits, or having to implement a new management process,” Marumoto said.

Overall, costs associated with remediating a reputational event can be two to seven times higher than costs related to the operational failure that caused the reputation damage in the first place.

“With reputation risk, it’s not always about right or wrong, but about getting the right outcome to satisfy shareholders and customers.” — Todd Marumoto, director of risk management, Mattel, Inc.

“It affects every line item of the P&L,” Kossovsky said.

The impact on D&O effectiveness will also certainly grab senior management’s attention.

“A typical board member makes about $250,000 per year to sit on the board for a term usually of about three years, and he’s usually sitting on three different boards,” Kossovsky said.

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“He’s looking at a personal loss of over $2 million” if a reputational hit leads to him being asked to step down from those boards.

According to Marumoto, risk managers can influence outcomes of a reputational event by working internally with investor relations and marketing to ensure the company is sending a consistent message, and to develop a coordinated response plan.

“Ultimately, you have to be responsible for all things that pass in front of you,” he said. “Partner with vendors you trust, be transparent in your efforts to mitigate risks, and develop relationships with government agencies.

“With reputation risk, it’s not always about right or wrong, but about getting the right outcome to satisfy shareholders and customers.”

Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at [email protected]
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Sponsored Content: XL Catlin

Mind the Gap in Global Logistics

Shippers need more than just a sophisticated system to manage their growing operations.
By: | December 1, 2016 • 6 min read
XLCatlin_SponsoredContent

Manufacturers and shippers are going global.

As inventories grow, shippers need sophisticated systems to manage it all, and many companies choose to outsource significant chunks of their supply chain management to contracted providers. A recent survey by market research firm Transport Intelligence reveals that outsourcing outnumbers nearshoring in the logistics industry by 2:1. In addition, only 16.7 percent of respondents stated they are outsourcing fewer logistics processes today than they were three years ago.

Those providers in turn take more responsibilities through each step of the bailment process, from processing, packaging and labeling to transportation and storage. Spending in the U.S. logistics and transportation industry totaled $1.45 trillion in 2014 and represented 8.3 percent of annual gross domestic product, according to the International Trade Administration.

“Traditionally these outside parties provided one phase of the supply chain process, perhaps transportation, or just warehousing. Today many of these companies are extending their services and product offerings to many phases of supply chain management,” said Mike Perrotti, Senior Vice President, Inland Marine, XL Catlin.

Such companies are known as third-party logistics (3PL) providers, or even fourth-party logistics (4PL) providers. They could provide transportation, storage, pick-n-pack, processing or consolidation/deconsolidation.

As the provider’s logistics responsibilities widen, their insurance needs grow.

“In the past, the underwriters would piecemeal together different coverages for these logistics providers. For instance, they might take a motor truck cargo policy, and attach a warehouse form, a bailee’s form, other inland marine products, and an ocean cargo form. You would have most of the exposures covered, but when you start taking different products and bolting them together, you end up with gaps,” said Alexander McGinley, Vice President, US Marine, XL Catlin.

A comprehensive logistics form can close those gaps, and demand for such a product has been on the rise over the past decade as logistics providers search for a better way to manage their range of exposures.

XLCatlin_SponsoredContent_Perotti“Traditionally these outside parties provided one phase of the supply chain process, perhaps transportation, or just warehousing. Today many of these companies are extending their services and product offerings to many phases of supply chain management.”
–Mike Perrotti, Senior Vice President, Inland Marine, XL Catlin

A Complementary Package

XL Catlin’s Logistics Services Coverage Solutions takes a holistic approach to the legal liability that 3PL providers face while a manufacturer’s stock is in their care, custody and control.

“A 3PL’s legal liability for loss or damage from a covered cause of loss to the covered property during storage, packaging, consolidation, shipping and related services would be insured under this comprehensive policy,” McGinley said. “It provides piece of mind to both the owner of the goods and the logistics provider that they are protected if something goes wrong.”

In addition to coverage for physical damage, the logistics solution also provides protection from cyber risks, employee theft and contract penalties, and from emerging exposures created by the FDA Food Modernization Act.

This coverage form, however, only protects 3PL companies’ operations within the U.S., its territories and possessions, and Canada. Many large shippers also have an international arm that needs the same protection.

XL Catlin’s Ocean Cargo Coverage Solutions product rounds out the logistics solution with international coverage.

While Ocean Cargo coverage typically serves the owner of a shipment or their customers, it can also be provided to the internationally exposed logistics provider to cover the cargo of others while in their care, custody, and control.

“This covers a client’s shipment that they’re buying from or selling to another party while it’s in transit, by any type of conveyance, anywhere in the world,” said Andrew D’Alessio, National Ocean Cargo Product Leader, XL Catlin. “When provided to the logistics company, they in turn insure the shipment on behalf of the owner of the cargo.”

The international component provided by ocean cargo coverage can also eliminate clients’ fears over non-compliance if admitted insurance coverage is purchased. Through its global network, XL Catlin is uniquely positioned as a multi-national insurer to offer locally admitted coverages in over 200 countries.

XLCatlin_SponsoredContent_McGinley“In the past, the underwriters would piecemeal together different coverages for these logistics providers. For instance, they might take a motor truck cargo policy, and attach a warehouse form, a bailee’s form, other inland marine products, and an ocean cargo form. You would have most of the exposures covered, but when you start taking different products and bolting them together, you end up with gaps.”
–Alexander McGinley, Vice President, US Marine, XL Catlin

A Developing Need

The approaching holiday season demonstrates the need for an insurance product that manages both domestic and international logistics exposures.

In the final months of the year, lots of goods will be shipped to the U.S. from major manufacturing nations in Asia. Transportation providers responsible for importing these goods may require two policies: ocean cargo coverage to address risks to shipments outside North America, and a logistics solution to cover risks once goods arrive in the United States or Canada.

“These transportation providers are expanding globally while also shipping throughout the U.S. That’s how the need for both domestic and international logistics coverage evolved. Until now there have been few solutions to holistically manage their exposures,” D’Alessio said.

In another example, D’Alessio described one major paper provider that expanded its business from manufacturing to include logistics management. In this case, the paper company needed coverage as a primary owner of a product and as the bailee managing the goods their clients own in transit.

“That manufacturer has a significant market share of the world’s paper, producing everything from copy paper to Bible paper, wrapping paper, magazine paper, anything you can think of. Because they were so dominant, their customers started asking them to arrange freight for their products as well,” he said.

XLCatlin_SponsoredContent_Dalessio“These transportation providers are expanding globally while also shipping throughout the U.S. That’s how the need for both domestic and international logistics coverage evolved. Until now there have been few solutions to holistically manage their exposures.”

–Andrew D’Alessio, National Ocean Cargo Product Leader, XL Catlin

The global, multi-national paper company essentially launched a second business, serving as a transportation and logistics provider for their own customers. As the paper shipments changed ownership through the bailment process, the company required two totally different types of insurance coverage: an ocean cargo policy to cover their interests as the owner and producer of the product, and logistics coverage to address their exposures as a transportation provider while they move the products of others.

“As a bailee, they no longer own the products, but they have the care, custody, and control for another party. They need to make sure that they have the appropriate insurance coverage to address those specific risks,” McGinley said.

Unique Offering

“From a coverage standpoint, this is slowly but surely becoming the new standard.  A logistics form on the inland marine side, combined with an international component, is becoming something that a sophisticated client as well as a sophisticated broker should really be asking for,” McGinley said.

The old status quo method of bolting on coverage forms or additional coverages as needed won’t suffice as global shipping needs become more complex.

With one underwriting solution, the marine team at XL Catlin can insure 3PL clients’ risks from both a domestic and international standpoint.

“The two products, Ocean Cargo Coverage Solutions and Logistics Service Coverage Solutions, can be provided to the same customer to really round out all of their bailment, shipping, transportation, and storage needs domestically and around the globe,” D’Alessio said.

Learn more about XL Catlin’s Logistics Services Coverage Solutions and Ocean Cargo Coverage.

The information contained herein is intended for informational purposes only. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details. XL Catlin, the XL Catlin logo and Make Your World Go are trademarks of XL Group Ltd companies. XL Catlin is the global brand used by XL Group Ltd’s (re)insurance subsidiaries. In the US, the insurance companies of XL Group Ltd are: Catlin Indemnity Company, Catlin Insurance Company, Inc., Catlin Specialty Insurance Company, Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., and XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions. Information accurate as of December 2016.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with XL Catlin. The editorial staff of Risk & Insurance had no role in its preparation.




XL Catlin. From insurance to reinsurance, a changing world needs new answers. We’re here to find them. With an incredible blend of people, products, services and technology, we have the power to find innovative, creative solutions to your risks — from the most familiar to the most complex.
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