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Risk managers have the tools necessary to help their companies succeed at innovation.

Some exposures can be a challenge for risk managers, especially if they're not insurable. They require time and effort to understand and provide scant opportunities for risk managers to apply themselves or their skills so that they are perceived as valuable.

Technology has become an integral exposure for companies as more of our activities become automated and globalized. One key driver for this trend is the ease with which we can share information and data across functions, groups, companies, industries, countries and continents.

Not innovating isn't an option because the risks the industry faces are changing all the time.

This year's Risk Innovator winners reflect the range of talents and backgrounds the insurance industry is capable of attracting, and how humanistic it is at its core.

One reason the insurance industry isn't very innovative is that it is ruled by incrementalism.

I like quants, but they often narrow their focus to only numbers, when more insight is needed from other methods. There has been much written since the financial crisis of 2008 about the over reliance on all the risk models that were supposed to have revealed how much risk firms were taking and to somehow enable them to manage their risk appetite more successfully. That mindset about risk modeling and measurement has taken much heat because so many lost so much: investments, pensions, jobs, houses--even lives.

If all the risks to your business were known, easily ignored, or cheaply transferred, would you feel better? Unfortunately, such a world does not exist.

Following this soft launch of ZFI, Noble and colleagues talked about the product with risk and insurance managers and at conventions, and let customers know it was coming. The product received its official launch earlier this year with announcements, advertising, and promotion through distribution channels. Zurich is rolling out the product to its customers around the world.

"There are several telematics offerings in the insurance business, and motor fleet insurance in the future will be built around some of the matrices that come out of telematics,'' Noble said. "It's going to be very widespread. But no one is doing this as a total risk package.

"What I was stressing in the development process was that we wanted to do this, not to skim the surface, but to dig down into what the customer was doing,'' Noble said. "That's part of what we do and what sets you apart."

Noble said that the effect ZFI will have on how people drive for a living will be dramatic, as it "does completely change the playing field.''

"We know that telematics is a solid and a very effective tool for both reducing the frequency of accidents and reducing overall operating expenses," said Jim Breitkreitz, vice president of corporate client services in risk engineering. "The secret to making it work is that you've got to have management involvement. That is one of the things that separates what we do with telematics as to the way it is sometimes implemented.''

Though not a "silver bullet,'' fleet managers who use the tool for "continuous improvement,'' and companies in which management is engaged and giving drivers feedback will see this telematics innovation have an effect on lowering accident claims, Breitkreitz said.

"It's not there to be used in punitive ways, and you need to explain this to employees,'' he said. "When employees see that the reason this monitoring is taking place is that the company is concerned about their safety, then their attitude changes.''

"It's very gratifying to see it out there, to see it working, and to understand that it has the potential to change the insurance industry and how we do things and change people's lives and how safely they operate their vehicle,'' Noble said. "When I think about my role in that, it's a very gratifying feeling."

-- Lynn Rosen

Development of the risk simulator progressed slowly at first.

The decision support team also works with other departments within the company, including claims, safety and risk control, and quality assurance. Those are its primary internal clients, and they support the needs of the field and other departments within ARAMARK.

Work on the risk simulator project continued during spare time, in a company atmosphere where innovation was encouraged. "Leadership here understands the value in innovation, so they make sure the employees have time to create those kinds of things," Toczek said.

Once the risk simulator was ready for testing, it went to what Toczek describes as "200 beta-testers we keep on hand to try things out.'' The product went out across the organization, up to regional vice presidents and down to front-line managers for feedback, Bowman said. The product was then tweaked and finally unveiled.

The risk simulator is available to all the lines of business, but not to every individual. Rollout continues, and preliminary feedback is positive, Pelcin said.

Pelcin praised Toczek's accomplishment: "It's that simple solution that you explain to someone and they say 'Why didn't we think of that five years ago?' When I slide the part-time employee ratio and they see that this affects your OSHA rate and how, they get it.

"Everyone understands how risk management plays into the greater organization and how their business directions are going to affect the larger mix. The fact it's visual really helps people understand.

"There are probably a million people in the world who could do the statistics, but to figure out a way to display it so simply and yet get all the points across, that's the beauty of this," Pelcin said.

-- By Lynn Rosen

We had many highly qualified applicants vying for the Risk Innovator^TM award this year so we decided to cite a few of the best who weren't selected for the award. The following six people deserve to be recognized for their diligent risk management work.

Scott Borup, director of corporate risk management for Johnson & Johnson, said that with J&J's three main business entities--pharmaceuticals/biological sciences, medical devices and consumer healthcare--the risk management landscape can get very complex. For example, J&J conducts clinical trials around the world, a risk management landmine if not done properly.

"You can imagine keeping your arms around everything is a daunting task, and something like Worldview is a great innovation and help," Borup said. "We have hundreds of operating companies worldwide, and ACE issues close to 200 policies for us. We are a very compliance- focused company, so we need to have every piece of information at our fingertips. Having a clinical trial delayed is not an option for us."

Borup said that Worldview has been a great step forward for the J&J risk management process, as the tool allows J&J to accomplish and track all sorts of activities, including the issuance of policies, certificates of insurance, and claims.

"It very unlike the past, where we had a file room full of shelves of huge binders," he said. "Now we have live, real-time access to the critical data. Worldview may not be transformational in terms of insurance, but it certainly is enhancing the risk management process."

Benson led the ACE Global Services improvement effort for multinational accounts, and as the Worldview concept began to take shape, Benson's role expanded to include multinational technology initiatives, including Worldview.

Benson and the ACE Global Services team launched the pilot in the spring 2010 with about 25 multinational programs. The main rollout began during late summer 2010.

Since the launch, more than 560 clients and brokers representing 172 multinational programs have signed up to use Worldview, with about 100 new users each month.

"Client feedback has been very positive," Benson said. "Several risk managers, in fact, have cited Worldview as a key reason for moving their multinational programs to ACE."

-- Tom Starner

This annual special issue showcases some of the best the risk management field has to offer.

Manager, Decision Support and Analytics, Global Risk Management Division
ARAMARK Corp.

A Big Thinker with Intellect to Spare

For John Toczek, the statistics are the easy part. Turning the data into digestible, presentable information for clients is where the innovation lies.

John Toczek manages the five-person decision support and analytics team, part of the global risk management division at ARAMARK Corp. It's a small team but it has companywide impact.

"Our goal is to enable other departments to make data-driven decisions," he said.

Although Toczek brings a statistics background to his job, he realizes that one stumbling block is the discomfort many people have with data. "In general, people don't like to look at a lot of data," he said. "They want something they can interact with."

This understanding, that the crucial information provided by the data needs to be conveyed in a more interactive and easy-to-grasp manner, led to the development of Interactive Risk Simulators (IRS).

The simulators are tools that visually portray statistical relationships between business metrics like employee tenure, employee engagement, a trained workforce and account tenure, and risk management metrics such as Occupational Safety & Health Administration (OSHA) incident rates, workers' compensation rates and customer injuries.

The simulators use gauges and interactive sliders to answer questions such as how more employee engagement tends to lower the OSHA incident rates. "Once you understand the links, you can control your risk better because you know which actions are going to be most effective at mitigating that risk," he said.

Toczek said the risk simulators meet the challenge of making complicated material accessible for a lay audience.

The work that led to the creation of the simulators began a few years ago during a discussion with Andrew Pelcin, director of decision support for global risk management, about the relationship between actions taken by front-line managers, food-service directors, district managers, and general managers in the field, and the effect of their decisions on ARAMARK's risk metrics.

"There's a lot of collaboration where we'll sit in front of the whiteboard and say 'What could we do with this information we have, and how do we deliver it to the people who are going to consume it?' " Pelcin said.

Pelcin said Toczek excels at translating complicated statistical information into easy-to-understand material. "He's phenomenal at delivering this information. It's one thing to make a statistical model, but the challenge is making it so the information can be consumed by anyone at any level almost without an explanation. You can't have an innovative solution if it can't get accepted as well."

Ken Bowman, vice president of safety risk and control at ARAMARK, raves about Toczek's abilities. "He's one of the smartest people I ever worked with. He's really interested in the next big challenge, in figuring out what the business problem is,'' Bowman said "He really likes to have things to think about and to solve problems. He is extremely customer focused and a good listener. He's resonated very much with our field population and been able to really use their feedback to enhance tools they've developed."

The seven days of stock market trading after the Standard & Poor's downgrade of the United State's credit rating was made public was the most volatile in years. After weeks if not months of doomsday predictions of the downgrade's effect, it appears to be one with short-term impact. Or is it?

Risk managers adopt enterprise risk management to help move their companies forward.

The second major advance achieved by Katersky and his staff was a novel notion, indeed.

They recommended to senior management that BJ's gift cards be distributed, as part of the general liability resolution process to generate additional goodwill during a potentially frustrating time.

"The gift card was seen as a victory by the member and it was a victory for us because there was no cash outlay like in a claim," Katersky said. "And we knew that when people got a gift card they would come back to the store, so now we're hitting customer retention."

Katersky said that because people shop at the same BJ's club most of the time, he and his team didn't want to create a bad feeling between local management and the member, so they took the process away from the club. "That way the club didn't have to get into a fight with the member," Katersky said. "The club was not good at investigations, they were better at running stores. We would tell them when things were resolved and to please look for the member at the member's next visit."

Another key ingredient in the gift card program, he said, was that a letter was sent with each gift card. "We did not ask for a release because then it became a claim and people would hire a lawyer to review the release and before you know it you would have more lawyers in this thing, which we didn't want," Katersky said. "So we took a position that these are relatively small dollar matters and we would try it without the release to see what would happen. And nothing ever happened, so it was great."

Of some 400 events that occurred last year, 320 to 350 of them were resolved without incident.
"Ed Katersky is an awesome risk professional," said Joanne Heslin, vice president of Willis of Massachusetts. "He's very bright. He likes to try new things. He's ahead of his time in many of the things he does. He's very good at forming partnerships. He very successfully trains people. We call him the professor."

-- Steve Yahn

In terms of efficiency, Parkin said that the new system, which went into planning at the end of May 2010 and was rolled out in late June, had great results in 85 percent of cases. In the remaining 15 percent of cases, Aon was not able to use the 3G technology and had to redo its work, going offline and then uploading survey information.

"If you have a great 3G connection everything is fine and you have no issues or concerns, which was the case in most instances," Parkin said.

Parkin said that Aon continues to invest money in improving the 3G program. "One of the things that we have done is create a global committee that's spread across all of Aon's regions, Europe, the Middle East, Asia Pacific, to look at ways we can to improve the GPS system," she said.

She worked closely with Aon's information technology development team to create the Aon GPS, a web-enabled database that could be used with an iPad.

She also credited Aon Global Risk Consulting team members Mike Panfil, managing director of property risk control¿U.S., Marcel Hanssen, director of risk control¿Netherlands, and Brian Parker, head of risk control and engineering¿Pacific Rim, who helped ensure a consistent global approach to GPS as well as the related iPad application.

Deadlines were tight and the GPS product was released about six weeks after the Abu Dhabi contract was awarded. "I'm a risk control person, but I've become a lot more of an information technology person as a result of doing this," Parkin said.

The return on investment for the Abu Dhabi project was 24 to1. For every $1 invested in Aon GPS, the broker received $24 worth in new client revenue.

Since the use of the iPad technology in Abu Dhabi, Aon has also utilized the system for clients in North America. Aon Global Risk Consulting's innovation committee approved the use of the funds to purchase the iPads and invest in related information technology development.

Based on Aon Global Risk Consulting's success with the iPads, other areas of Aon have looked at ways to use them. Aon is now moving toward using iPads and iPhones for access to email and SharePoint sites.

-- Steve Yahn

Chatter automatically pushes the status of important projects, claims, incidents, legal matters and other topics out to risk management staff in real-time. They can comment on a claim, an incident, an occurrence or any other object in the system. Users choose which information to follow and which conversations to engage in.

For example, users can follow a specific claim, which triggers automatic updates any time new information or new comments are added on that claim record. They can also choose to follow a dashboard or document attached to Chatter. If that dashboard is refreshed, or if a new version of the document is posted, they are alerted. System administrators also have controls over Chatter to limit access by certain people or groups, and users have controls to set up private groups among departments or teams.

Jeff Rose, business project manager, risk management, for the state of Utah, said that as his department has implemented Chatter it has been able to find multiple ways to boost effectiveness and transparency, while reducing paperwork and work hours.

For example, Rose said his department uses Chatter to track high-profile claims. Should a difficult claim arise, no longer does an adjuster need to gather the management team together for discussions, which might take one to two days depending on schedules. With Chatter, they send out a comment on what they have done or are going to do, and anywhere management might be with Web access, they can immediately follow the discussion. It amounts to a very accurate, and transparent, record.

"The adjuster can work the claim and if there is a problem or something a particular manager needs to address, they direct the message through Chatter to the right person," Rose said. "It's actually speeding up how fast claims can be settled."

Morrell also has developed a way that loss control can upload a document or picture via Chatter directly into the claim process, so a client gets instant knowledge on specific issues. "Unlike with email, you have the direct Chatter-generated data going into the claim file, creating a permanent record immediately," Rose said.

"We have been using the system for only two months, but we've found Chatter to be a critical component to speeding up the claim system, loss control function and the overall efficiency of risk management for the state of Utah," he said. "That's why it's truly innovative. It is easy to use, and really makes us all more effective."

-- Tom Starner

With Heller's guidance, SCE chose the WorkSTEPS program, which had a post-job offer testing approach designed to be job specific by matching workers' functional capabilities with the essential job functions. Among other things, WorkSTEPS also would certify SCE's in-house medical staff to be able to perform testing at corporate headquarters.

As a success gauge, SCE used the metric of reduced and/or avoided injury costs. Since the pilot program launched in 2009, approximately 550 post-offer candidates have been tested (nine job candidates did not stay with the company as a result of testing). And while pilot expenses were approximately $96,000, the estimated savings relating specifically to reduced workers' compensation and/or disability claims and wage-replacement benefits totaled $800,000.

"The thing that is important is Heller works in a highly regulated industry," said John Koval, an account executive with Sedgwick CMS, who works directly with Heller. "With that as the context, every program Heller tries to implement has to have oversight and approval. She not only has to sell it internally, but to regulators as well. That's a real challenge."

Koval said that Heller's innovative nature, vision and willingness to take the risk associated with implementing a new program actually not only has saved the company money, but also has served to lower risk by supporting safety on the job.

"Most of all, she recognizes that an employee's ability to safely perform the job is as much a job requirement as technical expertise," Koval said.

-- Tom Starner