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Risk Manager
Powernet Global Telecommunications
Fairfield, Ohio

Dana Berry used the patience learned as an English teacher to rope sales into the risk management matrix.

How does a former "phone cop" tackle a vexing risk management problem involving customer credit risk? By combining the analytical skills gained over years of work within the telecommunications industry, the instincts honed through fraud investigations, mixed in with the communication skills, and perhaps a bit of patience, learned as a high school English teacher.

As risk manager for rapidly growing telecommunications service provider PowerNet Global Communications, Dana Berry was confronted with the challenge of managing credit risk for new customers. Combining the expertise of the fraud and credit units, in consultation with the sales department, Berry developed a risk matrix to provide objective and consistent parameters that enabled the company to accurately score credit.

The risk matrix for large-business accounts takes into consideration a number of criteria and weights them to produce a score, determining if the account is accepted and whether a certain level of security deposit is needed.

This risk assessment matrix smoothed the process for both the sales staff, who now know what kind of information they will need to get a contract approved, as well as the credit department, which can now expect to get all of the information it needs up front.

"It's been really effective in taking care of the resistance from the sales side in gathering information," Berry said. "The matrix provides us with a really good method of scoring every account the same way."

By bringing in the sales department, Berry was able to get everyone on board in order to speed up the whole credit approval process, while actively managing the Ohio-based company's credit risks.

"We just sat down and said, 'What do you need to make a sale?' and 'This is what we need to approve a sale,' and we found the common ground and we built a matrix to satisfy that," Berry said.

This has cut down considerably on the back-and-forth between the sales department, which is focused on signing up new customers, and the credit department, which needs to ensure that the contracts will be honored.

"It took a lot of the emotion and the subjectivity out of the whole credit process. Plus it made the sales people feel like they had some input in how we were doing the work and what we were asking from their customers," said Berry. Berry previously served as director of corporate security for Global Crossing's enhanced services division and as a supervisor of investigations for MCI.

In addition, the risk matrix heightened the company's ability to meet its "know your customer" obligations under the Patriot Act and red-flag regulations by spotting suspicious transactions.

"It makes sense to have both (credit and fraud) groups working together so that we make sure we hit all areas that need to be protected at once," Berry said. "My fraud analyst can say, 'I have a weird situation here and we have an application that matches that situation' and we can take a closer look at it."

Berry also has led the development of the company's first business-continuity plan to evaluate the whole scope of threats that it might face.

"She's really taken ownership to make sure that all of their insurance risks are covered," said Liberty Mutual's Jeremy Riddle.

--By Michael Fitzpatrick

CEO
Longship Network LLC
Portland, Maine

CFO
Longship Network LLC
Portland, Maine

Internet-based platform links underwriting and the risk control field.

Gary Morin and Paul Sundquist are in the early phases of an innovative venture they've named Longship Network LLC. The men first teamed up when Morin was at IT services company Software Essentials and Sundquist was his client at OneBeacon Insurance. They both recognized a common problem in the marketplace.

They observed that outsourced risk control suffers from a lack of consistency, inaccessible information and poor quality. Critical information to prevent losses cannot be queried and high level data analysis is not available.

They combined their experience and knowledge of insurance risk control and IT to come up with a solution.

Longship Network is an Internet-based software platform linking insurance underwriting professionals who need risk information and risk improvement with field risk control specialists who conduct surveys and provide risk improvement services. It allows underwriters to outsource inspection requests directly to field inspectors or to traditional vendors.

"There are certain people who have automated risk control--there is a limited number--but they tend to sell their product to individual carriers on a one-on-one basis in the way that traditional software works," said Morin.

"It is a single platform that everyone uses. We don't sell a different version of Longship to a different carrier. They will be on the same platform as every other carrier. We have automated risk control as others have done, but no one has put it on one single platform as Longship has done," he explained.

In launching the product, Longship used Mike Billings, vice president of loss control and premium audit at Hanover Insurance Group, as the guinea pig. In early 2007, Hanover was looking for a vendor management system outside of its current loss control system. Billings said the current system was not really developed to facilitate a high volume of small inspection requests.

When Morin approached Billings with an opportunity to be the subject for the pilot of the Longship Network, Billings heard about the capabilities of the program and it seemed like a perfect fit for Hanover's needs.

"Basically, what it enabled us to do was to have a high volume flow of small commercial business that goes directly into the Longship system and goes back and provides a report back to underwriting," Billings said. "It manages a high volume of inspection requests but then links up to loss control vendors, which we outsource all of that. It automates that process but connects seamlessly to our system."

According to Billings, Morin and Sundquist have a proven track record, as well as a clear understanding of the needs of Hanover and the rest of the marketplace.

He said he was impressed with the time and effort the team put into listening to his suggestions and implementing improvements to the network in its early stages.

Director, Global Risk Management
Xerox Corp.
Norwalk. Conn.

Making headway by tackling others' fears.

To overcome the fear of risk, first you have to understand it, according to Maria Diaz. As director of global risk management for Xerox Corp., Diaz continuously challenges her colleagues and business partners to look at risk in a new light, to study it and then to decide how to deal with it.

"The reason we're so afraid of risk is that we don't spend enough time identifying it, talking about it and talking about how we mitigate it," Diaz said.

While dealing with the fear of risk, Diaz also has to help colleagues get over another fear, talking about insurance.

"Most people view the word 'insurance' as a very scary topic. Business people are much more comfortable talking about the overall concept of risk, liabilities that the company is able or willing to accept, without really dwelling on the topic of insurance," Diaz said.

A 24-year veteran of Xerox, Diaz has taken significant steps within the company not only to advance the topic of risk management to the strategic level within the organization but also to make risk management concerns a day-to-day part of operations.

"She has really been an ambassador for new thinking about risk, adding new dimensions to the dialogue and analysis of risk and opportunities they present to her firm," Marsh's Eileen McSweeny said.

The most effective tactic in shepherding this new way of thinking about risk has been education, both within the firm and outside, said Diaz, who has taught risk management classes at the University of Connecticut and was a presenter at the last RIMS conference in San Diego.

"One of my passions at Xerox is really the whole concept of education, everywhere from the general counsel's office and our attorneys throughout the world and out to our field sales organization," Diaz said.

The impact of that educational effort has been that the risk management department is now seen as an ally within the company, rather than an opponent.

"You have to figure out new ways to engage people in such a way that they are willing to listen and willing to make decisions based on the information that you give them," Diaz said. "We can't always say, 'No, the world's going to fall apart.' "

That education effort flows both ways. Risk managers need to really understand the company's businesses and the needs of its operating units and customers.

"We spend a significant amount of time talking about Xerox the company. What we do, how we do it, what makes us different from our competitors. What makes us alike. What our philosophy is. What our culture is in different places around the world," she said.

--By Michael Fitzpatrick