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By DAN REYNOLDS, senior editor, and CYRIL TUOHY, managing editor

Editor's note: Over the past two years, we've circled the country speaking with readers, advertisers and sources, asking them what they would like to see more of in Risk & Insurance® magazine. An overwhelming number of you responded by saying you'd like to see more stories about innovation. We've known this for some time, and we've written about innovation in risk and insurance in piecemeal fashion in our feature pages. Now, after traveling widely, attending trade shows, hosting seminars and considering hundreds of e-mail survey responses, we've answered with our first Risk Innovator issue.

In addition to featuring the people behind the innovations that move the risk management industry forward, we've bestowed a supplemental award for some of the innovators. The Responsibility Leader designation, sponsored by Liberty Mutual, recognizes innovators who've helped the community beyond risk management and insurance.

As always, readers are welcome to e-mail us at riskletters@lrp.com for future ideas on how to improve this issue, which will be published every year in mid-September.

Jack Roberts, editor in chief

Matthew Kahn, publisher

It's one thing to think of or talk about an innovative idea--just listen to the presidential candidates in the closing weeks of "silly season"--but it's quite another to turn those ideas into reality. And that's exactly where the winners featured in our 2008 Risk Innovators issue separate themselves from their peers ... and those running for office.

Every one of Risk & Insurance® magazine's 2008 Risk Innovators was able to muster the energy and the will to peel their ideas off their mental page and turn them into an executable process to the benefit of colleagues, customers, senior management and even themselves.

Some of those processes offered incremental improvements in risk and insurance management, others are more transformational in nature with longer-term benefits to the industry.

Take, for instance, Mike Perito, risk engineer of the Dubai-based Oman Insurance Co., and inventor of the superhero character Super Oman.

The marketing coup for his employer aside, odds are that Super Oman has done more for communicating the importance of loss control to foreign-language workers than any white paper or loss-control consultant armed with a Ph.D has ever done for communicating the importance of on-the-job safety.

OK, maybe we're exaggerating a little, but you've got to give Perito credit, or at least a raise. How many people, with just a comic strip, have the power to change attitudes and cut down on workers' comp injuries, particularly among hurly-burly workers in the construction and real estate industries?

As Perito already knows, Super Oman and the comics have a lot of power to communicate.

Interviewing candidates and talking with their colleagues and peers has been a thrilling, sometimes humorous process, and by now we've done enough digging to know that innovators in risk management and insurance come in as many shapes and sizes as do their innovations.

Some risk innovators embrace technology and relish in creating master programs to control losses. Others cast themselves as almost on the level of idiot savants, plodders of decent intellect who are able to follow their hunches and build teams that create winning solutions for them and their companies.

Which is why there's a special place in our hearts for Paul Buckley, senior director of risk management with Tyco International. He's one of us, or sounds like it: "The problem is I am not that smart, I have to keep things simple for me," he said.

And for us too ... and the rest of the executives with risk responsibility working around the country.

That's the kind of thinking that has an impact on the people who work for and around you: Get out of your own skin and inspire others to do the same. Buckley's reorganization of Tyco's claims operation required imagination more than anything else.

He was creative enough or willful enough to convince two competing TPAs to hold hands across the globe, trusting each other through a symbiotic system to channel claims reports all the way back to his office in Princeton, N.J. In the end, he unified a claims management program that functions on six continents and more than 30 countries.

No large capital outlays needed here; no booting up fancy risk management information systems, thank you very much. All Buckley needed was to get his subordinates speaking in the same language. Where's the innovation in that, you ask? In its simplicity.

Getting employees on different continents to communicate with one another about the nature or status of a claim is a big step forward for a company whose former CEO seemed more concerned with throwing toga-clad birthday parties in Sardinia.

"I'm just an idea guy," said Buckley. That's right. But ideas don't cost anything. Good ideas can even bring in a lot of money, or at least cut your claims costs, as they did under Buckley's reorganization. Great ideas, well, they last forever.

And this brings us to the kinds of innovations that, while not technically earth-shattering, make a big difference to the end-users, the people who ultimately matter most.

How much data is stored in the bowels of a Fortune 500's mainframe, yet remains buried under layers and layers of code? How much have companies spent on consultants and TPAs with empty promises of turning data into information palatable by the end-user: risk managers, claims or disability managers, or even the chief financial officer?

That's where Michael Wissman, risk management administrator for the Southeastern Pennsylvania Transportation Authority, rides to the rescue. If there's one innovation to remember him by in his profile, it's the expression "user-friendly statistics."

Anyone who can make statistics a friend of the user deserves consideration by the Nobel committee, in our opinion.

Yes, we know, we're using a little hyperbole here. But let's keep the big picture in mind. The point we're getting at is that turning data into information relevant and clear to people on the front lines of the risk management industry is worthy of recognition.

The subsequent profiles summarize their achievements, the strategies, the challenges faced and challenges conquered of risk innovators in their own words and in the words of those who work with them every day to bring some rationality to the world of risk.

Innovation is alive and moving forward quickly in many places, in fact. Enterprise risk management is one such area, though where it's headed isn't quite clear.

"Enterprise risk management is ripe for innovation all over the place," said Robert Morrell, founder and CEO of Marietta, Ga.-based Riskonnect Inc., a marketer of risk management software involved in "making spatial special," in the words of one writer.

It is. But Morrell, who sold a risk management information systems company known as RiskLabs to Aon a few years ago, insists ERM isn't solely an exercise in quantitative thinking. Maybe so. But if Morrell is convinced that ERM is at its core not about quantitative analysis, then he's got to convince the likes of Mike Giacobbe.

Giacobbe, a director in the Chicago offices of Aon, speaks about ERM in categorical terms that are the opposite of Morrell's: "Enterprise risk management is an approach that should lead to the quantification of all critical risks," said Giacobbe.

Go figure. Two risk and insurance innovators with diametrically opposed strategies about how to approach enterprise risk management. Is it any surprise that there's nary a consensus about ERM, or that it's been a slow climb penetrating the upper ranks of corporate leadership?

Innovators in risk management and insurance win in part because of the sheer strength of their willpower, coupled of course with their knowledge of the industry, their contacts and, oftentimes, their intellect.

Meet Fred Pachon, the vice president of risk management and insurance for Santa Barbara, Calif.,-based Select Staffing. Pachon works as a risk manager for a temp agency that has workers spread out all over the country, many of them in harsh, dangerous industrial environments.

Pachon works in a business where margins and companies can be wiped out by even a minor workers' comp claim. So what has he done about it? He's created ratings systems for the attorneys that handle his claims. If you close your cases quickly and for reasonable amounts, you get more cases. But if you don't, don't let the door slam you in the backside.

"It doesn't matter if you send me a bottle of wine or whatever, it is all about performance," said Pachon.

Looking to keep an eye on his company's risk management contractors, Pachon's even gone so far as to put workers in the offices of his TPA and his carrier that report to him. Can you imagine the silence in the room when Pachon had the audacity to mention that idea? Call it "hardball innovation." We'll drink to that.

For Grace M. Crickette, chief risk officer for the University of California at Berkeley, looking for and obtaining money from the U.C. system to fund the Be Smart About Safety program was deserving of a master's degree in political science.

Cash-strapped senior managers weren't about to hand Crickette a blank check to be used on safety. "We had to gamble on ourselves," she said. Even when top university executives were presented with positive return on investment figures, it was still a difficult sell.

With a deficit in the workers' comp program at the 10-campus U.C. system when Crickette first arrived, the schools returned $37 million last year and $57 million this year thanks to better loss control measures.

"We need to sell safety like Madison Avenue sells soda," said Crickette. Now, there's an idea every risk manager in the country would find worth toasting.

Let's not forget about Jeff Davies, former risk manager at the Indiana Blood Center. He came up with an elegant and revolutionary solution that eliminated the risk associated with storing donor Social Security numbers on his employer's database.

Instead of using Social Security numbers to identify donors, Davies proposed the idea of using fingerprint scans. Donors simply place each of their index fingers on a low-cost sensor that is connected to a Web browser, and they are identified out of the more than 500,000 donors the Blood Center has on record.

Software developed by BIO-key International uses that fingerprint data to develop a unique mathematical template, something like a bar code.

"This lets them stop storing Social Security numbers, which is a liability risk," said Jim Sullivan, director of sales at Wall, N.J.-based BIO-Key. "This is a great solution to a big problem. It was the first time it was done in a blood center," he said.

The fingerprint, always a unique identifier, can't be lost like a donor ID card. For donors, the fingerprint scan eliminates the hassle of having to carry around another card in order to be able to donate blood. The Red Cross is now interested in using the technology, according to Sullivan.

Then there are the company men, executives in massive corporations that work on every continent except the one where the Emperor Penguins march. They're innovators of the quieter sort--less the individualist superstars and more the work-from-the-inside insiders carrying unwieldy titles but highly skilled at weaving through bureaucracies capable of immense good yet so often calcified by entrenched interests.

Enter Janine Nicholson, director of workers' compensation--janitorial, and her colleague, Mark Poyadue, national director of workers' compensation for ABM Industries Inc.

They flew in from the company's West Coast offices and showed the corporate brass how to slash the company's comp claims filed in New York, where the vested interests in lifetime pension payments for disabilities exposed the company to some very long-tail risks indeed.

"Let's see, $125,000 up front or $800,000 in the rear. Yeah, we're going to start closing these claims," said Nicholson, recalling her experience. Characteristic plain talk from the "California girl" helped move claims along. The New York Settlement Program, begun more than two years ago, has cut ABM's net incurred by $20 million.

No issue on innovation in risk management would be complete without the mention of FM Global, the stalwart of stalwarts in the property/casualty sector, a company that cares deeply for and measures the precise rate of return delivered by such mundane items as rivets hammered into a roof. In this inaugural issue, the company man and risk innovator is Weston Baker, senior engineering technical specialist for FM Global.

Baker's an expert on fire research, and all you need to do to ignite Baker's passion is to broach the subject of sprinklers: exactly where they're positioned on ceilings, when they should go off, why they failed to operate, how much they cost, and a building's precise chances of survival when protected by a given number of sprinklers.

His innovations, if not quite apparent to the expert eye even of veteran sprinkler specialists, soon should be. He's modifying many of the existing sprinkler guidelines that are more than 40 years old. As a result, he expects to come up with far cheaper and simpler engineering solutions to fight fires indoors than in the past.

EXECUTABLE CREATIVITY

If there's a thread that binds the risk innovators featured in the following pages, it is that they are all committed to providing solutions--for themselves, their clients and their employers.

Not only have the innovators shown creativity and resourcefulness in their endeavors, but they've distinguished themselves with their ability to execute, proving that their ideas are not ones to be relegated to the inside pages of a consulting report.

We suspect that many of the innovations came from plain-old elbow grease--hard work and long hours. Most striking was the fact that many of the innovations didn't rely on complicated software or involved processes. More often than not, the innovations were incremental in nature: a faster way to process a claim, a deeper way to analyze the data. Few innovators mentioned that their ideas came to them courtesy of the proverbial lightning bolt, via a eureka moment, a sudden revelation.

Rather, the innovators spoke of quiet toil and long discussions with colleagues, bosses and clients. They thought about their corporate processes on their commutes home, mulled over the results, and tossed and turned in hopes of finding a better way to deliver a product or a service palatable to the multitiude of politico/corporate interests within the corporate environment.

Have these innovators in risk management and insurance made their employers more efficient? Their workers more content? Slashed claims costs? Improved benefits distribution? We hope so.

Changes take place so fast in the 21st century that by the time a new product or business process comes to market, there's no telling whether the improvements will be obsolete in a week. At the very least, the risk innovatorshave earned the personal satisfaction of having made a contribution. And for that we should all be grateful.

We welcome you to view all of the 2008 Risk Innovator and Responsibility Leader profiles.

September 15, 2008

Copyright 2008© LRP Publications