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By PATRICIA VOWINKEL, who has worked for national media outlets for more than 20 years

In thinking about the new, emerging risks that Microsoft Corp. will face in the coming years, Lori Jorgensen, the company's senior director of finance-risk management, is giving a lot of thought to how people interact with technology.

This raises questions about whether Microsoft is providing a consistent experience that is reliable and secure, and whether the privacy component of that is well covered, she also said.

From a competitive perspective, Jorgensen said, the company is trying to get it right and anticipate what the user will want. Its "Surface" computer, for example, is designed to fit in tables and hotel lobbies, hints of product design to come.

And then there are the perennial concerns about data security and steps the company can take to make its own data less vulnerable to a security breach.

In her years in risk management, Jorgensen has seen some big changes not only in the technology sector but also in risk management as well, as risk managers have gone from being simply buyers of insurance to being sophisticated finance professionals.

Risk managers today, she said, are professionals who have to understand the balance sheet and the profit-and-loss statements; they have to understand the impacts of those items and have to talk that language with senior management and, at the same time, have a seat at the table within the company's businesses.

She also said she's seen a change in the way risk management professionals move up the ranks. When she's hiring now, she said, she looks for people with outstanding analytical skills and a strong background in math and in problem-solving. That's a big difference from years ago when risk professionals typically got their start at an insurance company or an insurance broker--as she herself did, she said.

Part of the reason for this is that Microsoft retains so much of its risks, and so it does not rely as much on people with experience from within the insurance industry. Because of Microsoft's limited relationship with the insurance markets, Jorgensen has had to take a different approach to risk management.

"One of the perceptions I have is that we are better networked into the organization, and we have really good and strong relationships really throughout the organization, both horizontally and vertically," she said.

"I don't have the political barriers that tend to prevent others from having that kind of network," she also said. "If I'm dealing with the legal department or human resources or one of the businesses and we're working on a risk problem, they welcome our participation and support," she said.

The paradigm has enabled her employer to establish a robust network throughout the company, giving risk management a "seat at the table" and a wide audience, she also said. The perspective is one that others within the company may not enjoy.

What sets Microsoft's risk management approach apart from other companies is the fact that Microsoft has become comfortable with assuming its own risks, and has developed the ability to identify and, as best as possible, quantify those risks. To do this, whenever Microsoft's various business groups propose new ventures, the risk group gathers information around those risks and then, sometimes with outside assistance, applies various actuarial, quantitative analysis and financial analysis modeling to help come up with the best estimate of what the value and likelihood of that risk is.

In this way, the risk group has been able to bring value to the rest of Microsoft's operations.

Now, with the challenges in the economy over the last year or two, the risk management group has been in more demand than ever, Jorgensen said. Groups from within the company have been "looking even more to finance to help them with business strategies," she said.

"I think for finance and risk professionals across the board this is an unprecedented time for us to add value," she said.

May 1, 2010

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