Newsletter Sign-up

CYRIL TUOHY, managing editor of Risk & Insurance®.

Risk management and insurance are awash in innovation.

How can you tell, for example, if the promise of a new "innovation'' represents a big leap, or whether it's simply an incremental step forward? How do you parse through all these new "tools'' and "models'' developed by many accomplished risk managers to decide which are innovative?

For this year's Risk Innovator^TM contest, the fourth since Risk & Insurance® launched the award in 2007, we sharpened our focus on how we define innovation.

We realize that innovations come in shades of gray, and that it's impossible to capture every nuance between one product or service and another, particularly given the expertise and hours that have gone into the development.

Even then, and even among this year's winners, unanimity on how to separate an innovative risk manager from a diligent one is elusive.

To be named a Risk Innovator^TM winner this year, the applicants' innovations had to contain three attributes.

First, the innovation had to be creative. For example, adding new features to or coming out with the latest iteration of an established risk management information system, while creative isn't as much of a jump as inventing an entirely new risk management information application.

Next, applicants had to show that they could execute and implement their innovation.

Then, the innovation had to demonstrate evidence of solid results for colleagues and clients. A powerful impact is a sign that the innovation passed muster with internal users and external customers.

Using these criteria, selecting the 19 winners profiled in the following pages was still difficult because of the high quality of the applicants. We reviewed applications several times before deciding who made the final cut.

In some cases, not everyone will agree the winners we selected are innovators.

We accept that. We believe what these innovators accomplished was unique and we haven't seen or heard about it before in risk management. We realize--in fact encourage--that everyone is entitled to his or her own opinion on what constitutes innovation. We welcome reader feedback and reaction regarding our Risk Innovator^TM selections.

Many innovations this year promoted new risk management "tools,'' with little differentiation or uniqueness between them. We found that, for example, in the healthcare sector entrants. Given the uncertain nature of healthcare reform, it's not surprising. Other applicants, we concluded, were doing their jobs extremely well, but not all that differently than their peers.

Some of the innovations we recognize this year tend to be grand in scope, with a broad reach. Other innovations are more narrowly focused, yet designed to affect their sliver of the marketplace more deeply. Still other innovations provide solutions to vexing problems, but are simple, practical solutions requiring little capital investment. We believe the work of all of our innovator winners made a substantial difference in one way or another.

Take Stan Turbyfill, senior risk consultant with HUB International Ltd. in Dallas and a 2011 Risk Innovator^TM winner in the construction category. He decided that putting indelible markings on copper piping and coils would deter thieves from stealing the hardware from office buildings.

And Rick Shaw, an innovator winner in the higher education category, developed software to help colleges identify threats of campus violence.

Turbyfill's innovation was a local, rather than a national solution to a big copper theft problem, while Shaw's creation was more technically complex and years in development.

Shaw's software grew out of Awareity, the private company he started in 2002 in Lincoln, Neb. It's a risk management consulting company that specializes in safety and security issues. He wanted to figure out a way for colleges and institutions to "connect the dots,'' and prevent tragic incidents before they happen, such as what occurred in 2007 on a college campus in West Virginia.

Shaw remembers vividly the horrific events at Virginia Tech. It was April 16, 2007, the day 23-year-old English major Seung-Hui Cho stalked, shot and killed 32 students and faculty, himself included, and wounded 25 others.

"My first reaction was, 'How big is it? How bad is it? This is horrible,' " Shaw said, in recollection. "With my safety and prevention on the brain, my next thought was, 'Was this preventable?' "

The software he's selling is designed to help colleges and institutions identify students who are victims of bullying, or who suffer from the trauma of sexual assault, or who find themselves the subject of nasty and repeated pranks, and to intervene.

In hindsight, Shaw said, there are often "a lot of red flags," leading up to an incident of campus violence, but hindsight isn't good enough. Hindsight is always too late. No victim was ever saved by the shield of hindsight.

What we need, he said, is foresight. People need the ability to intervene before the threat has a chance to emerge.

That's where his Threat Assessment, Incident Management and Prevention Services (TIPS) software, designed to flag warning signs before an individual explodes, comes in.

For Shaw, thinking back provided motivation to innovate.

If only his TIPS software had prompted Virginia Tech to take action against a troubled student, the nation might have been spared the brutal massacre at the school.

The campus violence and bullying epidemic begs for a risk management solution, one that connects the dots to warn of impending trouble.

"Connecting the dots can be hard--the people dots, the process dots, the threat dots," Shaw said. "Think of all the dots that you have."

While few of the innovators featured developed their ideas with as wrenching an underpinning as Shaw, many of their projects are highly effective.

Several of these risk professionals, in fact, were long on imagination and required little in the way of new software or processes, and some only needed a small investment.

For Turbyfill and his team, all it took was a little brainstorming. They approached a Northeast vendor to produce CopperGuard, a theft-protection kit for $250 to protect commercial HVAC coils and piping from looters stripping the parts off the units to take advantage of high commodity prices.

Traditional security solutions, cameras and alarm systems were expensive, and determined professional thieves find ways around the defenses, Turbyfill told Risk & Insurance®.

"So one of the things we discussed is coming up with a way to brand the copper, like the cattle guys did with their steers," he said.

The upshot was the CopperGuard package allows building owners to stamp their pipes to deter would-be thieves. Thieves trying to scrub off the indelible ink leave a "ghost image" of the property's name and contact phone number, and salvage yards can call a number when the pipes turn up, Turbyfill said.

While CopperGuard isn't a substitute for more expensive surveillance equipment, it represents a creative and practical solution, and that's partly why Turbyfill was selected as a Risk Innovator^TM.

It didn't take Jim Graff of Arthur J. Gallagher & Co. in Chicago long to cull through claims data and find ingenious ways of slashing $250,000 in claims costs for a workers' comp self-insurance pool for school districts.

Graff, a pool administrator and another winner in the higher education category, manages the School Employees Loss Fund, provider of workers' comp coverage to about 80 Northern Illinois school districts.

When he and his team began looking into a series of injury claims plaguing the pool, they pinpointed a handful of causes, among them teachers falling off chairs and desks while trying to reach shelves or put up classroom material.

Graff's deceptively simple response: A matching grant program from the pool's surplus funds that has provided money to the schools to buy the kind of safety equipment--including stepladders--that can be found at the local hardware store.

Graff estimated the initiative has led to a 15 percent to 25 percent reduction in slip-and-fall claims at the participating schools in 2010.

In Anne Parkin's case, it was she and her team's decision to use a tablet computer to significantly reduce the time it took to prepare and send property survey reports to a client in Abu Dhabi.

Thanks to 3G technology and the latest iPad hardware from Apple, what had in the past taken 10 to 20 days to review and prepare reports for real estate clients was done in hours.

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

"So basically we were able to provide the client with the information as soon as we left the site, which is really a unique thing when you're doing risk-control reports," said Parkin, lead consultant with Aon Global Risk Consulting, and a Risk Innovator^TM winner in the real estate category.

One of the applicants not selected as an innovator but who we thought offered a good example of a risk professional working tirelessly and diligently to get results was Barbara Vitale, director of corporate risk management and insurance for Avis Budget Group Inc. She fought an uphill battle to convince her carrier that the car rental company's risk was overcollateralized.

Avis Budget had been with CNA for years and the relationship was sound. But Vitale felt that her employer was being unfairly charged.

Vitale eventually prevailed, but not without some marathon negotiation sessions that included Avis's chief financial officer David Wyshner meeting personally with the insurer in Chicago.

When Vitale and Wyshner flew to the Windy City for the equivalent of a carrier-insured heart-to-heart, they asked the carrier point-blank: "Are you trying to get rid of us as a client because you're concerned about our exposure and our credit rating? Because we'd like to stay with you."

(Editor's note: Read more about all of the 2011 Risk Innovator^TM winners here.)

September 15, 2011

Copyright 2011© LRP Publications