By Cyril Tuohy
What better place to hold a risk management conference than in Los Angeles, earthquake capital of the United States?
Sitting as it does on multiple fracture zones, not a year goes by when the vast plain known as the Los Angeles Basin doesn't gently shift or suddenly rock as tectonic forces under foot undergo periodic realignment. Most of the temblors are harmless, but every so often they are strong enough to cause property damage.
With every cycle of loss, experts collect more data, document where the damage occurred, and record how the ground motion affected the structural integrity of homes, businesses and public structures. With every new lesson learned, the earthquake models used by insurance carriers, and specialized software vendors become more accurate.
On April 21-24, thousands of the world's foremost corporate risk managers are expected to descend on the Los Angeles Convention Center to discuss the latest developments in the risk and insurance industry, and earthquake risk is going to top the agenda.
Attendees looking for advice and counsel on earthquake risk are going to want to attend the Wed., April 24, session titled Aftershock! The Aftermath of History-Making 2011 Catastrophes.
That year's biggest catastrophe, the March 11 earthquake measuring a magnitude 9.0 which struck off the coast of Japan, spawned a tsunami powerful enough to kill more than 20,000 people, destroy thousands of homes and businesses, and even cripple one of Japan's largest nuclear power plants.
Stunned television viewers watched as a shock wave from an explosion at one of the four reactors at the sprawling Fukushima-Daiichi complex ripped through the top of a reactor housing unit.
And it was no silver screen fiction concocted in Tinsel Town. It was a real event, recorded live, with huge financial consequences and massive loss of life.
As if the Great Tohoku Earthquake weren't enough, another temblor, in February of that year, leveled Christchurch, New Zealand. Epic flooding drowned swaths of the Australian countryside as well, followed by more flooding in Thailand later in 2011, which engulfed hundreds of important factories supplying the auto and technology industries around the world.
The floods forced many companies and their insurance brokers to take a closer look at their business interruption coverage, and to dig deep into the vulnerabilities of their supply chains.
Tom Texeira, executive director and supply chain expert, Willis Group Ltd., told Risk & InsuranceŽat the time, that the loss numbers from the 2011 catastrophes were "a lot bigger than anticipated or had been assessed."
"While the claims process worked well, particularly with brokers on the ground locally, there were still issues with regard to understanding the exposures, and the companies getting paid half of what the sum of the loss actually was," he said.
With the bulk of the property claims now processed, and more accurate estimates around contingent business interruption losses in connection with 2011, a panel of risk managers is expected to reveal what was learned from that record year.
Panelists include Diane Cannataro, senior manager for corporate risk and insurance for the computing software giant Adobe Systems; Jill Dalton, partner, and Eric Sullivan, partner-in-charge, respectively, with consultancy Dempsey Partners LLC; Anthony Moraes, principal of Integro Insurance Brokers; and Martha Doherty, senior risk manager with computer disk drive manufacturer Seagate Technology. The session, to be held between 9 a.m. and 10:15 a.m., will be hosted by the Silicon Valley chapter of the Risk and Insurance Management Society Inc.
Risk managers will also be interested in the companion session titled "Recovering from the Unexpected: Business Interruption Claims," on Wed., April 24 at 10:30 a.m., immediately following the Aftershock! Session.
Participants in the business interruption session include coordinator Ryan Pratt, principal with Ernst & Young LLP, and speakers Allen Melton, partner, Americas leader - Insurance Claims Services, Ernst & Young LLP; Paula Gentile, senior vice president and general counsel, risk management, MGM Resorts International; Alan Gier, director, global risk management & insurance, General Motors Co.; and liaison Phil J. Corbeil, risk manager for the City of Calgary.
The session on the aftermath of the 2011 earthquake, along with other sessions on handling property-catastrophe claims, are among the more than 100 sessions in 11 categories offered by RIMS over the four-day conference.
Session categories include claims management, employment risks, enterprise risk management, finance, industry-specific risks, insurance, international risks, legal legislation, loss control, risk management and strategic risk management.
Risk managers, brokers and vendors from around the world come to the conference, and a West Coast location draws many attendees from Pacific Rim nations.
Last year's conference was held in Philadelphia, where more than 8,500 people attended. Even more people are expected to show up this year, according to a RIMS spokesman.
The last time RIMS held its annual conference on the Pacific Coast was in Vancouver, B.C., in 2011.
John R. Phelps, director of business risk solutions for Blue Cross and Blue Shield of Florida Inc., and president of RIMS for 2013, said the conference is designed to be broad enough to offer every risk manager the opportunity to learn, grow or simply connect with peers.
"No matter what you're looking for in risk management and insurance, you'll find networking and sessions to support it," Phelps said. "You can tailor your conference schedule to what you need. Think of it as 'ŕ la carte' to the max at the RIMS conference. That's a great advantage for someone looking to grow and learn."
New at this year's conference is the "Power Hour," which RIMS is billing as 60 minutes on the morning of April 23, of "innovative, highly interactive education" that will energize attendees. The "RIMS Hub," in the center of the exhibit hall, will offer attendees educational and networking opportunities, according to RIMS. Author Simon O. Sinek is scheduled to give the opening keynote address on inspiration and leadership, and entertainer, author and television host Howie Mandel is scheduled to deliver the closing address at 2:15 p.m. April 24.
Phelps, a proponent of widening the risk management tent, said that in his experience, the biggest change has been the transition of the industry from insurance management to new opportunities in enterprise risk management.
"The transition from 'risk is the enemy,' to 'risk is a source of potential value,' it is a huge change in the risk management discipline and one which is still evolving today," he said. "That doesn't mean that a risk manager needs to transform to enterprise risk management. I'm talking about making the tent wider."
Insurance management and loss control are still "vitally important and always will be," he said, but the opportunities for risk managers who want to think more strategically about risk have multiplied. "That opportunity wasn't there in the past."
Phelps, a member of RIMS for 33 years who started in the industry on the insurance side before leaving to start a risk management program for Blue Cross/Blue Shield, said the annual conference can at times feel overwhelming for a novice risk manager.
Risk managers who get the most out of the meeting are the ones who come with a plan, a specific goal, or a particular takeaway from the conference. "My advice is for the risk manager that's truly committed at improving themselves in order to increase the value they bring to their company, is to develop a plan before you go," Phelps said. "What do you want to know more about? What people do you want to talk with? What networking could provide you the great support? What are the goals? Do you want this session or that session?"
Risk managers looking for more information about a technology, a strategy or regulation and litigation surrounding a particular risk landscape should look at the list of exhibit hall vendors to see if there's a topic they want to find more information about.
Phelps also said risk managers should "make a plan and work it, because if you don't you tend to bounce around, and it can be very overwhelming."
CYRIL TUOHY is managing editor of Risk & InsuranceŽ. He can be reached at firstname.lastname@example.org.
March 1, 2013
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