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From: Subject: PM article Template Date: Tue, 5 Nov 2002 11:39:02 -0500 MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_000_0000_01C284BF.F0876420"; type="text/html" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2800.1106 This is a multi-part message in MIME format. ------=_NextPart_000_0000_01C284BF.F0876420 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: file://C:\Documents%20and%20Settings\iqintern2\Desktop\New%20Folder\riskmanagement.htm PM article Template 3DPM=20

=20 = =20 = =20 = =20 = =20 October = 2002=20

A Risk = Management=20 Yankee
In King Arthur's Court

=20

Allen=20 Iampaglia =

=20

In late 2000, my superiors in the = city of=20 Glendale, Arizona, received a rather daring proposal. After more than = two=20 decades as risk manager for the city and another eight years of private = sector=20 experience, I had decided to go to London for three months starting in = May 2001=20 to work with various brokers, government entities, and university staff = members=20 to open a line of communication among these groups here and in Europe. = The=20 ultimate goal was to arrive at a best-practices standard that could be = used by=20 local governments to acquire better insurance products at more = competitive=20 premiums. An added goal was to open new markets to local = governments.

It has become clear that the = traditional=20 nature of the insurance market will not change in the foreseeable = future. The=20 continuation of market cycles will mean several years of cheaper = insurance,=20 followed by several years of expensive insurance. These cycles also may = cause an=20 overall shortage of coverage because of the number of carriers leaving = the=20 government-sector market. (And now, with the events of September 11, = 2001, still=20 fresh in people=92s minds, the problems of coverage and capacity have = become even=20 bigger issues in the industry.)

Even with substantial rate = increases, some=20 carriers continue to reevaluate their role in the local government = market. We=20 were faced with this reality during Glendale=92s insurance renewal = period in=20 January 2002. Fortunately, we were able to find an alternative carrier = for the=20 city=92s $300 million in property.

Proper Techniques in Place =
One of=20 the problems that have plagued local governments in their efforts to = obtain=20 stable coverage has been an inability to prove to the insurance industry = that=20 proper risk management techniques are in place to handle risk factors = and=20 losses. We, as risk managers, have not done a good job in educating the=20 industry=97and, in some cases, our own organizations=97on how a local = government can=20 employ a strategic approach to risk management issues.

By developing a set of best-practice = standards=20 specific to risk management, local governments could succeed in = improving their=20 insurability image in the global marketplace. Clearly, this would not = happen=20 overnight, but a good first step would be to make contact with European = brokers,=20 government agencies, and carriers.

Insurance leaders and agency = representatives=20 with international experience agree that agents and brokers will find it = increasingly necessary to develop relationships with their counterparts=20 overseas. In my opinion, the same need holds true for other = organizations=20 involved in risk management and insurance.

Because the insurance markets that = local=20 governments can go to for coverage are shrinking, the time has come to = explore=20 other markets. We could even take the argument further and propose that=20 government should not only seek out other markets but also work to = generate new=20 ones. If we developed a line of communication with other entities around = the=20 world, the wealth of knowledge and experience could only improve our = chances of=20 success.

Working with Glendale=92s stateside = and London=20 brokers enabled me to meet with risk management professionals in the = United=20 Kingdom, France, and Germany. My first stop was a regional conference = hosted by=20 the Association of Local Area Risk Managers (ALARM).

Like its American counterpart, the = Public Risk=20 and Insurance Management Association (PRIMA), ALARM is the professional=20 organization of risk managers working for local authorities and other = public=20 sector organizations. With more than 1,200 members, representing most = local=20 authorities in the United Kingdom, the association=92s aim is to enable = the public=20 sector to develop and implement successful risk management strategies. = And, like=20 PRIMA, it is committed to supporting and raising the profile of risk = management=20 practice, along with promoting education, training, and research and the = dissemination of information. The ALARM annual conference at the = University of=20 Warwick is the biggest public sector event of its kind outside the = United=20 States.

It was ALARM=92s commitment to our = project that=20 gave me the necessary entrance into the U.K. risk management arena. My = plan was=20 to attend the conference in April 2001 and introduce Glendale=92s = project concept=20 to the members. I would then return in May and begin working with some = of the=20 members I had met during the conference.

While working with many of these = entities, I=20 came to understand some of the problems they were facing. Discussions = developed=20 as we compared issues, problems, and solutions. When one of the = discussions led=20 to a meeting at which we reviewed how to measure the results of various=20 programs; I was able to share some information on how Glendale deals = with risk=20 management issues and how we have traditionally measured our success = rate.=20 Several members of the group described some new concepts they had been = working=20 on with the government audit office in London.

Much of the information gathered = from these=20 meetings led me to ask the other group members who was doing the best = work in=20 this area. All fingers pointed to Scotland. So, with laptop in hand, I = was off=20 to Scotland and the department of risk and finance at the Caledonian = Business=20 School in Glasgow, where I met with Dr. Lynn T. Drennan, whom I had = first=20 encountered during my earlier U.K. trip, to attend an ALARM conference = in=20 Coventry. Dr. Drennan, who heads the department of risk and finance, and = I=20 decided to work together on a strategic plan.

She was especially interested in = helping to=20 develop the format for the property database for Glendale=92s risk = management=20 department. Dr. Drennan had started her insurance career as an = underwriter, and=20 this knowledge and hands-on experience have given her special insights = into the=20 inner workings of the insurance industry. As an educator, she was able = to apply=20 this insight to the problem and to give to me valuable information on = how to=20 format the proposed database.

Glendale=92s risk management staff = have worked=20 with information technology departments both here and in Glasgow to = build a test=20 version of this database. A member of Dr. Drennan=92s staff came to = Glendale for=20 three months to work on this and other joint projects. We finished the = testing=20 of the database this year and put it into operation. The final step in = this=20 project will be to introduce this new concept to various insurance = carriers in=20 the United States and Europe.

The database employs a Web-based = technology=20 that allows any user to log on to the system and view every aspect of = existing=20 or developing property. Digital images, along with site plans, building = specs,=20 traffic flows, infrastructure, and proposed policies and procedures will = be=20 accessible with a click of the mouse. Updates will be automatic, and = each city=20 department will be able to input information regarding construction and = use.=20 Underwriters viewing the system also will have the capacity to comment = on any=20 aspect of the property.

The benefits gained from this = project will be=20 far-reaching. They include the results of the Glendale Best Practices = Program,=20 which already have begun to change what staff members are doing. = Discussions on=20 new product development continue regularly with our broker and with = several=20 other carriers. The continued relationship with ALARM furnishes new and=20 insightful information, and the ongoing partnership with Caledonian = University=20 in Glasgow has developed into an international internship program that = will=20 continue well into the future.

Allen Iampaglia is a risk = manager,=20 Glendale, Arizona (mailto:h.risher@worldnet.att.ne= t).=20

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