As I arrived today at this year's RIMS conference in San Diego, my thoughts drifted back to the first time I attended this convention of corporate insurance buyers in the late 1980s, when risk managers had a fairly thankless job. Man, how times have changed, as NU's exclusive coverage of the annual "Risk Management Compensation Survey" by Logic Associates reveals.
In the “old days,” risk managers never received a call congratulating them because no property had burned down that day, no worker had been injured, and no one had sued. The only time they got a dreaded call from above was when something went wrong. The conversation was short and far from sweet.
“How in the world did we let something like this happen?” some corporate big would demand, adding: “What are we doing to make sure it doesn’t happen again? And we had better be insured!”
Today, the dynamic has changed dramatically. Certainly, risk managers still get called on the carpet when a bad loss occurs. But the conversation these days is far more likely to be initiated by the risk manager—not to deliver bad news, but to announce success in lowering the cost of risk, or to propose innovative loss control and alternative risk-transfer solutions.
As a result, risk managers are being recognized where it counts—on their personal bottom lines—with pay on the rise.
Indeed, the most recent salary survey by Logic Associates--based for the sixth-consecutive year on a sampling of over 1,300 of NU’s risk manager subscribers-- reveals that on average, salaries were up 6.6 percent last year to $187,215. That’s quite an improvement over the 2006 gain of 4.8 percent, and more than double the 3.2 percent average raise in 2005.
Logic President Bill Perry makes it clear in this week’s NU cover story, “Risk Managers Are Big-Money Players,” that the numbers are no fluke. He points out that by taking on added responsibilities and being more proactive, they are drawing positive attention from senior management, and being rewarded accordingly. (Click here for the full cover story and survey results.)
It’s very gratifying to see the third leg of our readership base (along with insurance carriers and intermediaries) step up the way risk managers have, especially with their recent forays into enterprise risk management.
There are skeptics who insist ERM is just another empty buzzword; that risk managers are doing what they have always done and always will do—basically buy insurance and manage claims.
These cynics contend that anyone boasting the exalted title of Chief Risk Officer is kidding themselves (and their employers) if they think they’re doing anything differently—let alone anything better—than their predecessors.
I beg to differ, if only because more and more risk managers are taking their firms into the ART markets, most never to return-- much to the chagrin of traditional insurance carriers, who are left to battle over a shrinking premium pie, further fueling an already accelerating soft market.
The challenge facing risk managers now, as Mr. Perry wisely points out, is not to fall back into bad habits. As easy as it may be to simply accept the lowest bid in a down market--especially with the pressure to cut budgets in a struggling economy--risk managers must resist the temptation to revert to being just an insurance buyer.
Risk managers have come too far to take the easy way out. Never again should they trust their fate to the cyclical insurance market, or delegate their responsibilities to their broker. The biggest risk they must manage is that of complacency.
What do you folks think?
Comments (1)
Risk managers have more risks to manage today than ever before, juggling such issues as environmental, global manufacturing and transportation, product safety from a huge number of sourced lines, international and internal liability, as well as the usual issues that have faced them over the years.
Todays' risk manager is more than the safety guy and the insurance consultant; they are an overseer of a fluid environment where not only does change happen rapidly, but often happens in the wrong direction without their constant guidance.
Success in risk management is measured by some management strictly in terms of profitability. Others see the bigger picture of corporate image of good citizenry, employer-employee relations, environmental stewardship and the avoidance of injury and the suffering it causes to man and the consequences of a loss. They actually get the BIG picture.
Risk managers who report to HR and not the top executives usually have a "watered down" position where they have to meet the needs of a bureaucracy and have little power to be creative, make and enforce change as needed.
When they report to the top gun in a company and are given the responsibility, and the accountability, to create a safety culture that works for everyone, the success is attributable to the team building and effort of everyone involved, led by a charismatic risk manager.
In short, a great risk manager is worth whatever it takes to get the job done right and well.
Posted by BJ | April 28, 2008 5:37 PM
Posted on April 28, 2008 17:37