Some people miss the good old days. I don’t. I’ve been around since the days when business was done on a napkin with people who were more like buddies than business partners and yes, when the deal was done, there was usually time for another round. Good times were had. But today the stakes are higher. The business we do is bigger. Today we know that risk isn’t just about property and casualty policies. Today we understand that risk is a key driver of success. And looking ahead the trend is clear: the risk manager of the future is going to have a seat at the table and I’m glad to see it coming.
More prestige, influence and, yes, money
The risk managers of the future are going to have a broader role in their organizations. They’re going to be hired with the direct participation of their company’s top leaders and those leaders are going to be looking for more education, training and experience. They’re going to be looking for knowledge of finance and law. They’re going to be looking for advanced degrees. They’re going to be looking for smart leaders ready and eager for that seat at the table. And the risk managers of the future are going to be compensated accordingly – with prestige, influence and, yes, money.
When I started in this business I met a CEO of a company and asked him who bought insurance at his company. He didn’t even know. Risk management was pretty much buying insurance and buying insurance was a transaction about as important as paying rent and getting office supplies. You needed it, but if you were running a company, you didn’t want to think about it. Today, the C-suite is thinking about it, because they’re thinking about risk in a bigger way.
Risk today includes cyber risk, which can threaten every aspect of an organization. Terrorism risk. Political risk. Supply chain risk. Reputational risk. These are threats that can take down a company. These are risks that go to the heart of a company’s identity and finances. Today, the risk manager is called upon to advise the company leadership on strategic operational and financial issues. In the future, that role will only expand.
Less art, more science
Fortunately, the tools available to the risk manager are expanding too. When I got into the business, making the decisions insurance buyers make was considered an art. It was personal. There were relationships. Favors were traded. The decisions were subjective, gut-level. Today, there’s more science – a lot more science. We have models that spit out evaluation impact studies for earthquake, flood, windstorm and more. We have analytics that reveal the impact of deductible levels. We can quantify D&O risk. We can dig into the vast data we have on workers compensation and put that data to work in ways that can help us reduce the chance of injury in the first place.
We also have a broader perspective on the nature of risk. Years ago a client pointed out to me that workers compensation and employee health benefits were really two sides of the same coin: you need to take care of people so they can stay productive and you need to offer attractive benefits to successfully compete for talent. Our profession is starting to realize that now. The concept of total rewards helps make that point. We’re also making connections between people and risk in areas like cyber vulnerability, where recent studies show that when people aren’t engaged at work, they’re more likely to be susceptible to phishing schemes that put a company at risk. The data analytics available now show where problems are and also point the way to fixing those problems.
It’s still a people business
At the same time, it’s not all science. One thing that hasn’t changed is that on many levels this is still a people business. It’s people doing business with people they trust. And it still can be a heck of a lot fun.
If I could give one piece of advice to people entering the field – to the risk managers of the future – I’d say this: keep learning. The world keeps changing and you can’t be left behind. Your new roles will require more skills and training, and while your employer may provide some of that, you’ll have to do the rest. Every day, try to learn something you didn’t know before.
The value of the risk manager is growing. It will keep growing. You have to make sure your value keeps growing, too.