Finding the 19TH Hole

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Finding the 19TH Hole

• Where Do We Go Next?

Steven P. Kahn, CPCU, ARM
Managing Director
Aon Global Risk Consulting
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Taking Inventory
The Good building on the strengths of pools

• Thirty years experience managing risk
• Broad property liability coverage
• Strong financial position (mostly)
• Great ability to identify risk
• Well developed risk control programs
• Well developed claims management programs
• Loyal members
• Understand political process
• Other??

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Better Analytics
1970s

• I had been to school and could say the
  multiplication table up to 6 X 7 35, and dont
  reckon I could ever get any further than that if
  I was to live forever. I dont take no stock in
  mathematics anyway.

Mujtaba Datoo, actuary extraordinaire
Quote by
Huckleberry Finn, Adventurer
TODAY
Sophisticated actuarial analysis, IRIS ratios,
etc.
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Taking Inventory (contd)
The not as good

• Data management / technology
• A lot of gray hair
• Other??

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Taking Inventory (contd)
What to watch

• Commercial competitors (are they a threat?)
• Other pools
• Paradigm shift
• Other??

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What do Your Members Want?
Strategic

• Predictable costs
• Low costs

Tactical

• Cover me
• Respond to me
• Ensure my legal compliance

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Other Key Risks
Aons 2009 Global Risk Management Survey

• Economic slowdown
• Cash flow/liquidity risk
• Technology failure
• Failure to attract/retain talent
• Political risk and uncertainty

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Is There a Plan to Address the Risk?
40

• Economic slowdown
• Cash flow/liquidity risk
• Technology failure
• Attract retain talent
• Political risk uncertainty

57

67

50

33

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Is There a Plan to Address the Risk?
ED
RISK
ALL
40
60

• Economic slowdown
• Cash flow/liquidity risk
• Technology failure
• Attract retain talent
• Political risk uncertainty

57
75
67
78
50
68
33
52
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Incremental Enhancements
Evolution of Training

• Better identification of member needs
• On-line training
• Webinars
• Training partnerships
• Greater support for stressed members

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Incremental Enhancements (contd)
Evolution of Technology

• OTS to purchased underwriting systems
• Enhanced use of pool websites
• Use of contractor-supplied services

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More Ambitious Changes

• Group data system
• Credit enhancement facility
• Invite others to pool training
• Collaboration with others for claims
  administration
• Inmate healthcare cost
• Other??

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Non-Hazard Risks Critical Questions
Potential risk and risk management questions
Risk governance
Risk improvement
Risk awareness

• What is the agencys risk appetite?
• Is there a senior level or governing board
  committee on risk?
• Do employees understand their risk management
  role?
• Where is the risk management unit/responsibility
  located in the agency?
• How does management incorporate risk into its
  development plans?
• Is the agency taking an appropriate amount of
  risk?

• What activities are in place to manage key risks?
• Does the agency have the ability to execute its
  risk response strategy?
• What metrics are used to monitor current
  risk/exposure levels?
• Who is responsible for monitoring completion of
  action plans?
• Did the risk mitigation activity yield the
  appropriate level of benefit for the cost?

• What are the top risks?
• What is the potential impact of the top risks?
• Which services bring the most risk to the agency?
• Has the agency quantified any of its key risks?
  If so, which?
• How is risk information communicated to the
  governing board and other key parties?
• How is the risk profile changing?

• External stakeholders
• Citizens
• Banks, creditors
• Rating agencies??

• Internal stakeholders
• Governing Board
• Internal Audit
• Management
• Employees

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