Hitting The Books

Risk & Insurance, May, 2000 by Lawrence Richter Quinn

To understand the future of risk management--and the education required to be an effective player over the next several years--all one needs to do is talk with Chris Duncan.

For the past three months, Duncan has been director of risk management and field security at Delta Airlines in Atlanta. That makes him part of a company with 45,000 employees, including three who specialize in risk management and another 14 who handle claims management.

What stands out about Duncan are three things: His relative youth (he's 37); his education (he has a BBA in marketing from the University of Georgia as well as an MBA in finance); and a stellar job record (he has held an impressive number of jobs that have enabled him to move in and out of risk management while learning how line businesses operate and how companies do strategic planning as they enter and exit businesses).

All of this sets him apart from the legions of risk managers who have followed before him--that is, those who have learned risk management by the seat of their pants, and who now are struggling to understand the increasingly close relationship between the capital markets, treasury management and traditional insurance risk management.

Duncan talks about his own success--and the opportunities and challenges facing everyone in the community--with humility. "I've been very fortunate to have had several bosses who have been extremely supportive of those who want to try their hands at something in addition to risk management," says Duncan, who, when leaving Georgia, went to work directly for Corporate America. "As a result, I've had four years when I was able to blend a mix of jobs involving finance, operations and risk management jobs.

"Seeking experiences beyond risk management has been a conscious career move on my part," adds Duncan, who has also worked with Tillinghast and Coopers, and has been director of strategic planning and director of finance for new concepts, both at Kentucky Fried Chicken. "I've been convinced for some time that the risk management job of today is very different than it will be 20 years from now, and I have wanted to broaden my skills while young enough to do so. So I haven't hesitated to add new tools to my belt."

A New Breed

A generation from now, expect most corporate insurance risk managers--and perhaps those with a relatively new title, corporate "chief risk officer"--to have backgrounds that mirror Duncan's.

More than likely, these future risk executives will have double-majored in both finance and insurance risk management as undergraduates at a handful of elite schools. Many will have gone on to obtain MBAs in both finance and risk management, and a few will even have PhDs in these and related topics.

And--who knows?--perhaps even Ivy League and other prestigious business schools will be offering executive education programs in subjects such as enterprise risk management--subjects that remain, oddly, off their curriculums.

Wishful thinking? Perhaps. After all, and more often than not, today's typical risk manager remains someone who found his or her job simply because, well [ldots] because it was there. That's the case with Roger Andrews, general counsel and director of risk management at Cynthia, Ky.-based Bullard Co., a company that "invented the hard hat," he says. A lawyer by background, Andrews fell into the industry when he returned to Maine, where he was born, and went to work for the state's department of insurance, handling property and casualty concerns. When the state's risk manager retired, Andrews jumped at the opportunity.

That's the case, too, for David Mair, associate director for risk management at the U.S. Olympic Committee (USOC) in Colorado Springs. Mair is an educator by background (eight-year-olds were his challenge du jour) when he joined the USOC, and his job was to help hand out large chunks of grant money to varying member sports associations. "After a couple of months my boss said, 'We're going to do this thing called risk management, you're in charge.' That was it." What started as a part-time job has turned into a full-time position in 1993, with four people reporting to him today.

"I've learned everything from the ground up," says Mair. "And my education background has been useful, teaching me presentation skills."

Rather than reacting defensively to younger executives like Duncan, eschewing their specialized educational backgrounds and successes, risk managers like Andrews and Mair are welcoming them with open arms. Reason: the coming of age of so-called "enterprise risk management." For lack of a better phrase, the "Old Guard" understands that it needs people with specialized risk management education and backgrounds on the payroll if it is going to be able to pull its own weight in front of boards of directors, senior management and others in treasury. It may not have all the specialized knowledge and information it needs, but at least it can hire it while going back to school and enhancing its own talents in the interim.