Slicing through the silos: about 18 months ago SBC Communications hired Paul Stephens to unite the risk management functions around the far-flung corporation, and to increase control at the managerial level. Stephens' group united investments, including pensions and savings, with all risk management, including corporate risk financing, workers' compensation, and claims

Risk & Insurance, March, 2005 by Gregory DL Morris

"From a personal standpoint, top management trusts me to go through our entire risk management approach on a rational basis--not making snap decisions," Stephens says.

Since the initial reorganization under Stephens 18 months ago, the head count under him has actually decreased--one indication that the new risk management is looking for efficiency rather than territory.

There has also been a thorough review of process as well as structure. In one ease an 18-month insurance policy was taken out shortly after the terrorist attacks of Sept. 11, 2001. "I asked if year-and-a-half policies were standard/'or that coverage and was told that it was not," Stephens recalls, "but in the wake of the attacks, it was thought at the time that premiums would go up and we were locking in the rate. That was fine. But here we were, well into the term and rates had not gone up ranch. 80 I asked if we could cancel and rewrite. Again, I was told that we don't do it every day, but we could. As a result, we saved ~2.5 million in premiums."

Stephens is a CPA and an attorney. He has an undergraduate degree from Millikin University in Decatur, Ill., and took his law degree at Washington University in St. Louis. From 1988 to 1997 he was with Ernst & Young] as a tax advisor. At that point he joined SBC as head of the state and local tax group. He then moved to CFO of one of the firm's operating subsidiaries before taking over risk management in July 2003.

Walton notes that Stephens has an unusual resume for a risk manager. "Generally, tax people are very technical," Walton says, "but certain folks can demonstrate a broader skill set: organization, communication, law and interpersonal skills. The previous risk manager was here for 20 years, and he did a good job. But it is good to get in new blood. And Paul has great people skills. He has been able to blend departments and groups without much confrontation."

Walton also cheers, "Go Bears!" on Saturdays, but for Baylor rather than Washington University. There is a Washington connection, though. Walton has an MBA from George Washington University in Washington D.C. He also holds a property and casualty charter, and is an associate in risk management and in claims. That is where he started, as a claims adjustor for The Travelers in 1988.

In only six years he advanced to supervisor, then litigation supervisor for three years until joining SBC's risk management group in 1998, a year after Stephens joined the firm.

"Paul, without a risk-management background, has been able to challenge me and all of us on our expertise."

With SBC's announcement that it would buy AT&T, Stephens and his team will looking for ways to integrate the risk functions of the long-distance carrier. This will surely stand as his most challenging assignment yet.

GREGORY DL MORRIS, a former executive editor, is an freelance writer and editor in New York. He contributes regularly to Risk & Insurance[R].