RIMS president Mandel wraps up successful year

Rough Notes, Apr 2003 by Moody, Michael J

Passage of terrorism act cited as one of the year's highlights

By anyone's standards, Christopher Mandel, assistant vice president of Enterprise Risk Management for USAA, has one of the most demanding risk management jobs in the industry. But despite that, Mandel is just finishing up a successful year as the president of the Risk and Insurance Management Society (RIMS). It's a year of which he is proud, and he is able to point to a number of achievements that were accomplished during his tenure.

Among the most rewarding of the accomplishments was the passage of the Terrorism Risk Insurance Act of 2002, which President Bush signed into law on November 28, 2002. As Mandel notes, "This was a long and arduous road." However, Mandel considers the passage of the Act as one of the cornerstones to his term as RIMS president. Other notable achievements include:

* Improved RIMS' financial stability. Mandel thinks that the organization will begin to see growth in its surplus even in this tight economic market.

* RIMS member-ship is also on a growth track, "with new member growth in the 4% to 6% range."

* "Realizing the benefits of new partnership opportunities" has been another important achievement. This has been a strategic focus for RIMS over the past several years, Mandel said.

* Development of the RIMS staff.

* Continued to pave the way for global expansion, particularly in Asia, and strengthened RIMS' other international partnerships.

* Enhanced the public profile of RIMS with key national and regional media.

All in all, it was a very memorable year.

USAA

USAA, like a number of other financial services institutions, was one of the early proponents of a holistic approach to risk management. And Mandel has largely been able to design his job description as he goes. Before he started at USAA, in early 2001, the company made a commitment to move to a more holistic approach regarding risk management. And while Mandel was not originally hired to drive this process, he ended up owning it.

Once he started at USAA, his first order of business was to perform an operational review of the company. As a result of this review, Mandel developed a number of recommendations to "shore up the operational side of the house," including hazard risks and more traditional risks. However, at the same time USAA formally launched the enterprise risk management initiative.

While there have been a number of keys to Mandel's success, he points to one specific key as critical: the ability to effectively communicate with senior management. "Communication with top management is not a plus; it is a must," says the RIMS president. His authority comes directly from the CEO and his executive counsel, which approved the design and execution of USAA's enterprise risk management program.

The ERM program at USAA continues to evolve as the company searches for new and creative ideas to address their catastrophic loss exposures. The ultimate goal is to bring their net risk down to acceptable levels. Mandel realizes that a critical issue for ERM is to make it pay. Risk managers must be able to show measurable benefits. USAA is currently in the middle of executing its strategic ERM plan and not yet in the mode of measurable results.

RIMS

Being president of an organization like RIMS requires a significant commitment both from an individual and an employer standpoint and USAA gave Mandel its blessing. However, he has been able to complete his RIMS-- related duties while utilizing noncompany time, such as vacation time or weekends. But as he points out, "he would be unable to do his duties without the active involvement of the nine RIMS Executive Council vice presidents, who handle their specific area of responsibility." Additionally, the support of the 50 paid RIMS staffers has greatly assisted him. Mandel believes that the RIMS president's primary responsibility should be to make certain that the strategic direction of the organization is followed. Obviously, "this is an impossible task without the paid staff and voluntary committees to carry it out."

Mandel indicated that one of the areas in which RIMS would become more involved is enterprise risk management. From that standpoint, RIMS is currently offering a two-day "Introduction to Enterprise Risk Management" course. Additionally, much of the information that is involved with the "RIMS Fellow" educational designation program is directed at ERM. Mandel says, "The Society wants to take risk management to the next level." RIMS also has developed partnership relationships with other groups such as the Casualty Actuarial Society to explore the ERM concept.

Enterprise risk management

Ask Mandel if the future is enterprise risk management, and he has a one-word answer: "Absolutely." While the risk management profession may still have some difficulty agreeing on what to call it, there is little doubt about its forward movement. "In order for risk managers to be successful in the long term, they need to broaden their scope."

While recent federal legislation and proposed stock exchange listing requirements have helped to "grease the skids a bit," the real challenge is "to make certain that risk managers are the ones to take the lead." Risk managers are the best qualified to handle the potential issues within their companies-whether it relates to corporate governance or purchasing terrorism insurance. According to Mandel, "While risk managers could abrogate to auditors, lawyers, planners, etc; that would be a mistake." He disputes industry pundits' claim that risk management is "going the other direction and becoming less relevant. Nothing could be further from the truth....In the post 9/11 environment, not only have we become more relevant, but more important as well." He continues by saying, "We have been given a better opportunity than ever before, and we need to grab the reins and go with it."