RIMS: A growing commitment to ERM

Helping risk practitioners with practical applications

By Michael J. Moody, MBA, ARM

Enterprise risk management (ERM) influence has been on the rise over the past few years, and it has not gone unnoticed by the Risk and Insurance Management Society, Inc. (RIMS). RIMS is the world's preeminent organization dedicated to advancing the practice of risk management. Founded in 1950, one of RIMS' primary purposes has been to focus its efforts on bringing networking, professional development and educational opportunities to its nearly 10,000 professional risk management members. With today's dynamic, changing business environment, the professional development and educational opportunities are key to RIMS' future role.

RIMS' involvement with ERM has increased steadily over the last five years; however, 2010 was a breakout year for ERM within RIMS. One of the association's seminal decisions last year involved the creation of a Strategic and Enterprise Risk Practice (SERP). The development of this Practice follows a comprehensive analysis by both RIMS' Strategic Planning Task Force, and the full board of directors. SERP will be under the leadership of industry veteran Carol Fox, ARM, and its major purpose will be to better equip RIMS members and their companies in tying risk management programs to strategic objectives.

Fox points out that with the rising visibility and importance of enterprise risk management, "RIMS needed to take a very direct and purposeful view of where the evolution of risk management was headed." The organization did not want to add yet another theoretical approach to risk management but, rather, Fox says, "We really wanted to help the risk practitioners with practical applications." She indicates that providing practical applications has long been one of RIMS' basic roles; "In many ways we worked to provide applied risk management." As a result, RIMS believed that it was "important to expand the capabilities of not only its current practitioners, but the next generation of risk leaders.

"Clearly the role of risk managers is increasing, and it is important that they begin being viewed as strategic partners within their own organizations," Fox notes. "While conventional risk management roles have always been important to RIMS—and will continue to be—it is necessary to move the discipline beyond these roles." SERP will serve as the focal point in these efforts "as risk managers work towards incorporating the strategic aspect of ERM." She also points out, "Often risk managers struggle with articulating the value of ERM as well as how to participate in that strategic aspect of risk management."

Tackling ERM education head-on

As the senior director of risk management for Convergys Corporation, Fox had been actively involved with many of RIMS' enterprise risk management activities. Now, as director of SERP, she will be much more involved with many phases of professional development. She indicates that RIMS is approaching the professional development and educational offerings on a number of different fronts.

The most predominant of its efforts is the RIMS annual conference, which is scheduled this year from May 1 to 5 in Vancouver, Canada. According to Fox, members have been requesting an increase in the number and experience level of the ERM sessions that RIMS schedules at the conference.

In response to this need, of the total 120-plus sessions, there are currently 25 separate ERM-related sessions planned for the conference. In addition, Fox points out that there are also several additional ERM-related topics that are listed under the General Risk Management topic. Also, a variety of ARM and RIMS Fellow (RF) designation sessions that deal with ERM are planned for the conference.

In addition to the sessions at the annual conference, RIMS has developed a stand-alone, three-day basic ERM workshop that has been put on at various locations throughout the United States and Canada over the past few years. These programs have been revised and will be introduced in May 2011 as ERM: Accelerating Theory into Practice. Among major changes is a reduction in time from three days to two-and-a-half days. Fox says that Integrating ERM into Strategic Planning has also been updated and revised and was launched in March 2011. A new program, Harnessing ERM to Tap Risk Appetite, Anticipate Emerging Risks, and Limit Future Shock, was introduced in March 2011.

Another key educational program that has been on the RIMS professional development list is the ERM Summit, which is typically held in the fall. Support for this program has been strong and, Fox notes, "We are looking to expand this in 2011." As a result, she says, "We will be getting more people involved with the presentation of sessions." One of the byproducts of the 2010 session was the issuance of a "Major Concept" white paper about where RIMS "sees the next evolution going."

Moving past traditional risk management

At this point, there is little doubt that risk management is on an upward path. Whether it is driven by shareholders who are asking more questions and want more transparency, by boards of directors who are required to make more disclosures, or by other interested stakeholders, the die has already been cast; and RIMS believes it's their job to provide members with the tools and resources needed to advance with the movement. Inclusion of the strategic aspects of ERM is a necessity for risk managers to gain the support of their internal business partners.

According to Fox, one of the issues that receives a lot of attention is RIMS' position with regard to the various ERM frameworks that have been advanced by other groups. She states, "RIMS is agnostic toward the frameworks." From their standpoint, "RIMS feels that organizations need to find whatever frameworks or standards work the best for them." RIMS' major ERM tool, the Maturity Model, she says, "has more to do with the behaviors and attributes of ERM and, as such, can cross all frameworks." Fox says that one of the projects for completion this year is "a study that highlights the similarities and differences of each of the major frameworks."

An additional issue that comes up with any discussion of ERM is: Where does the concept of governance, risk and compliance (GRC) come in? Fox indicates that there are those who believe that GRC is the future of ERM; however, she does not believe that this is in the best interest of the corporation. "All too often this just becomes a compliance exercise that is taken over by one checklist after another." Further, she points out, "This really does not allow organizations to obtain the full value from their ERM programs."

Conclusion

The RIMS annual conference will feature more than 140 exhibitors and 10,000-plus attendees. It has been and continues to be one of the foremost risk management gatherings in the world. And with such dynamic times for risk management, it offers some of the best, cutting-edge educational opportunities. It is clear the RIMS has gotten the message regarding enterprise risk management and has developed a significant commitment to the discipline. Corporate risk managers will need to change their career development plans to include ERM or move back to being the corporate insurance buyer.

But what about commercial insurance agents and brokers? Where is their future? It would appear, for better or worse, ERM will become the dominant approach to risk management at all but the smallest corporations. The future of the mid-sized agents and brokers is closely tied to ERM. For those agents and brokers who see the opportunity, ERM will be a game changer; for those who don't, ERM may well be the straw that breaks the camel's back.