NEW YORK–The challenge for global insurance clients today is tounderstand the risks they face and turn them into a competitiveadvantage, a top brokerage executive told an industry meeting.

Brian M. Storms, Marsh Inc.'s chairman and chief executive, gavethat advice yesterday in speaking to the Association ofProfessional Insurance Women meeting here.

Mr. Storms said in the world of risk today threats appear to begrowing daily and involve “volatile, uncertain, complex andambiguous” areas ranging from the economic to environmental togeopolitical concerns.

However, in a recent report released by Marsh on the subject,researchers found that there is a fundamental disconnect betweenrecognizing risk and finding answers to mitigate the risks.

“The mechanisms for managing risk are strangely inadequate,” henoted, adding, “Inaction in the face of global risk is not anoption.”

While understanding these risks can “sometimes seemoverwhelming,” clients today need to anticipate risks they havenever seen before, said Mr. Storms.

A lot of the new risk elements stem from globalization and theinterrelation of companies' supply chains. Corporate clients areworking to “be ruthlessly efficient,” he said, with just-in-timesupply chains. This new business philosophy can be easily disruptedby a terror attack or pandemic, for example, he observed.

Clients, he said, need to actively work through these issues anddetermine how best to protect themselves.

“It is clear that there is a tremendous amount of work, but itis [also] clear that companies that think this way, and act thisway, are in a strong competitive position in the world,” Mr. Stormssaid.

What is most important, he stressed, is to understand what areuninsurable risks and develop creative solutions for those risks.He warned against “the risk du jour,” saying, “You cannoteffectively run a company by getting caught up in every event. Youjust can't plan for every event.”

Planning for risk, according to Mr. Storms, needs to focus onthe worst and most disruptive case. This task, he said, can nolonger be left simply to risk managers and other midlevelexecutives, but needs to be taken up by corporate chief executivesand the board of directors.

The more stakeholders involved in the evaluation of risk, hecontinued, the greater the ability of a corporation to overcomerisk in time of crisis, giving it a “strong competitiveposition.”

To shape solutions, he said, carriers and brokers need to actquickly and come up with creative answers to the burgeoning arrayof risks. It is a subject, he said, that the insurance industry isconstantly working on.

“All of us are talking,” he remarked.