From the March 19-26, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Speaking Financial-ese: Successfully Integrating Treasury & Risk

Members of NU’s Risk Advisory Board discuss presenting data to top financial execs

When it comes to providing information to senior financial executives, risk managers need to understand the importance of speaking the language of the treasurer and CFO—and not the language of risk and insurance. They also need to understand the importance of using broker information and assistance appropriately.

According to Michael Liebowitz, director of risk management and insurance for New York University, what financial executives are really looking for these days are the true, total cost of risk and the extent to which the company is insured, relative to that cost.

“They also want to know if we have used any benchmarks, whether they be industry-wide or nationally recognized,” he says. Liebowitz likes to present information in graphic form, showing financial information over a period of time—usually anywhere from five to seven years’ worth of data.

“I can then show the financial executives whether certain trends have been increasing or decreasing in terms of cost, limits, claims and anything else that has a financial component to it that would adversely or positively impact the way a program would be going,” he explains.

Sarah Perry, risk manager for the City of Columbia, Mo., reports to John Blattel, the city’s director of finance. “He wants information on how we are doing, preferably in ways that can be measured,” says Perry. 

“Sarah provides me with a monthly report on the status of all of our outstanding litigation cases,” Blattel says. “She also informs me of the settlement of cases as these occur.” He then reviews these cases to determine how the city’s claims experience for the current fiscal year compares with that of the previous fiscal year. 

Gary Pearce, vice president of risk management for Kelly Services, shares data with a number of individuals and groups, including the general counsel, executive leadership and board of directors. Pearce submits reports and does presentations both on a recurring basis and on an as-needed basis.

Each quarter, Pearce provides a financial analysis of Workers’ Compensation data, which he presents to the leadership of the finance division. He also submits a summary of significant claims to the company’s public auditors, which is first reviewed by Kelly’s executive leadership.

“Once a year, we make an insurance review presentation to the board’s audit committee, which is usually a 15- to 20-page document,” says Pearce, who notes that the report highlights efforts made in the company’s enterprise-risk-management program.

In addition, Pearce deals with individual issues as circumstances dictate. “We do this to fit the culture of the organization and the people to whom we report,” he says. For example, it might be a risk-assessment matter related to a specific client.

William Montanez, director of risk management for Ace Hardware Corp., prepares a monthly finance report that he submits to the treasury department.

And twice a year, Montanez prepares a formal report that goes to the board and the audit committee. It contains vital information on retentions, losses, renewals, premium levels, deductible levels and other critical data. “We also provide a semi-annual report on the financial stability of the carriers that we use,” he adds.


Risk managers rely heavily upon brokers to provide information and sometimes other forms of assistance as they prepare their reports and presentations for senior financial management.

“I use brokers as part of my information-gathering process,” states NYU’s Liebowitz. “For example, I would call my brokers and ask for their benchmark information based on an industry class. However, I don’t use them exclusively.”

The City of Columbia’s Perry reports that her broker is very helpful with providing information from outside of the organization, such as possible changes in the market. “This is useful because, when I provide information to my boss, it’s not based just on what I think, but what our broker thinks is happening on a wider scope,” she notes.

According to Tim East, a director of corporate risk management for The Walt Disney Co., brokers are particularly important in providing market-comparable information about similarly situated risks, as well as market direction.

“I digest this information, format it and then include it in my presentation, so that the presentation has a consistent look,” he says.

As Ace Hardware’s Montanez sees it, the primary role of brokers is to gather information—and he uses much of that for benchmarking.

“However, we may have brokers present very technical information,” he adds. “For example, we went with a new D&O carrier a couple of years ago, and we had the broker come in and do a presentation to the audit committee to make sure they were comfortable with the decisions that we had made.”

Kelly’s Pearce often takes his previous internal presentation and asks his broker to update it, not in lieu of what he would otherwise prepare, but as a supplement to it.

“At the end of the day, we are responsible for what goes into reports,” he states. “Some of the information may be prepared by the broker, but it is under our direction, and we may cut and paste certain information that we get from the broker. However, what we ultimately present is 100 percent our own material.”

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