When it comes to providinginformation to senior financial executives, risk managers need tounderstand the importance of speaking the language of the treasurerand CFO—and not the language of risk and insurance. They also needto understand the importance of using broker information andassistance appropriately.

According to Michael Liebowitz, director of risk management andinsurance for New York University, what financial executives arereally looking for these days are the true, total cost of risk andthe extent to which the company is insured, relative to thatcost.

“They also want to know if we have used any benchmarks, whetherthey be industry-wide or nationally recognized,” he says. Liebowitzlikes to present information in graphic form, showing financialinformation over a period of time—usually anywhere from five toseven years' worth of data.

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

Sarah Perry, risk manager for the City of Columbia, Mo., reportsto John Blattel, the city's director of finance. “He wantsinformation on how we are doing, preferably in ways that can bemeasured,” says Perry. 

“Sarah provides me with a monthly report on the status of all ofour outstanding litigation cases,” Blattel says. “She also informsme of the settlement of cases as these occur.” He then reviewsthese cases to determine how the city's claims experience for thecurrent fiscal year compares with that of the previous fiscalyear. 

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

Each quarter, Pearce provides afinancial analysis of Workers' Compensation data, which he presentsto the leadership of the finance division. He also submits asummary 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 theboard's audit committee, which is usually a 15- to 20-pagedocument,” says Pearce, who notes that the report highlightsefforts made in the company's enterprise-risk-managementprogram.

In addition, Pearce deals with individual issues ascircumstances dictate. “We do this to fit the culture of theorganization and the people to whom we report,” he says. Forexample, it might be a risk-assessment matter related to a specificclient.

William Montanez, director of risk management for Ace HardwareCorp., prepares a monthly finance report that he submits to thetreasury department.

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

BROKERS SERVE AS KEY DATA PARTNERS

Risk managers rely heavily upon brokers to provide informationand sometimes other forms of assistance as they prepare theirreports 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 andask 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 veryhelpful with providing information from outside of theorganization, such as possible changes in the market. “This isuseful because, when I provide information to my boss, it's notbased just on what I think, but what our broker thinks is happeningon a wider scope,” she notes.

According to Tim East, a director of corporate risk managementfor The Walt Disney Co., brokers are particularly important inproviding market-comparable information about similarly situatedrisks, as well as market direction.

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

As Ace Hardware's Montanez sees it, the primary role of brokersis to gather information—and he uses much of that forbenchmarking.

“However, we may have brokers present very technicalinformation,” he adds. “For example, we went with a new D&Ocarrier a couple of years ago, and we had the broker come in and doa presentation to the audit committee to make sure they werecomfortable with the decisions that we had made.”

Kelly's Pearce often takes his previous internal presentationand asks his broker to update it, not in lieu of what he wouldotherwise prepare, but as a supplement to it.

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