Santa's Workshop (SW) has never failed to provide holidayhappiness for millions of people around the globe, but that doesn'tmean that this magical North Pole-based operation isn't affected byrisk.

In fact, Santa's enterprise has one of the most advancedenterprise risk management (ERM) programs in the world, allowing itto produce and deliver gifts on a scale that practically defiesphysics. SW's ERM efforts are so sophisticated; they've even coinedtheir own term to describe it: elf risk management, or ElfRM.

"People have this idea that we and Santa only check thingstwice, but we actually never stop assessing the risks that couldget in the way of spreading Christmas joy," said Chief Risk ElficerFiggy Evergreen in an exclusive interview. Evergreen has earned theChartered Property Casualty Underwriter (CPCU^®)designation and is currently working on earning the Associate inRisk Management—ERM (ARM-E™) designation.

Evergreen spends her days identifying, assessing and treatingpotential risks, all to ensure that the centuries-old, family run,not-for-profit SW organization can continue to bring smiles to thefaces of children for Christmases to come.

With 50,000 elfin employees and a herd of reindeer living andworking in a frozen tundra, the inherently low-operating incomeassociated with producing millions of handmade goods that are givenaway for free, and the constant threat of Santa Truthers andshrinking Arctic ice, Evergreen's job is never ending. She worksclosely with her broker, Candy Kane, on implementing appropriaterisk treatment techniques, including retention and transfer, aspart of an overall ERM program.

"Don't even get me started with The War on Christmas," Evergreenadded.

In a rare moment of free time as she prepared the operation forits busiest time of year, she described what she does on an averageday:

11:00 a.m.: Wake-Up Call (Elves sleep in, afterall.)

Evergreen wakes up an hour earlier than her fellow elves, aftera night filled with thoughts of workers compensation claims dancingin her head.

The first item on her list is to review the daily BelieverNumber Dashboard, which indicates current and potential giftrecipients. Thanks to Santa Truthers (usually fifth-graders), thesenumbers are vulnerable and constantly fluctuating.

"Our reputation is a major strategic risk," Evergreen said."Even though Santa is an integral part of the holiday tradition formore than 80 percent of families in the U.S. and many othersthroughout the world, making Santa one of the strongest brands inthe world, we never stop striving to grow our BelieverNumbers."

Evergreen spends the rest of her mornings monitoring operationalrisks with her managers. Being late on deliveries is not an optionfor SW, so it's incredibly important for Evergreen and hercolleagues to diligently manage her workshop's people, processesand systems.

"Can you imagine if children woke up on Christmas Day and didn'thave any presents? Not only do we have to deliver on Christmas, butwe have to hit a very narrow delivery window in the middle of thenight," Evergreen said. "Needless to say, we have to be efficienton a level that practically every other organization on Earth can'teven comprehend." Add to that concerns about the logistics oflaunching a sleighful of gifts and eight reindeer while complyingwith FAA, TSA and other regulatory requirements.

12:00 p.m.: Lunch

To keep her energy level at its peak, Figgy eats an early lunchfull of nutrients. Cinnamon buns and cheese Danish keep her fueledas she tackles her day.

1:00 p.m.: Fundraising Forecasting

Handmade goods that are created pro bono generate no operatingincome. SW relies heavily on anonymous donors to help fund theoperation, but the recently volatile economy—and future mixedprojections—have left fundraising estimates in flux. Candy Cane andher firm have assisted in structuring a general liability program,including products liability coverage with higher retentions, toreduce overall premium costs. They also solicited proposals fromseveral insurers and provided a range of insurance programs so thatFiggy and the Risk Management (RM) team could recommend variousprogram options to Santa and the senior management team.

Based on Figgy's projections, the Development Department haschanged direction. It now works to establish partnerships withlarge retailers who donate shipments of toys, leveraging theiranonymous philanthropy departments to help SW meet growing demandswith shrinking resources. This, however, opens up a whole new rangeof potential risks related to supply chain management, includingidentifying possible disruptions and coordinating activities acrossmultiple global organizations. Candy assisted in this process byrecommending that SW be included as an additional insured on thedepartment stores' general liability policies to protect them frompossible products liability claims arising from the retailers'products.

1:30 p.m.: Snack Time!

Gingerbread cookies and hot chocolate, of course

2:00 p.m.: Climate Change Strategic RiskManagement 

Figgy and the rest of the elf workforce take climate change veryseriously. Aside from the environmental implications, SnoCones area primary source of elf nutrients—and given the shrinking Arcticice cap, they're increasingly harder to come by. In anticipation ofa future without the North Pole, Figgy has taken a proactive ERMapproach and begun scouting real estate in Antarctica. With a landmass larger than Europe, established infrastructure due to variouscountries' research camps and native penguin populations, and airthat is warming at a slower pace than the North Pole, Antarcticahas the potential to be an ideal substitute.

3:00 p.m.: Safety Hazard Mitigation

Elves are tiny, especially in comparison to reindeer. Given theReindeer Readiness Department's regular contact with the sleighsquad, Figgy and the RM team have developed strict safety protocolfor any elf working in close proximity with wildlife (penguins andpuffins included). This has helped lower workers compensationpremiums for SW, cutting 15 percent off of the total l policy.

3:30 p.m.: Pre-dinner snack

Candy-cane flavored SnoCone

4:00 p.m.: Liquor Liability Projections

About 10 years ago, a group of rowdy elves got a little toocarried away with the eggnog. They misplaced a few parts of thetoys they were responsible for building, and a group of veryunhappy children received doll babies with two sets of hands and nofeet. Since that debacle, Figgy and the Head Nog Elf haveimplemented a moratorium on the all-you-can-drink eggnog bar in theElf Café. There have been no repeat incidences, and customersatisfaction numbers have been up every year.

4:30 p.m.: Financial Risk Strategies

Though the North Pole dollar has strengthened since lastChristmas, Figgy is working with the finance manager to work out acurrency-hedging strategy that will insulate the North Pole fromany currency devaluation in the years to come. Given the tenuousprogress in most other emerging markets, it's better to be safethan sorry, so they've mapped out a five-year plan to boost thevalue of their own currency.

5:00 p.m.: Dinner

Having put in a full elfin day of work, Figgy reunites with herfamily for their daily Christmas feast (one of the perks of SWemployment). Complete with prime rib, mashed potatoes, green-beancasserole and, of course, plenty of Christmas cookies, apple pieand more SnoCones, the meal and celebration last until Figgy's 9:00p.m. bedtime 

Thanks to Evergreen's diligent efforts as chief risk elficer, SWruns smoothly, and millions of children wake to a Christmas morningfull of the presents they have been wishing for all year long. Nowthat's successful ERM!

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Ann E. Myhr, CPCU, ARM, AU, is Senior Director of KnowledgeResources at The Institutes, [email protected].