HONOLULU--A large number of risk managers view terrorism as a looming threat, but not to their own companies, according to an industry survey.

The survey, titled "Excellence in Risk Management III, The State of Risk Management," conducted by Marsh, polled 866 members of the Risk & Insurance Management Society from midsize to large organizations, from December 2005 to January 2006.

Christopher A. Duncan, managing director with Marsh USA in Atlanta, told National Underwriter that the survey found more organizations are embracing strategic risk management--which focuses more on the management aspects of risk management than the more traditional risk financing and insurance aspects.

The study found that 77 percent of companies with a strategic risk management style said risk management was a key priority versus 45 percent of companies with a traditional style. It also found that 76 percent of companies with a strategic style allocate "sufficient resources to manage risks effectively" versus 43 percent using a traditional risk management style.

Mr. Duncan said newer entrants into the risk management profession from nontraditional backgrounds are "bringing fresh leadership to risk management that wasn't there before."

The trend, he said, was backed up by an interactive survey of audience members attending a seminar at the RIMS annual conference here. That poll revealed 20 percent of the audience had been in the risk management profession for five years or less.

"They are coming from internal audit, finance and legal," he said. "All areas where people on the enterprise risk management side are coming from, because senior leadership is looking for people who can come in and lead across the functions, not just manage a function."

He said generalists with a diverse management background are desirable because they understand how a company operates at a variety of levels.

But rather than be intimidated, Mr. Duncan said risk managers should view this as an opportunity, because they are "good generalists" from the onset.

"You can't be a risk manager without an understanding of legal principles, marketing, advertising, operations and finance," he said. However, "it's the depth of that diversity of experience that is the challenge. They may know a little bit about everything, but these general management types know a lot more about more subjects."

So while opportunity exists, he warned that ignoring this trend "could have career implications."

Mr. Duncan explained that to be successful 10 or 15 years ago, a risk manager needed a good understanding of insurance buying, claims and loss control. Today to be successful, he said, "you need to be able to talk about brand issues, reputation issues, societal risk issues like terrorism and pandemics."

"The other small surprise [from the survey] for me was terrorism," he said, adding that "I don't know if that's due to geography or their product line."

"For the risk management community to say 'I don't see myself as being impacted by terrorism,'" he said, is concerning.

In the case of 9/11, he noted, while there was immediate impact on the airline industry and a specific geography in New York and Washington, D.C., the event had far-reaching implications to the economy, politics and fuel supplies.

He noted that terrorism is by definition "a nonlinear risk--you don't know when, where, how and what the impact will be." On a psychological level, he said, "we may tell ourselves it doesn't impact us."

Even though that aspect of the survey was disturbing to him, another part of the survey found that terrorism topped the list of emerging risks at 23 percent; followed by technological/e-mail risks at 21 percent; regulatory/compliance at 16 percent; and environment and pollution risks at 13 percent.

"So, there is a dichotomy," Mr. Duncan said. The survey also found that 69 percent of the companies polled were either planning or partially implementing enterprise risk management.

"If 69 percent of accountants had a brand new philosophy emerging on accounting, that would be a blockbuster event," he said. "That's a quantum shift. It's great for the industry because ERM gets risk management into the boardroom. And that can only bode well for the profession."

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