As the enterprise risk manager (ERM), for Citizens Property Insurance Corp., Robert Gofourth's job places him at ground zero throughout the year, not just during hurricane season. Florida Underwriter spoke with him about the daily challenges of his position at the state's largest property insurer.

Q. How long has Citizens had an ERM and how long have you held the post? Where did you work before Citizens? How does your job help Citizens fulfill its mission?

A. Citizens created its enterprise risk management department in February 2009. I have held the post of vice president of ERM since inception. Prior to that, I was vice president of operations at Citizens, and before that, director of operational improvement for SITEL Corporation in Eindhoven, Netherlands. The ERM initiative — which reports directly to Citizens' audit committee — helps Citizens by ensuring that risks are known, by aligning those risks to our strategic goals, and by assisting management in seeing any roadblocks that will prevent Citizens from realizing its objectives. Our strategic goals are appropriately tied to our mission to serve the people of Florida by providing property and casualty insurance protection and superior customer service. When managing our business, we look at processes that may endanger our ability to reach those goals. ERM assists with that in ensuring that we are mindful in our decision making. It is true that there are a number of items that can be challenging, such as hurricanes. We make sure that we are aware of those, but in the end, they are just things that we have to work around and ensure that we have mitigating strategies.

Q. Florida's property market faces significant challenges today — vetoes from the governor, natural (and human-caused) disasters, companies being downgraded by Demotech, insolvencies, insurers cherry-picking properties, overstated wind mitigation discounts, and so on. Do you ever want to just board up the windows and doors and say, "Let us catch up here?" Where do you, as the ERM of the property insurer of last resort, even figure out where to start?

A. At times the challenges can seem almost overwhelming. However, Citizens' very purpose as a government entity is primarily to serve the people of Florida. It is our job to do what other insurance companies do not want to do, to cover risks they do not want to cover, and to provide public service. With the focus of service comes many challenges; it is really just part of the job. As far as conducting ERM at the state's alternative insurer, it is challenging but that is where applying basic tools of the discipline are very valuable. We are able to prioritize our risks against our strategic goals and that becomes our flight plan. We realize the position of the private market and the impact that various events have on the private market.

Q. What do you predict will be the biggest impact on Citizens of the governor's veto of SB2044? What's the next step with wind mitigation inspections?

A. While we believe that there were elements of SB2044 that would help bring stabilization to the industry, it will be business as usual for Citizens. As for wind mitigation inspections, the project is in the interim stage and we will continue to gather data in order to ensure that risks are being properly rated.

Q. Paul Palumbo, Citizens' senior vice president of underwriting, called your new inspection and outreach program for questionable wind mitigation credits "one of the most important initiatives that Citizens has ever undertaken." He said Citizens will benefit by ensuring that it has accurate information on the risks it covers. Will risk management have oversight of this effort?

A. This companywide initiative is in the interim stage. It is being managed outside of the ERM department by the appropriate business units.

Q. When will the staff know if they will be handling re-inspections on all of your 400,000+ policies now receiving the mitigation credits? Could that increased workload occur during hurricane season? If so, what risks versus benefits come with that?

A. The need for and ordering of re-inspections will continue to be looked at on an ongoing basis. All factors, including changes in workload, are being evaluated as this project continues.

Q. If "operational risk" can be a measure of the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events, and your major stakeholders are the state's taxpayers, what tops your daily priority list?

A. Ensuring that we are looking at the right things and performing according to plan. ERM does not run the business; it provides a venue for the corporation (throughout the enterprise) to ensure that appropriate risk consideration and mitigation is implemented and documented. At Citizens, we consider the people of Florida every day and they are truly one of the first and foremost thoughts when it comes to managing our risks and our business. Citizens is in the early stages of ERM, but our intent is to focus on the strategic goals of our business and to address risks that may prevent us from accomplishing our objectives. Additionally, ERM will work with business units to design tests of controls as ERM becomes more developed in our organization. However, the business units remain responsible for their business processes. Therefore, I think it is most accurate to state that gains are found in the performance of the business and not necessarily within ERM itself.

Q. If fending off risk corporate-wide falls to you, what issues does Risk Manager Florence Dickinson focus on?

A. Flo is an integral part of my team and helps effectively manage risk from an enterprise perspective. Additionally, she is the primary manager when it comes to handling our traditional corporate risk management items, such as business insurance.

Q. State Farm Florida will be shedding some 125,000 policyholders as part of its agreement with the Office of Insurance Regulation. Many expect those policies to land in Citizens. Outline for us the personnel, capital and process risks that come with a large influx of new policyholders. Can your current IT system handle such ongoing policy expansion? Explain when and how internal processes pose a risk to the operation.

A. We remain hopeful that any such policyholders can find coverage in the private market. However, if not, Citizens is prepared. Our systems have demonstrated that we can handle such an expansion. Citizens' charge is to fill the insurance gap, and we build our processes with scalability in mind. Internal processes in any operation pose a risk if they are built without flexibility and agility. We know this, and have made every effort to build flexibility and agility into our processes.

Q. How do Citizens' reserves, bond activity and assessments affect your responsibilities?

A. All of these activities are ultimately the responsibility of Citizens' CFO and my boss, Sharon Binnun. Sharon and her team have handled this area with great success even before the introduction of the ERM department. While all such risks are recognized by ERM, the responsibility remains with our accounting, finance and investment areas.

Special Reports /

Q&A With Robert Gofourth of Citizens

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