As the enterprise risk manager (ERM), for Citizens PropertyInsurance Corp., Robert Gofourth's job places him at ground zerothroughout the year, not just during hurricane season. FloridaUnderwriter spoke with him about the daily challenges of hisposition at the state's largest property insurer.

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

A. Citizens created its enterprise risk management department inFebruary 2009. I have held the post of vice president of ERM sinceinception. Prior to that, I was vice president of operations atCitizens, and before that, director of operational improvement forSITEL Corporation in Eindhoven, Netherlands. The ERM initiative —which reports directly to Citizens' audit committee — helpsCitizens by ensuring that risks are known, by aligning those risksto our strategic goals, and by assisting management in seeing anyroadblocks that will prevent Citizens from realizing itsobjectives. Our strategic goals are appropriately tied to ourmission to serve the people of Florida by providing property andcasualty insurance protection and superior customer service. Whenmanaging our business, we look at processes that may endanger ourability to reach those goals. ERM assists with that in ensuringthat we are mindful in our decision making. It is true that thereare 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 arejust things that we have to work around and ensure that we havemitigating 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, insurerscherry-picking properties, overstated wind mitigation discounts,and so on. Do you ever want to just board up the windows and doorsand say, "Let us catch up here?" Where do you, as the ERM of theproperty insurer of last resort, even figure out where tostart?

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

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

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

Q. Paul Palumbo, Citizens' senior vice president ofunderwriting, called your new inspection and outreach program forquestionable wind mitigation credits "one of the most importantinitiatives that Citizens has ever undertaken." He said Citizenswill benefit by ensuring that it has accurate information on therisks it covers. Will risk management have oversight of thiseffort?

A. This companywide initiative is in the interim stage. It isbeing managed outside of the ERM department by the appropriatebusiness units.

Q. When will the staff know if they will be handlingre-inspections on all of your 400,000+ policies now receiving themitigation credits? Could that increased workload occur duringhurricane season? If so, what risks versus benefits come withthat?

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

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

A. Ensuring that we are looking at the right things andperforming according to plan. ERM does not run the business; itprovides a venue for the corporation (throughout the enterprise) toensure that appropriate risk consideration and mitigation isimplemented and documented. At Citizens, we consider the people ofFlorida every day and they are truly one of the first and foremostthoughts when it comes to managing our risks and our business.Citizens is in the early stages of ERM, but our intent is to focuson the strategic goals of our business and to address risks thatmay prevent us from accomplishing our objectives. Additionally, ERMwill work with business units to design tests of controls as ERMbecomes more developed in our organization. However, the businessunits remain responsible for their business processes. Therefore, Ithink it is most accurate to state that gains are found in theperformance of the business and not necessarily within ERMitself.

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

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

Q. State Farm Florida will be shedding some 125,000policyholders as part of its agreement with the Office of InsuranceRegulation. Many expect those policies to land in Citizens. Outlinefor us the personnel, capital and process risks that come with alarge influx of new policyholders. Can your current IT systemhandle such ongoing policy expansion? Explain when and how internalprocesses pose a risk to the operation.

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

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

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