From the March 2012 issue of Treasury & Risk magazine

In The Squeeze

Worries loom large for corporate risk managers caught between shrinking budgets and a tightening insurance market.

The interrelationship of two issues confront corporate risk managers as they gather for their annual convention in Philadelphia in April—the volatile economy and the tightening property and casualty insurance market. The former is squeezing budgets, while the latter is ballooning costs—obviously not the best of circumstances.

Still, risk managers are used to pressure-cooker responsibilities. To give you an idea of the vital role they play, we turned to Deborah M. Luthi, president of the Risk and Insurance Management Society, and asked for a sampling of what’s on her plate. Luthi is the enterprise risk manager for San Francisco’s Public Utilities Commission, which serves 2.6 million customers throughout the Bay Area.

The property-casualty market hasn’t tightened to any considerable degree yet, but risk manager Wayne Salen says he sees the first signs. “We’re in the industrial and construction temporary-staffing business, placing more than 100,000 employees nationally, and our industry typically is a harbinger of what to expect, insurance-wise,” explains Salen, director of risk management at Labor Finders International in West Palm Beach, Fla. “What happens to us first bodes well, or not, for others.”

What’s happening? “Our workers compensation premiums are up more than 10%, and workers comp typically leads other risk categories in market changes,” Salen says. “Many of my risk management peers will soon be seeing the same.”

What are risk managers doing to guard the gates? “We employ state-of-the-art firewalls, encryption and other security measures,” Ochenkowski comments. “We’ve assessed the internal risks from a data breach standpoint and are properly managing them.”

Salen says Labor Finders has done the same. He also purchases cyber liability insurance in case those best-laid plans go awry. “With more than 100,000 employees, whose personally identifiable information we collect, store and transfer, this is a threat we take very, very seriously,” he says.

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