Pat Wechsler, Treasury & Risk: What do you see as the most important risk that companies face? Plumeri: Although some companies have been inspired to build a culture of shared corporate governance, perhaps the greatest macro risk is that of easing into a state of complacency. If our new millennium has demonstrated one thing, it is that events once deemed too extreme to merit serious consideration must be thoroughly explored through a formal, continuous and rigorous process of evaluation of internal and external risk factors. As for specific perils, the obvious and compelling top nominees continue to be terrorism and natural catastrophe risks. The overarching imperative for companies and governments is managing the associated aggregation risk–ever-growing concentrations of people and physical assets subject to windstorm, flood, earthquake or an act of terrorism.

T&R: What do you see as the most problematic area when attempting enterprise risk management?Plumeri: Besides getting a company to embrace the rationale for managing risk across the organization and commit resources, the most problematic areas are often the ones encountered at the very outset: achieving understanding of the drivers and priorities for the respective stakeholders; agreeing on the metrics to be used for risk assessment and modeling; and achieving consensus on methodology and project management. The language of risk and finance has many dialects. Properly designed and executed, the ERM process is the single best vehicle for achieving a common language platform and optimal deployment of a firm's capital resources.

T&R: Has the insurance industry made headway in developing coverage to replace the Terrorism Risk Insurance Act (TRIA)?Plumeri: The prospect of TRIA's demise–or the uncertainty that accompanies periodic renewal–is not viable. A long-term solution to the terrorism insurance crisis is essential, and the federal government must play an important role. Failure to implement a long-term or, ideally, a permanent fix before TRIA expires will not only vastly decrease risk transfer options, it will effectively expose the U.S. economy to potentially devastating uninsured economic losses. The issue before Congress must not simply be whether the government will be the insurer of last resort, but whether the government is prepared to work with insurers to thoughtfully and deliberately develop a plan to maximize private sector coverage and avoid reacting in crisis mode after an attack occurs. Any such plan must encompass nuclear, biological, chemical and radiological risks that, today, are almost completely uninsured.