Assessing and controlling risk means, to a certain degree, expecting the unexpected. New threats to commercial stability tend to emerge regularly, so risk management disciplines must be sufficiently flexible and durable to cope with sudden problems and rapidly developing sources of danger. Moreover gradually developing sources of danger must not be overlooked.
Corporate governance related issues are also becoming increasingly important and there is an ever increasing number of potential banana skins for directors & officers.
Millennium compliance was the classic example at the end of the last decade of the last century. There are plenty of others. For example, global warming has been brought into focus by extremes of weather, both on an international scale (we have seen sea at the North Pole for the first time in thousands of years) and closer to home (the devastating storms in northern France last winter).
An emerging socio-political trend of concern to risk managers relates to the environment. Recently we have seen tough legislation come into force obliging local authorities to identify polluted sites in their areas and giving them the power to force those responsible to clean up the mess.
Paying for pollution
Preventing spills, leaks and seepage is becoming an increasing important part of a risk manager's responsibilities.
But the issue does not end there. If the polluter cannot be found or is unable to pay the cost of clean-up, then the local authority has the power to pursue the landowner. What is more, the legislation is retrospective, which means that pollution caused years ago by a firm that has long since moved away or ceased to exist will still have to be sorted out.
In such instances, the current occupier of land, who might be entirely blameless of causing the damage, could find itself paying for it to be put right.
Spice is added to the mix by the fact that many liability insurance policies specifically exclude this sort of pollution risk. The risk manager, in his role as insurance buyer, must therefore be particularly tenacious in finding indemnity.
As every risk manager knows, however, insurance is only ever part of the solution. So far as property developers and those moving into new or newly acquired premises are concerned, more effort and resources will need to be focused on guaranteeing the integrity of the physical environment. This calls for a highly-specialised survey technique which again is beyond the capability of most insurance providers. It will be up to the risk manager to track down insurance partners equipped for contemporary realities.
Another area worth some consideration is personal injury. Clearly, it is in the interests of insurers and ultimately policyholders (because higher claims lead to higher premiums) to reduce the size and number of pay-outs.
One way in which this might be achieved is by increasing the efforts made to get injured people back to work again. We have seen rehabilitation becoming increasingly important in recent years.
At present, few companies have procedures in place which actively seek to rehabilitate injured employees and get them back to work, either in their previous position or in a new post that can accommodate their changed abilities and general circumstances. There is an endemic attitude which concludes that there is little or nothing to be achieved that is worthy of the effort required, so the problem tends to be dumped on the insurer. However, we are now seeing a change in attitude, particularly among the more enlightened employers.
Proactive approaches such as absence management and an early intervention are vital instruments in a rehabilitation case manager's repertoire. Higher claims costs make risk managers want to do what they can to reduce these costs. This does not mean prising people from their sick-beds or accusing genuinely ill people of malingering. It does mean working with people to re-establish them in the working environment so that they can begin to resume the normal working life which, in all probability, they crave anyway.
Proactive, post-incident healthcare of this nature is just one of the contemporary mechanisms by which the risk manager and case manager can limit exposure and enhance the efficiency and profitability of the business. The important point is to be aware that, with new risks appearing all the time, the risk managerís task is never finished.