(Photo by nostop.bg)
It’s no secret the C-Suite and Risk Management professionals can struggle to communicate. I was recently fortunate enough to moderate a panel on this topic at this year’s Annual Workers’ Compensation Educational Conference. My fellow panelists and I provided our tips and tricks to risk managers for addressing a number of common issues:
- Loss development
- Effective collateral management
- Accrual adjustments
- Allocation models
- Exclusive remedy
Beyond the basics of effective communication to management—be prepared, keep it brief and concise, and accentuate the positives—one of the most valuable tools that came up repeatedly was the power of analogies and storytelling.
Try to connect with the audience by drawing similarities to concepts familiar to them. For instance, a CFO is more likely to understand the need for collateral if you describe the liability in terms of bond obligation (a much more familiar concept for her) and use a whiteboard to illustrate how credit risk is created.
Another example is efficient collateral management. We often use a “cake” visual to illustrate this: the actuarial loss projection is the bottom layer (foundation) of the cake, and the baseline off of which all other adjustments are derived. We adjust that requirement based on the second layer of the cake; the financial strength credit rating, which we manage via our own credit assessment and relationships with the credit officers at insurers. Finally, the last adjustment is based on the collateral instrument (letter of credit, trust, cash deposit, etc.), which also impacts the final collateral demand. These three components illustrate a process that is rare in the brokerage community.
There are plenty of other great suggestions in the risk management community, but they all have the same focus: the C-Suite values subject matter experts who can effectively message material from their disciplines. Read my Property Casualty 360 article to learn more about this topic.