Being on Top of Global Risk Trends

In today’s episode of Risky Business Paul Martin and Colin Rooke talk about the importance of keeping up to date on the global risk trends, and creating a process to adjust and address those areas of your business when needed.

 

Listen to the full episode here, or read the full transcript below

Paul Martin: This is Paul Martin, the business commentator on CKOM, and joining me in studio is Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers Commercial Insurance. And as always, Colin, you come to this show with news. There’s always news going on in your industry and I guess that’s just a sign of the times that things are changing, and trying to keep on top of it probably is full-time work. But you guys just had a big conference and you brought the best heads in the country and the world together to talk about what’s new in the marketplace. What have they discovered? What are they seeing right now that business owners should be aware of?

Colin Rooke: Yeah, so for those that are not in risk management and are listening now, there’s an organization called RIMS, and it stands for Risk & Insurance Management Society. This is a global society and it would be really the largest group that focuses on risk management in the world. And this in particular, there was, I guess, a Canadian conference in Edmonton a few weeks ago. I guess I want to touch on a little bit about what was discussed, some of the high points.

We’ve talked in the past about the global risk index that comes out every two years and I’ve referenced the top 50 risks in the world and the fact that each and every time this index comes out, the risks changed. They’re all over the map. And it just shows that what you worried about yesterday is not necessarily what you’re worried about today. The Canadian conference, it’s a little more focused on, again, the Canadian market. There’s about 1,700 risk management professionals that are in attendance on top of other brokers and insurers and underwriters. I mean you name it, but 1,700 that are actually working directly in the field of risk management. One of the topics is, and every year they do this, well, what are you worried about today? And there’s some usual offenders, like cyber comes up. I know we talk about it all the time, but it’s not going away, people, so number one-

Paul Martin: Get used to it.

Colin Rooke: Yeah. So I guess I can say the one thing that doesn’t change anymore on the top 10 list is cyber. It just gravitates towards the top. It used to be nine globally and 15, and now it’s one globally and one in Canada. So again, if you’re not thinking cyber, you need to be, and there was a lot of discussion. But again, what’s come up, I guess, a lot more recently is human trafficking as a risk. And I’m not referring to the sexual side of human trafficking, but basically organizations that are employing illegal immigrants, and it’s really on the rise and there’s a lot of organizations out there that are doing their best to sort of falsify documents. So I guess what I’m suggesting is there’s companies that aren’t aware that they’re actually hiring illegal immigrants because now it’s a new form of fraud. It’s a new, or not new, but emerging, I guess, black market activity. But it was top five for new and emerging risks in Canada is human trafficking.

If you’re not thinking cyber, you need to be.

Paul Martin: Isn’t this interesting? I mean the topic gets a lot of attention because of whether it’s border and border security or immigrants sneaking across, walking across, seeking asylum, and what do they call it now? The nontraditional arrivals, or something like that. I mean, that’s the political side of this thing, but you’re saying there’s a business aspect to this too, that there’s a push and there’s a pull, and on the push side, it’s political. On the pull side, it’s a business case, isn’t it?

Colin Rooke: Exactly. And then another thing to think about is, okay, maybe your organization does its best to screen for this, but what about the third parties you work with? So, the firm that you’ve hired to clean your offices in the evening, are you sure they aren’t human trafficking? Have you looked into that company? Do you have a corporate policy that says, “We will not partake in this, and we do our best to, again, screen companies for this.” But like I said, this is a global risk management conference, and the top five, human trafficking. Again, I’m just trying to show that we haven’t discussed human trafficking on this show before and I don’t intend to spend a lot more time on it, but each and every year the landscape of risks, or of risks or changes … And that’s why it’s so important to have a risk management plan, to put risk management first to better educate you and your organization so you can prepare for these things. Now- 

What about the third parties you work with? So, the firm that you’ve hired to clean your offices in the evening, are you sure they aren’t human trafficking? Have you looked into that company?

Paul Martin: You know, based on that, I mean, I could see it be very logical and actually probably not that difficult for a business owner or a manager of a significant organization to say, once a quarter or every six months, “We’re going to have a lunch and learn and we’re going to look at a topic like this.” And you probably could be a great well of information, a source of these kinds of content. You could be the content provider because these things are changing so much, and I guess the whole point of our show is the fact that Colin Rooke, Commercial Risk Reduction Specialist, is on top of this job. I mean, that’s your assignment is to stay abreast of what’s going on in the world.

Colin Rooke: Yeah. It is our focus at Butler Byers insurance. We want to stay ahead of new and emerging risks so we can certainly educate our partners and say, again, “This is what’s going to happen. Whether you’re seeing it now, you will see it at some point. Are you ready for this?” Another really interesting topic that emerged from this conference is business interruption. So insurance topic, if anyone’s listening that’s bought insurance- 

Paul Martin: Been around forever, yeah.

Colin Rooke: Been around forever, and you think, “That’s one of the … That’s a new and emerging risk? How is that possible?” But it’s not the regular run-of-the-mill business interruption. It’s, “What will I do if I’m crippled by way of cyberattack, and how will I continue to pay my bills? What if I can’t even pay my people because my payroll system’s down?” So one of the, again, top new and emerging risks is the idea of business interruption, but again, related to cyberattack. So again, really old topic, new spin on things. And now, apparently, on the claims side, I mean that’s rising rapidly as well. So a lot more business interruption claims related to cyber and a lot less related to property losses. 

Paul Martin: It’s an interesting nuance, isn’t it?

Colin Rooke: Yeah.

Paul Martin: And I think one of the things, you and I have talked offline about this, that having a little cash around is a pretty good idea too because if your accounts get locked down or whatever, even your personal accounts, and you can’t buy gasoline or groceries if you can’t access your account, can you?

Colin Rooke: I was at a session where I listened to a fantastic speaker and he said that he always carries $200 cash in his pocket. I was at the Calgary airport and they had no power for six hours and I was one of the few with cash, so I was eating and drinking while everyone else was trying to figure out a way to pay. Another, I guess, really interesting fact that came out of this conference is just talking to these risk management experts, and their view of the preparedness for the organizations they work for. So if you’re in attendance in this conference, you’ve dedicated your career to risk management. I mean, and so again, if you’re employed by another organization, you would think that again, they’re making risk management a priority as well. 

And yet it was really interesting, only 50% of those risk management professionals thought that they were ready to tackle new and emerging risks that would be prevalent in 2025. And then even more interesting was the CEOs in attendance were surveyed and only 30% of those said they felt that their organization was equipped to deal with new and emerging risks that, again, what’s going to impact them in 2025. So again, if you’re, if you’re part of this organization, you’re attending this conference, you’re into proactive risk management, and still, despite all that effort, all that investment to say, “At best, we feel we’re 50% able to tackle what’s coming,” is a pretty scary thought. Paul Martin: Yet I’m sure there are some who are saying, “50% would be quite an achievement. If I could get that far ahead,” right?

Colin Rooke: Yeah, yeah, that’s true, yeah.

Paul Martin: But you’re right. I mean, these are people who are interested in the topic, so they’re showing up at a conference, and even the keeners think they’re only 50% of the way there. So what do real people do? 

Colin Rooke: Well, and then to add to that a little bit more, they addressed the declining rate of those going into the profession of risk management. And at the rate we’re going, in I think it was eight or nine years, there basically won’t be enough in the world to manage the business, basically, of risk out there. So it’s a declining field of study, and yet there’s more risk prevalence today than there ever has been in the past. So we’re creating a ginormous gap. 

It’s a declining field of study, and yet there’s more risk prevalence today than there ever has been in the past. So we’re creating a ginormous gap. 

Paul Martin: Colin, as always, you make a great case for risk management and a proactive case for businesses and business owners and managers to be taking the lead on this kind of thing. And we’ve got to take a little break. When we come back, we’ll continue to explore this topic, but it’s really quite fascinating how this thing is an evolving and changing game on almost a monthly basis. You’re listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers Commercial Insurance. This is Risky Business. Back after this.

Paul Martin: Welcome back to Risky Business, Butler Buyers Commercial Insurance. Sorry about that. Paul Martin here, and a joining me in studio, Colin Rooke, the Commercial Risk Reduction Specialist with Butler Buyers. Before the break we were talking about the prevalence of new and emerging trends. I guess one of the other trends that people really are always interested in is, what is happening to costs, and all our … We keep hearing about huge hurricanes, big storms, a lot of damage, these kinds of things. Obviously that is hitting the treasury of insurance companies. Somewhere down the line, that’s got to have a trickledown effect for people who buy insurance. Is that what you’re seeing?

Colin Rooke: Yeah, absolutely. If you’re in the industry, for anyone who’s listening, you know this is not news. Every news article you get on a daily basis is talking about hard market, hard market. In Canada, it’s been about 16, 17 years since we’ve had a true hard market where double digits or 100%, 200% increases, substantially reduced capacity, reduced coverages. So we are certainly headed in that direction. And in short, the insurance industry just can’t take in enough premium to pay the cost of claims. When we’re visited by other company reps, it’s, “This line of business is not profitable. This line of business is not profitable.” And it’s the norm. It’s not something that’s isolated to any one insurer. It’s now the new story. If you’re a buyer of insurance, whether it be on the personal line side or, or certainly the commercial, again, the idea of costs increasing over the last few years is not new to you and it’s going get worse.

Those that have sold insurance on price alone, no value add, “We’ll market the account, we have a program, low service,” it’s just not going to work for you in the future. And so I want to reference a previous show that we did where we talked about, if you’re putting in the work, you’re going through our risk reduction system, you’re telling your story properly, you’re making risk a priority, and you still are faced with a 10% or 15% rate increase, are we doing our job? Is our system not working? And the answer is, you are doing your job and the system is working. And what you have to look at is we can’t control the cost of insurance. We can’t help everybody. I mean, we’d certainly like to help every purchaser of insurance in the world, but as of now, we can’t. 

Paul Martin: You don’t have the full market yet  

Colin Rooke: Yeah, we need a few more employees to get to that point. But we can’t help the industry, but we can help the individual, and it’s all about what’s going on in the industry. So if your industry is averaging, and we ask the underwriters for this information all the time, if they’re averaging 60% rate increases and we can negotiate a 10 or a 15, you did win. You know, it might not always feel like you won, but if you look at what the average company would expect to see, and this would be when I say average, I’m not I’m talking no claims. So what would seem like above average would be really average, because they’re assuming that you’re performing poorly, usually in the pricing model.

So you know, claims-free business, doing … Good luck, a company with good luck might still have a 60%, 70% even, triple-digit rate increase, no fault of their own, just due to the market conditions. So again, now it’s more important than ever to have your story told effectively, to put in the work to stand out, or you are going to be left with no options. And it’s easy to say, “Well, okay, well, if I don’t like what my insurance company or the news that my broker tells me, I’ll just go somewhere else. My broker can remarket or I’ll call another broker. That’s what I’ve done in the past and saved some money,” and it’s just not going to work now.

Again, now, and certainly not into the foreseeable future, the discounts aren’t there. There’s no one out there that’s vying for different lines of businesses. The story that we’re hearing is, “We want out, we want out. We’re reducing our capacity. We’re reducing coverages. We want subscribers on this policy,” and again, that’s the norm, and it’s going to be the norm. So if you’re sitting there today listening and saying, “Okay, last year I was lucky. I had slight increases, maybe an as-is renewal,” you may not be so lucky this year, and you certainly won’t be that lucky moving forward. So if you’re on the fence about making risk management a priority and having that story told effectively, I would caution you now. And again, reach out, ask your broker, “What are you hearing about the market conditions? I’ve heard this topic of a hard market. Tell me about it. What’s going on?” And they will absolutely verify that that’s what’s going on, a hard market.

Paul Martin: I guess if you don’t care and you’re prepared to pay, you don’t care if you get a 60% increase in your premium, then don’t do the work. It’s simple-

Colin Rooke: Yeah. True. 

Paul Martin: … but you don’t get anything for free, so if you want to get the best possible deal, it’s actually going to take a little effort on your part. It’s not just about putting all the effort onto the broker. 

Colin Rooke: Yeah. Good point. If you don’t mind, if the purchase of insurance is not something that frustrates you and you’re okay with that and you’ll ride it out and then you’ll ride it back down later on, you’re right. No one’s going to tell you to do anything. Just know that it is going to happen, and that should you want to, you can turn the tides. Now again, we can’t promise that it’ll be a 50% reduction, but again, in a hard market, if you’re seeing reductions at all, you’re winning.

Paul Martin: And I guess you could look at it this way, that if you are what you would call an ordinary account or a good-looking account, you’ve not had claims or whatever, then you’re the perfect one to charge the higher premium too, because you have the capacity to pay. That’s who insurance companies look for, people with pockets, right?

Colin Rooke: Exactly. Yeah. The last thing I’ll say too is we talked about opening and closing doors. Well, in a hard market, maybe there’s 15 companies that would normally look at your account, and if you told the story right, maybe 30. In a hard market you might have three, and neither of those three even really want the account. They’re just prepared to take it if you’re you’re prepared to pay. So look at it like any sort of boom in the construction industry where the general contractor you would like to use for your project has 70 projects on the go and can’t afford to take yours. But if they throw out an outrageous quote and you take it, they’ll certainly find the time. I mean, that’s the type of scenario that you’ll be faced with if you don’t do your best to keep doors open.

Paul Martin: Colin, as always, very informative, and if there’s a lesson here, it’s that the market is always changing. Stay on top of it, and calling you is one way to find out just what the latest lay of the land is.

Colin Rooke: Mm-hmm (affirmative).

Paul Martin: You welcome that, don’t you? Anybody can just, if you’re listening here, give Colin a call. He’ll be pleased to have a chat with you. 

Colin Rooke: Yeah, give us a call and we’ll talk it out. We’ll explain things. We’ll talk about our step by step approach and we’ll go from there. 

Paul Martin: Colin, as always, thank you. You’ve been listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Buyers Insurance. This is Risky Business, Commercial Insurance with Butler Buyers. Thanks for joining us. Talk to you next time.