In a country with a scarceness of risk managers, Kei Masuyama is leading the way for the profession in Japan
While risk management has established itself across a broad cross-section of international organisations, in Japan – the third largest economy in the world – the situation differs.
“Most Japanese companies still do not have risk managers,” said Kei Masuyama, risk manager of Mitsubishi Heavy Industries (MHI). “The corporate insurance market is very dominant, so salespeople at insurers operate as risk managers.”
This means that major insurers remain the powerbrokers of the Japanese approach to risk. While the insurance space provides essential partnership and coverage for risk managers, the unique value of risk management has yet to be fully embraced in Japan.
With an insurance background himself, Masuyama was the first ever risk manager of MHI. Today, the organisation has a 13-strong risk team, demonstrating the value of such teams to the risk-shy Japanese corporate structure.
Adding it up
Masuyama’s journey towards risk primordial at MHI started after he graduated in 2000 from Keio University in Tokyo with a major in mathematics. From there, he dived straight into the insurance world at Tokio Marine, the Tokyo-headquartered insurer with global operations.
“My first job was in a sales and distribution position at Tokio Marine. I worked with commercial clients and was responsible for major Japanese automobile manufacturer, Nissan,” said Masuyama.
“My first role did not make much use of my mathematics education, but later I was responsible for underwriting for the property. There I was able to run statistical models for general catastrophes, such as earthquakes and windstorms.”
His role with Tokio Marine included a stint overseas, moving to New York in 2011: “It was really exciting to be in New York. Tokio Marine was attempting to expand its non-Japanese business and I was responsible for the property line of business over there.”
After 14 years with Tokio Marine, Masuyama joined Zurich Japan in 2014, deepening his understanding of the insurance market before making the dive into risk management in 2017.
“Moving from insurance to risk was an exciting opportunity. To be the first ever risk manager of an organisation like MHI was amazing,” he said.
“Working in risk is similar to working in underwriting – both are taking part in some form of risk. For risk managers, we need to make decisions about which types of risks should be retained on our balance sheet and what kind of risks should be transferred to insurance. Ultimately, risk classification is the core role of the risk manager.”
MHI was founded in 1884 and when Masuyama arrived in 2017 it broke a 133-year stretch without a company risk manager.
As an industrial firm, MHI has offerings across industries covering land, sea, sky and space. With over 80,000 employees working in more than 300 MHI group companies worldwide, it provides power and energy, industrial machinery, urban infrastructure, aerospace and defence.
Stepping into this newly created role of risk manager, Masuyama quickly set about overhauling the organisation’s approach to risk and insurance.
Bringing it together
Masuyama states that one of his most important actions as a risk manager at MHI was the creation of the MHI Global Insurance Program (MHI-GIP), which he still has primary oversight for today.
“Our approach is unique compared to the European or American global companies. Our programme does not have deductibles. The reason we have an insurance programme with either no deductibles or very few deductibles is because it is very difficult to gather small amounts of loss information from the Group’s companies,” said Masuyama.
“They are reluctant to mention such a small loss event or will settle it themselves. If it is positive information they will report it to risk management spontaneously, but they are not willing to provide information like an insurance claim. So our insurance programme gives all parts of the company a strong inventive to report insurance claims as they can be reimbursed by the insurance company.”
Masuyama said this enables his team to collect all of the information from the insurance company instead. This results in hundreds of insurance claims every year and he can clearly see the trends of every business unit, offering a better picture of insurance needs moving forward.
The MHI-GIP consists of four components: Property Damage & Business Interruption (PDBI), Marine Stock Through Put (STP), Commercial General Liability (CGL) and Directors & Officers Liability (D&O). The MHI-GIP chiefly works as the “risk sensor” of the group.
“I introduced this approach when I joined in the company in 2017. Previously, the MHI group companies purchased insurance policies individually,” he said. “By integrating all of our insurance policies into one programme, I can now see all of our claims at once, from my laptop.”
Masuyama said this single insurance programme was a difficult task, taking almost a year to complete, but the results left MHI’s management with the best information to make the right decisions.
Land of the rising risk manager
In November, the Pan-Asia Risk & Insurance Management Association (PARIMA) hosted its first in-person conference since the start of COVID, over in Singapore. It was also a seminal moment for Masuyama – himself a board member of PARIMA – as the association announced its second-ever conference in Japan, heading back to Tokyo on 19 October 2023.
“At the conference it was announced there are now more than 2,500 members at PARIMA, with 475 in Japan,” he said. “When I joined MHI in 2017, there was around 60 Japanese members, so the association is rapidly growing in terms of Japanese risk managers.”
Masuyama said that being a risk manager can be an isolating role and it can be difficult to gain information from peers. “That connection to the other risk managers is very crucial. Having access to that information and an open exchange of ideas is important.
“We hope that the PARIMA conference in Tokyo next year will be a good opportunity to distribute information on the value which risk management brings to an organisation. We hope this information will also be delivered to Japanese companies which do not have a risk manager currently,” he said.
Masuyama said that with so few information sources for risk managers in Japan or Japanese organisations themselves, its distribution will empower both parties to adopt and expand on risk management capabilities.
With a GDP just shy of $5 trillion and some 3.3 million corporations, despite being one of the most advanced nations on earth, Japan may witness a bullet train-like expansion of risk management.
Especially considering the array of geopolitical and macroeconomic external threats which risk managers are often best placed to manage.
“In more recent years, Japanese companies have looked towards new markets abroad and have engaged in more M&A deals to accelerate growth,” he said. “Such activity has highlighted the need for further risk management.”
Masuyama knows about being the new risk-manager-on-the-block and such experience will prove essential as he helps expand his cohort of peers in his native Japan.