Susan Hiteshew, a board member at RIMS, tells StrategicRISK which risks are big focuses at the RIMS 2018 event in San Antonio
Three major risks plus one insurance trend are on the menu at RIMS 2018 in San Antonio, according to Susan Hiteshew, an insurance buyer on the board of directors at The Risk and Insurance Management Society (RIMS).
These four hot topics include: the fast-evolving cyber risk landscape; business interruption related to recent extreme weather as well as cyber events; brand reputation and how firms respond to crises; and the rise of parametric insurance products.
Hiteshew (pictured) is senior director of insurance for the Americas at hotel group Marriott International, in addition to her involvement with RIMS.
She joined Marriott just earlier this month after more than six years at US sportswear retailer Under Armour.
She started her career at insurer Travelers, and in 2011 joined Under Armour as senior manager for global insurance and risk financing, before her latest move to Marriott.
Speaking to StrategicRISK live at RIMS 2018 in Texas, Hiteshew highlighted the importance of a strong enterprise risk management (ERM) approach to risk transfer.
“You can’t do the insurance role well unless you have an ERM focus,” she said.
She noted that ERM lends insurance buying a more strategic approach, for how much risk to retain and how much to transfer, creating a better view of intersecting risks across the business landscape.
“To structure insurance purchasing effectively, you need to understand ERM and how risk is going to affect your business,” Hiteshew added.
The fast-changing nature of cyber risk – different types of attacks hitting different firms for different reasons – keeps it high on the risk roster, Hiteshew suggested.
“Cyber has been a hot topic for years – we’ve been talking about it, but it’s ever changing, so we need to keep talking about it, because the threats continue to evolve,” said Hiteshew.
In October 2017, an augmented reality art exhibition run by Snapchat with artist Jeff Koons was hacked. Graffiti appeared on its virtual sculpture exhibits, including in New York’s Central Park.
The graffiti was not political or extremist in content, for example, but Hiteshew notes that it might have been, and that such attacks pose challenging questions.
“What would the park authority’s or the city authority’s liability be?” she asks. “The technology is evolving, which is creating potential for exposures not contemplated before.”
A recent editorial by StrategicRISK suggested risk managers and insurers are considering cyber risk in new ways in response to recent attacks.
Property catastrophe events and business interruption (BI) represent a major focus at this year’s RIMS conference, according to Hiteshew.
Insurers are still licking their wounds from a devastating year of extreme weather events in 2017, she noted, which is creating lively discussions about premium rates at policy renewals.
“The property insurance industry paid out on significant BI claims after last year’s weather-related losses,” said Hiteshew.
“BI is a huge issue and it intersects different policy types,” said Hiteshew. “There is a BI component in cyber insurance policies and recent cyber events have resulted in meaningful cyber BI claims”.
The focus on BI and supply chain risk is also leading companies to dust off their business continuity planning (BCP).
“It’s true that in the past, people have rolled their eyes and had little enthusiasm for going through all those BCP plans,” said Hiteshew.
“But BCP is starting to come to the fore; we’re now seeing people taking a fresh response to BCP and crisis response,” she continued.
Crisis management can come in many forms, and the threats posed by online and social media have transformed the threat posed to brands and reputations.
“You’re nothing if not a brand. Reputational risk management is a big focus,” said Hiteshew.
The internet and social media age has added a new dimension to the impact and likelihood of events taking place, she suggested.
“The velocity at which a risk can impact the brand is so much greater, due to social media.
“Having plans in place is now much more of a focus for companies,” Hiteshew added.
The fourth hot topic she listed is not a risk but an insurance response: parametric triggers for insurance policies are changing the way insurance works, particularly claims pay outs.
“Parametric insurance is a hot topic at RIMS 2018. People are discussing the possibilities,” Hiteshew said.
The focus is on property side, where simple meteorological data can provide the trigger for a pay out, removing the need to file a traditional insurance claim, or for claims managers to assess the details.
Hiteshew suggested that pricing concerns are important for these new products, but that this type of insurance is being seen to offer improved certainty about claims and faster pay outs.
“There could be pricing efficiency with parametric, with potential for blockchain technology to make it more effective,” she said.
She has concerns that parametric products could change the relationship between the underwriter and their client – corporate risk managers and commercial insurance buyers like herself.
“I value long-term relationships with my underwriters. I see them as part of the risk management team, and I’m concerned about missing out on the value of the underwriting process,” Hiteshew said.
If the efficiencies afforded by parametric products mean an underwriter ends up with a much bigger book of clients, that is also a concern, Hiteshew noted.
“If that means less of a relationship with the underwriters, that would be unfortunate,” she added.