To see more videos from the conference, click here.

According to AccuWeather, the season should begin quickly after June 1, but isn’t anticipated to start as early as 2012 when two named storms appeared in May. However, 2013 could see stronger storms than last year due to the reduced amount of Saharan dust in the air, which can inhibit a storm’s severity.

In the May issue of Risk Management, Jared Wade wrote about how Floridians feel like they’re overdue for a hurricane having not experienced a landfall since Wilma in 2005. In addition to echoing that concern, AccuWeather.com Expert Senior Meteorologist Dan Kottlowski said that one of the biggest fears regarding the upcoming hurricane season is the effect another major storm would have on the East Coast regions that still haven’t entirely recovered from Superstorm Sandy. Many areas still haven’t rebuilt the protective sand dune barriers that were washed away by Sandy, so another storm would put already reeling communities at an even higher risk for more flood damage.

Overall, AccuWeather’s numbers have been in line with forecasts by other organizations, suggesting that an active season, at least to experts, is almost certain (or at least as certain as any weather forecast can be).

For instance, the United Kingdom’s Met Office expects 14 named storms, nine hurricanes, while in April, Colorado State University’s Philip Klotzbach and William Gray predicted 18 named storms, nine hurricanes and four major hurricanes, and Weather Services International forecasted 16 named storms, nine hurricanes, and five major hurricanes.

As the current Terrorism Risk Insurance Act (TRIA) moves closer to its scheduled expiration date of December 31, 2014, the debate is heating up over whether the federal backstop remains necessary and whether the market demand for terrorism coverage still exists. According to the Marsh 2013 Terrorism Risk Insurance Report, released April 30, demand for coverage has remained both steady and strong. These results only reinforce the need for a long-term extension of the terrorism backstop.

During the first full year of TRIA, only 27% of organizations obtained terrorism coverage as the market was still adjusting to the TRIA program and the fallout from the 9/11 attacks. Since that time, take-up rates have grown steadily. By 2005 the take-up rate for terrorism insurance was 58%. Today the rate is more than 60%—where it has been since 2009. The take-up rates are highest among companies with total insured value (TIV) over $500 million, but even those companies with less than $100 million in TIV obtained terrorism insurance at a 59% rate in 2012.

Take-up rates did vary amongst different industry sectors. Companies within the media, education, financial institutions, health care or nonprofit sectors obtained terrorism coverage at a rate above 70% during 2012, with the media sector leading the way with an 81% take-up rate. The food and beverage, manufacturing, chemical and energy and mining and sectors were at the low end with take-up rates of 50% or lower.

With regard to region, companies located in the Northeast were most likely to obtain terrorism insurance with a take-up rate of 77% in 2012. This is to be expected given the concentration of large metro areas with high population density. However, other regions are showing a strong need for coverage as well. Companies located in the South, West and Midwest regions obtained coverage at the rates of 63%, 53%, and 58% respectively in 2012. The threat of terrorism is not just a Northeast problem, and companies in regions with a less-perceived threat of terrorism are showing recognition of that fact.

If TRIA is allowed to expire, these numbers could change drastically as capacity would be significantly decreased. Without TRIA, insurers would no longer be required to offer terrorism coverage. The Marsh report shows that terrorism pricing, as a part of property premiums, has remained within the 3-5% range since 2010. Premiums would likely rise, however, without TRIA, and the certainty it provides insurers essentially subsidizes current rates. Additionally, companies with a high exposure concentration in central business districts or major metropolitan areas would likely not be able to purchase the necessary amount of coverage, forcing them to self-insure all or part of their terrorism risks.

The Marsh report covers many other issues surrounding the terrorism market that are not discussed here, including: considerations in using captives for terrorism coverage; the terrorism reinsurance market; the standalone terrorism market; and implications on workers compensation and general liability coverage if TRIA were allowed to expire.

Risk Management Monitor: Has the idea of the role of risk manager been lost? How so?

Michael Lopez: I don’t think so at all. If anything, I think we’re seeing a new appreciation for the profession. Historically focused in insurance and finance, risk is taking on a broader definition, from homeland security to business operations to social issues. If anything, we might be seeing the scope increase too broadly and thus we’ve got some confusion about what a risk manager is and what they do.

In a general sense, we’re all risk managers. We are all constantly evaluating risk and making decisions as a result. Most of us don’t even know we’re doing it. Because of that, some business or organizational leaders don’t think they need a risk manager because they do it themselves. Alternatively, some leaders outsource the role all together. Reality, of course, is always somewhere in between. With enough training and confidence, risk managers can exploit this ambiguity by creating their own role and demonstrating value in ways that are unique to, and appreciated by, the organization. Personally, I’ve never wanted a job that is too strictly defined. I believe the expansion of risk-related roles is opening up new opportunities in a very positive way.

RMM: Why is the role of a risk manager unique?

ML: What I personally like about risk is the intersection between the quantitative and the qualitative. Risk is an art and a science and I believe the truly great risk managers have both. I’ve seen many solid, quantitatively-oriented risk managers that are critical to a business or an organization. I’ve also seen risk managers that are charming and able to tailor communication in very influential ways. But I would say that those risk managers that rise to even greater levels of influence and impact in an organization are the ones that combine a quantitative orientation with an appreciation for the soft skill required to proliferate risk in an organization. Monte Carlo simulations, for example, can be a valuable decision making tool, but if senior management doesn’t know how to use it, it’s meaningless. Likewise, a persuasive communication style is valuable, but if you’re not able to interpret risk data, you’re little more than an interesting conversation partner. There’s a balance between these skills that I believe makes a risk manager truly unique.

RMM: What is the one key attribute of a great risk manager?

ML: Without question—perseverance. Risk management can be a challenging profession. It’s not for those that take failure personally or get discouraged easily. It requires a thick skin. It requires courage to sometimes tell a senior leader what they don’t want to hear. At some point, this role will require you to make a call; to get out from behind the data, from underneath the analysis, and make a decision. A great risk manager has the ability to overcome resistance and not let failure reduce their enthusiasm for continuing to push the program or project forward.

RMM: Have you seen the risk manager’s role move from strictly analytics to a more strategic thinking role?

ML: I think the expansion of the role presents both opportunities for future risk managers but also presents some challenges. With the expansion and variety of opinion on the value of risk, I believe we’re witnessing a challenge with the risk managers themselves. I’ve noticed many strong, junior risk managers question the overall direction of the profession. They often ask, “Can I ever be more than just a risk manager?” The answer of course should be yes. Unfortunately, we’ve either stereotyped the risk manager one level up the back office, green-eye shade role, or communicated an artificial ceiling between risk managers and more senior level roles.

I do believe that the chief risk officer position has helped with this to some degree, but I think we as leaders in the profession, need to do better at helping younger risk managers see the potential and the future possibilities. We need to let them know that being analytical is the price of entry of the profession, but leadership positions require that they bring this blend of art and science to the organization. I’ve often said that risk is the ultimate back stage pass in an organization. As the risk manager, I should be able to peek into any aspect of an organization or business. But the narrow focus of the historical role doesn’t really empower the modern risk manager to strive for greater.

RMM: Are the traits that make a successful risk manager and successful leader vastly different?

ML: They are, in fact, quite similar. As noted in a paper I authored two years ago, there are several characteristics of successful risk managers that are also traits of strong leaders: Flexibility, influence, communication and perseverance. These are all required of leaders and required in spades of risk managers. There are several outstanding studies on leadership, and while it’s easy to find any number of perspectives that support or refute the overlap of risk manager and leader qualities, I like to think of it as the most basic level.

Leadership, in my opinion, can be defined by answering the following question: Do people follow you? People follow you because they comprehend and believe in shared ideals, goals, values or purposes that you communicate. In order to be a successful risk manager, you must get people to follow you. Plain and simple. They must believe risk has value. They must see that value. And they must proliferate that view throughout the organization.

(To register for Michael Lopez’s session during World Risk Day, click here)

From the Property Casualty Insurers of America:

The following is a list of allocated funds by the Department of Interior. The complete list of approved projects can be viewed here.

• $42.35 million: The amount New Jersey will receive from the Department of Interior. The funds will be used to repair and rebuild parks, refuges and other federal assets damaged by the storm
• $104.9 million: A portion of this amount will go to New Jersey for multistate projects.
• $2.85 million: The amount allocated to New Jersey by the Bureau of Safety and Environmental Enforcement to make repairs to the Ohmsett oils pill research facility in Leonardo, New Jersey.

For a look at how the property/casualty industry was affected by Sandy, we turn to the Insurance Information Institute for this chart illustrating the p/c industry net income for fourth quarters from 2007-20012.

The National Hurricane Center and the Federal Emergency Management Agency supplied these Hurricane Sandy funding numbers.

• $1.4 billion: The amount the Small Business Administration has loaned to homeowners, renters and businesses in New York. New Jersey received $731 million.
• $3.4 billion: The amount the National Flood Insurance Program has paid in New York claims. Another $3.3 billion was paid in the state of New Jersey.
• $959 million: The amount the Federal Emergency Management Agency paid out for housing assistance in New York. $387.4 in housing grants was given to to New Jersey residents in need.

For a breathtaking photo essay on the effects of Hurricane Sandy, head to Boston.com.

Jeff Hearn, managing director of International Finance Facility, talks about the rising interest in treasury risk management training and how companies are shifting their thinking in terms of using hedging strategies to manage treasure risk.

May 14, 2013, marks the annual event known as World Risk Day. In its second year, the event aims to bring together industry thought leaders and peers to gather together virtually to discuss the major trends, challenges and best practices in risk management. This year’s WRD is themed “Shattering the Project Myth.”

World Risk Day is open to anyone who wants to learn how taking smarter risks can drive their business. The official website includes:

• Virtual Summit: The centerpiece of the first annual World Risk Day, the virtual summit will bring together a unique program of global risk thought leaders who will share
• Resource Center: Visitors can access reports and whitepapers on all aspects of risk management, from embedding a risk management culture to managing risk in government.
• Blog: The World Risk Day blog offers commentary on the event and risk management issues in general and encourages readers to share their experiences and opinions.
• Newsroom: Offers coverage of press releases, supporter announcements and media coverage.

Some of the speakers include:

• Lieutenant Barry McNally, Lieutenant Commander Steve Lee, The Royal Navy – “Making the business case for risk management”
• Norman Anderson, President & CEO, CG/LA Infrastructure – “What lessons can be learned from the world’s Top 100 infrastructure projects?”
• Christoph Schwager, Chief Risk Officer, EADS – “Developing a holistic approach to risk management”
• Rob Halstead, Head of Risk Management, Crossrail – “Strategies for successful collaborative risk management with contractors and the supply chain”
• Chris Bell, Chief Marketing Officer, Active Risk – “Shattering the project myth – managing cost and schedule alone doesn’t equal project success”
• Michael Lopez, Senior Associate, Booz Allen Hamilton - “What makes a great risk manager and how can risk and project professionals collaborate more effectively?”
• David Hillson, The Risk Doctor – “New concepts in understanding and managing risk in projects”

This free, open-to-all event is sure to be a learning day. If you can’t dial in, we’ll have a recap here on the Monitor.

One of the biggest business risks of the coming years and decades will be hiring and — more importantly — retaining top talent. Legions of Baby Boomers are heading out to pasture every day, taking an untold wealth of knowledge with them, so those companies that can get the best of the best from the younger generations will be poised to leapfrog the laggards in their industries.

While most consultants tell organizations to focus on the perks, policies, benefits and workplace atmosphere that will attract the brightest, what about the negative side? What are the aspects of a company’s workplace that deter employees from sticking around?

When it comes to the big issues, my guess is that pay, horrible bosses, uninspiring environments and too much work must rank high on most people’s lists. The people I know anyway.

What about the little things though?

The Institute of Leadership and Management in London took a scientific approach to find out, polling nearly 2,200 managers to determine the most-common annoyances of office workers.

Jargon, poor time management and employees coming to work sick (so-called “presenteeism”) rate highly. And as expected, workers being tardy to work and meetings came in as the number-one irritant of managers.

Guilty as charged on that one, I’m afraid. Sorry co-workers.

Another thing many people hate is a hate I share, however: Trying to use email for everything.

Now, look, I hate talking on the phone, too. It’s the worst. If you’re trying to call me to ask me what time I can meet you for coffee, that’s annoying. And please don’t leave me a voicemail unless your house is on fire. Text or send and email, please. I have things to do, and your accent is not as charming as you think, Ms. South Carolina.

But if you need to discuss the start of a new project, particularly if it’s not some old-hat procedure that we’re both familiar with, then, yeah, pick up the phone. Better yet: If we work in the same office, would you please just walk over to my desk for a chat? It’s really not that far. And it’s just so much more useful. Not everything can be done by email.

That said, this is what makes managing a workforce so difficult.

Some people care deeply about certain issues while others don’t even notice them. Then those not-noticing people have annoyances that don’t rank with person C. And so forth and so on forever.

All this illustrates the incredible difficulty of managing the modern employee.

It’s hard to make everyone happy.

But there is great risk in not even trying. You can’t please all of the people all of the time, they say, but as the race for talent becomes increasingly competitive, companies should be attempting to keep as many of them as happy as possible.

If you don’t, your competitor will.

In a colorful presentation at RIMS 2013 in Los Angeles last week, NFL referee and attorney Ed Hochuli shared his secrets of successful negotiations gleaned from decades on the gridiron and in the courtroom. Accompanied by film clips showing him flubbing on-field instructions and being berated by coaches, Hochuli pointed out that there are two types of negotiators. Understanding the strengths and weaknesses of each is how you win the negotiation.

The aggressive type, he explained, are “always on the push.”

They use intimidation, threats, claims of superiority and cast blame on their opponents in an effort to get their way. Aggressive negotiators will make extreme demands and few concessions. While these types will rarely get taken advantage of, they tend to create a feeling of mistrust and are, more often than not, unsuccessful — 75% receive poor results, Hochuli said. Cases take longer to resolve and end up going to trial at twice the rate of other cases.

Cooperative negotiators, on the other hand, try to find agreement and move toward their opponents.

They generally establish credibility and good faith by presenting themselves as trustworthy and fair. They are willing to make concessions in an effort to reach the best outcome for both parties. This strategy results in more success and easier settlements, as both parties tend to feel like they’re getting something out of the deal. Of course, this strategy runs the risk of exploitation, especially by an aggressive opponent who considers a cooperative opponent to be weak. But Hochuli pointed out that this can still work as long as the cooperative party understands what is happening and doesn’t get rattled.

Hochuli’s final bit of advice for successful negotiation was simple: Make the first offer.

He demonstrated how starting with a low number in a discussion anchors the conversation to that range and can allow you to set the tone for settlement at an appropriate level for your company. It gives the opponent a better idea of what a claim is worth. Or at least what a company is willing to pay.

And when you’re negotiating with, say, the NFL about ending last year’s referee lockout, this is probably good information to have.

Green construction has become more and more popular over the past decade. Businesses and homes are turning to green while the government encourages it through tax incentives. But going green is not just about sustainable or local products in construction. It involves specific construction standards, various rating systems and green construction codes. Last week, a session at the RIMS Annual Conference & Exhibition helped us understand the complexities of green construction.

Speaking on the matter were:

Stephen Grossmark, partner at Tressler
James McIlnerney, vice president, field operations and risk manager for Leopardo
Matt Lumelleau, producer for Lockton Companies

There are many different green construction standards depending on what type of construction is being done and what the intent is. ASTM International (formerly the American Society for Testing and Materials) is known as the gold standard for green construction standards. There is also ASHRAE (the American Society of Heating, Refrigerating and Air Conditioning Engineers), which focuses on building ventilation.

And of the different green construction rating systems, the most prominent is LEED (Leadership in Energy and Environmental Design), which addresses:

• Sustainable sites
• Water efficiency
• Energy and atmosphere
• Materials and resources
• Indoor environmental quality
• Innovation in operations and regional priority (using local products)

With LEED there are four certifications: certified, silver, gold, platinum. As the speakers said, LEED is a flexible program as to the number of points needed to earn a green construction certification and how they are earned.

“It’s not whether you can get a green certification, it’s how green are you going to be,” said Grossmark.

“Basically, the whole point of LEED is to convert structures from energy efficiency to energy neutral to energy-producing buildings,” he added.

The most impressive example is the Bullitt Center in Seattle, which is known as the greenest commercial building in the world. The building captures rainwater and uses it on site. It even uses raw swage as fertilizer off site. “The goal is to be self sustained, not to pull electricity from the grid if they don’t have to, or water for that matter,” said Grossmark.

According to McInerney, there is a basic formula for sustainable design. He believes that design plus construction plus commissioning equals:

• Higher productivity
• Healthier conditions for occupants
• Meeting green market demands
• Potential tax credits

But of course, as McInerney pointed out, there are performance and contractual concerns. As with anything, there are risks involved.

The major causes of loss for green buildings are:

• Envelope leaks
• Electrical fires
• Plumbing leaks
• Mold growth
• Building code and rating upgrades
• Unknown green construction risk
• Vegetative roofs (the weight of the soil can cause problems)
• Indoor air-quality problems (can use vapor extrusion to move bad air out)
• Materials characteristics and integration
• Brownfield sites (environmental exposures related to prior land use)

Then there are the builder’s issues, including:

• Inexperienced contractors and subcontractors
• LEED projects require experienced personnel
• Alternative energy and other advanced systems/learning curves
• “Greenwashing”
• LEED point challenges

“If it’s your first time building a green building, you’re not going to get everything right,” said Lumelleau.

There are two ways of dealing with that from insurance standpoint: OCIPs (owner-controlled insurance programs) and CCIPs (contractor controlled insurance program). Current carriers of such insurance include Liberty, Fireman’s Fund, FM Global, Travelers, Zurich, GenRe and Lexington/AIG. Many times, carriers will offer discounts for green-certified buildings for property coverage or upgrades to greener technologies after a loss occurs.