On Aon Podcast: RIMS 2023 Reflections

On Aon Podcast: RIMS 2023 Reflections
June 22, 2023 17 mins

On Aon Podcast: RIMS 2023 Reflections

Podcast

Episode 53: Our Aon experts discuss the energy at the conference, tools that support the insurance industry’s response to increased volatility and risk, and new and innovative ways that risk managers are addressing workplace shortages and talent retention.

Key Takeaways
  1. Risk managers are proving they are ready for a new way of finding solutions.
  2. Experts discuss the value of bringing risk managers into the C-suite.
  3. This episode dives into the tools that support the insurance industry’s response to increased volatility and risk.

Joe Peiser:

Hello, I'm Joe Peiser and I am the head of Aon’s Commercial Risk Solutions for North America. I've been with Aon since 2021. And I'm here today with Jennifer Santiago. We're talking about this year's annual RISKWORLD Conference and all the insights that stem from that. So, Jennifer is currently the president of RIMS, and she has a long history and experience in risk management. She's worked at organizations including Novartis, Ingersoll Rand and Penn State University. Currently, she's the director of risk management and safety at Wakefern Food Corp, which is the largest retailer owned cooperative in the United States with over 18 billion in revenues and 51 member companies that independently own and operate more than 360 retail supermarkets. Jennifer, thanks for being here today.

Jennifer Santiago:

Thank you so much, Joe, and thank you to Aon for having me. I'm excited to chat.

Joe Peiser:

Great. Great. Why don't we start with something to break the ice, an easy question? What was the most memorable moment of RISKWORLD 2023 for you? And I'm not going to count the hordes of Taylor Swift fans or “Swifties” that were all over the place on Sunday.

Jennifer Santiago:

That's right. It made for a very interesting time in Atlanta for sure. This was a really important RISKWORLD for me because I had the opportunity to serve as RIMS president. And so, wearing that hat and that sort of ambassador feel made it really more interesting and more exciting for me. I've been going to RIMS conferences for years, but it was just a different perspective really seeing behind the scenes, all the work that goes into it, the exhibitors and the sponsors, and over 200 educational sessions and 40 first-time new exhibitors. So, we're just growing exponentially. So much coordination, the numbers of stakeholders that are involved. So, it's really very cool to be a part of it from that lens and then being on the stage and having the opportunity to Welcome to RISKWORLD was really incredible for me.

So, I enjoyed it from so many aspects this year. I didn't get to go to too much from an educational perspective, which is what I really love about RIMS, but did do a lot of networking, a lot of shaking hands, a lot of welcoming, a lot of hugs, and I think it's just, there's just this momentum around the industry post-COVID that's just incredible and everyone is really coming out in full force, excited to be back together. And so, one of my key lines on the stage was “We're much better together than we are apart.” In a world where there's so much division, this community is incredible, and RIMS is the conduit to that. Right. So, we're bringing the network together, getting the education. So anyway, it was incredible, and I loved it. I hope you did too.

Joe Peiser:

Oh my gosh, I can't imagine the work that you personally had to put in because I helped lead Aon's efforts at RIMS and I know how much work it was for my team and myself. So, I mean, for you it's just exponential. But I thought it was great. It was great to be back. I did go to RIMS in San Francisco last year and that was good, but this year it just felt like, “Hey, we're really back.”

Jennifer Santiago:

We're back. Absolutely.

Joe Peiser:

We're back.

Jennifer Santiago:

Yeah. Yeah.

Joe Peiser:

Yeah. And it was so good to be together.

Jennifer Santiago:

Yeah. Appreciate all that Aon's involvement and support and everything that you all do. And I think everybody felt the energy. It just was at a whole different level. So very exciting.

Joe Peiser:

I felt that as I was talking with many risk managers at the event, that there was a sense that not only are we back, but it's time for risk managers to get off of being defensive and being more offensive. We've had a long hard market. It's gone up and down since 20, at least 2019, in some cases even earlier than that. And our clients and risk managers have been through a lot and it's ebbed and flowed in different lines of businesses. We started with property and then D&O and then cyber, and now we're back to property again. But I definitely got the sense from risk managers that they want a new way to approach things and they're ready for new ways and they're ready for new thinking. Is that what you heard as well?

Jennifer Santiago:

Yeah, I would agree 100 percent. I think it's just a super exciting time for risk management because that spotlight is really, really turned up. And I think certainly the financial crisis, there was a tension and then post pandemic, it's off the charts. So, risk managers in the C-suite are at the table, leading responses, making decisions, sitting on boards, having more active roles. I mean, it's just fantastic for the profession. And then couple that with a hard market and a lot of challenges that we need new solutions for. We see insurance company challenges, we see challenges getting claims paid, and so captives and alternative risk, we need more solutions and change used to happen, it seemed like it would be years. You'd have a crisis and then you'd sort of catch your breath. And now it seems we go from somewhat from crisis to crisis. Right. And so, we're on overdrive chronically. And so really trying to get ahead of that risk, if that's even possible, and then making sure we have the solutions, the mitigation, the strategy, the continuity of business operation.

Joe Peiser:

I want to pick up.

Jennifer Santiago:

Yeah.

Joe Peiser:

I want to just pick up on one of your comments. You mentioned risk managers being in the C-suite more and more often. That's certainly consistent with what I hear from many risk managers. I've heard them say they've never been called into the C-suite as often as they are now, and it's not just because of price increases. Sure. None of our clients and no risk managers out there are happy about price increases, but what they're getting called in to talk about are all the other areas that risk management touches, including ESG issues, including the climate, including diversity, equity and inclusion. And there's an attention to these issues from the C-suite more than ever. In addition, Jennifer, what I've noticed in my time over the past few years is that there is not a decrease in the demand for risk transfer and other solutions.

We don't hear organizations saying they can ignore this. In fact, quite the opposite. I think organizations are really more attuned to the volatility that they face than ever before. I think part of that comes out of the pandemic, which was an event that came out of nowhere and affected every company on the planet and all of the other volatility that executives read about, whether it's ransomware, or wildfires, or floods in Europe or most recently the hurricane Ian in Florida. I think there's real attention, and as you said, risk managers are looking for alternative ways to address this risk, to assess this risk and just new strategies to tackle it.

Jennifer Santiago:

Yeah, I would agree. I think to your first point, really, risk managers are in a very unique position in their organization because we have a line of sight, and a holistic view. We know what everybody does. So that's why, when the pandemic hit, who got called to the table? It was the group that really knew where everything was, how everything got done. So, I think that's a fortunate position to be in. Right. We know the business continuity; we know the disaster recovery. We know how to activate the financial backstops, the captive, the insurance programs. We have all the service providers with expertise, and then we have a toolkit. Right. We know how to assess risk. We know how to identify, we know what to do to manage, mitigate and treat. So, I think that all worked very, very well in our favor. And yeah, I would agree. I think we need more solutions. I think we're going to see more public-private partnership type things going on, more financial backstops that will be needed for the insurance companies, PREA and TRIA and cyber property. So, it's an interesting time.

Joe Peiser:

It is. And the good news is, despite the reputation of the insurance industry, which I think is wrong, we are actually a very innovative industry. I've seen it over the course of my career, a tremendous amount of innovation, responding to different types of risks that arise, whether it be cyber or way back when employment practices was a new line of insurance coverage and looking at different techniques, not just insurance, but also CAT bonds and integrated risk and now parametrics. So, when I look at the landscape and I talk to risk managers and they say, “well, how is the insurance industry responding to this increase in volatility and emerging risks?” And what we can point to, Jennifer, is that there's much more sophisticated modeling these days, more sophisticated tools to help risk managers do exactly what you said, which is: identify risk, assess risk, quantify risk and mitigate risk and, where needed, transfer risk.

And we're seeing as the stakes have gotten higher, prices have gone higher. We hear financial executives want to really understand the trade-offs. What are the trade-offs between retaining risk and transferring risk? And not just in property, casualty, et cetera. They want to see it as a whole. And luckily or fortunately, the insurance industry, whether it be brokers or others, have responded with better modeling and more sophisticated modeling. In addition, there's other solutions now beyond just buying a commodity insurance product. We're seeing structured insurance for certain troubled layers. We're seeing parametrics, which parametric insurance has been around for well over 20 years, but now it's becoming more and more of a staple or at least a consideration in large risk management programs, especially those clients who have serious natural catastrophe exposures. We're seeing prices go up 20, 30, 40 percent once again in natural catastrophes. So, risk managers are asking, “What's another way to do this? What's a better way to do this?” And parametrics and sophisticated modelings are just good examples of how the industry is responding.

Jennifer Santiago:

I would agree. I think the challenge today is that we're being forced to take higher deductibles. You're not seeing any premium credit for that. Right. It's a different world. So, leaning on parametrics, leaning on structured programs is just alternative options. It's good to have more options.

Joe Peiser:

It is. And I work with a lot of clients who established captives years ago, and boy, they are happy that they have that as another tool in their toolbox to take risk rather than succumbing to predatory pricing at the end of a renewal season.

Jennifer Santiago:

Yeah. Yeah. 100 percent. I've worked with captives really the entire time I've been in the industry, and I'm so thankful for that because as you said, as things have turned, this is a difficult time to be just doing your feasibility study. Hopefully you've already got one in place.

Joe Peiser:

Exactly right. Admittedly, I've worked with captives as well most of my career, and for a while I was a captive skeptic, but I'm reformed, right? I've seen their usage and I've seen their value particularly in the last few, four or five years.

Jennifer Santiago:

Right. Right.

Joe Peiser:

I was going to switch gears now Jennifer, and just mention that RIMS is also a client of Aon and has experienced how we partner with clients or try to partner with our clients, especially around innovation. So, what are your thoughts around this, both from a client perspective, but also as the president of RIMS?

Jennifer Santiago:

Yeah, I mean, I've worked with Aon for years in different, I've moved my career along a lot of different organizations. So, I've had the pleasure of working with Aon in a lot of different roles. And to me, that broker client, customer relationship is super, super critical and valuable. And what I've been saying most recently is the importance of the broker partner to really understand the client and really understand the risk. And it takes time to really get into that, understanding how our financial cycle works, when we set our budgeting, what's important, what are our key priorities? I think if the broker doesn't understand those things, it makes it very difficult to really be a good partner and to bring the right solutions and what have you. So that's been a big focus for me, making sure there's a really clear understanding of my risks and how we operate so that we can have the most successful partnership going.

So, I think, and RIMS has so many materials about partnering and working with your broker because you have new people coming into the industry, it's such an exciting time. Right. All of these university programs didn't exist 20 years ago, and so now we have so many people coming out of school that majored in risk management and actuarial and insurance. So that excites me a lot. As they move out of students, they become rising risk professionals at RIMS. And part of my platform this year is really tapping into that group because that's our future, and I think we need that talent. And so, making sure they have the resources and partnering with firms like yours to help them get to where they need to be in their career and have that great career path, keeping them in the profession.

Joe Peiser:

That's exciting. And you made me remember another great moment for me at RIMS, which I was chatting with a risk manager who's on the younger side, at least compared to me. And she talked about meeting up with some of her classmates from her risk management program who were also in the business there at RIMS. And it made me think for years and years, I used to say that people in our business are either born into it or fall into it, and that's no longer the case. We have many, many professionals who have chosen our business, which I applaud because I have found it to be.

Jennifer Santiago:

Yes.

Joe Peiser:

A great business and endlessly fascinating.

Jennifer Santiago:

Yes. There was recently an article, and it actually was a comment to those who have said historically and have continued to say, “I fell into this industry.” It gives a negative impression that it wasn't a choice. Right. And these students are choosing. So, I think that's exciting.

Joe Peiser:

Yes.

Jennifer Santiago:

I think it's really exciting.

Joe Peiser:

Now, one of the things that we, Aon, did at RIMS was to launch one of our risk management surveys that we do every two years where we ask risk managers and other executives, what is top of mind when it comes to risk? And the early indications this year is that what's top of mind for clients, probably not surprising, are cyber risks, data breaches and workplace shortages. How does that resonate with you and your membership at RIMS?

Jennifer Santiago:

Yeah, it completely resonates, and RIMS also gathers so much intelligence from the risk management community and all of our membership, and these are the top-of-mind priorities. So, we talk about the talent risk, we talk about cyber and the really hard market are the things that keep us up at night. Talent seems to be that foundational thing that almost scares me. Right. Because if we don't have enough people in the workforce, certain things can be replaced by machines and AI, but we really need talent. And there's been talk of this sort of wave of retirements and there'll be this massive gap where we don't have skilled labor. So, I think that's a big priority for everybody in really every profession, including our profession.

Yeah. Cyber's one of those that just doesn't want to go away. The ransomware, the number of DDS attacks and things that go on, on a daily basis. All of our IT teams are constantly blocking, diverting and regrouping from those. So, it becomes that, not if, but when, and hopefully not a catastrophic. But the challenging market, there's capacity, but you just start to wonder how they carve back coverage, as you see more frequency of claim.

Joe Peiser:

The cyber market is evolving frankly, on a weekly basis, and has been now for a number of years. It's quite a different market than it was several years ago and probably will be different again in the next few years. Fortunately, at least pricing is easing a bit, but the risk continues.

Jennifer Santiago:

Yeah. Yeah. Yeah. So, from a risk manager perspective, right, it's making sure that you're hardened, and you've got all your plans and your checks, and you're doing your tabletops and just being prepared for the when and if on the cyber side. And then I think just, I don't know if your survey identified the sort of political, social, civil unrest that's going on in our country.

Joe Peiser:

Oh, absolutely. Political risk across the world typically shows up in our top ten. And climate also is an area where I expect to see that increasing up into the top ten, if not the top five.

Jennifer Santiago:

Yeah. Yeah. Agreed. Agreed.

Joe Peiser:

Great. Well, this has been a great discussion, Jennifer. And before we sign off, I'd like to ask you another quick question just to let our listeners learn a little bit more about you, Jennifer, personally. So, tell me what's your favorite thing to do when you're not working?

Jennifer Santiago:

Well, it's a good question. I think my family is my priority, so that's where I put a lot of my energy and my attention outside of working for sure. And then I'm a traveler. So, I'm thankful that the world has opened back up again and hopeful to get on the road and see as much of the world as I can. I've tried to do the same for my children. I think it's so important to know other cultures and traditions and appreciate differences and diversity. So, I'd love to be on the road all the time if I could.

Joe Peiser:

Any plans for this summer?

Jennifer Santiago:

Well, we're looking at a potential Europe trip, but my son's going to Italy, so we've been talking about whether we might tag along for some portion of that and just try to enjoy the beach, which is my other number one priority.

Joe Peiser:

That sounds great. Well, it's been a real pleasure to talk with you today, and I really want to thank you for joining us in this discussion that I know is important to you. I can tell it; I can tell from the passion in your voice and it's very important to me as well. So, thanks very much.

Jennifer Santiago:

Thank you so much, Joe. Thanks for having me, Aon. Appreciate it.

Joe Peiser:

So that's our show for today. Thank you all for listening and look for the next episode of On Aon coming soon.

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