I recently read a Forbes article of risk management and sustainability I thought made much sense.
It was an interview with Dr. Leo S. Mackay, senior vice president at Lockheed Martin, and he was describing a reorg at Lockheed that puts enterprise risk and sustainability under common reporting, since ERM and sustainability are both principally focused on the identification and prioritization of risk.
Considering risk and sustainability together is part and parcel of the same thing because sustainability in strategic terms is about building in resilience and efficiency into the business. “Rather than have separate silos where discussions or disaggregated thinking around what are the existing and emerging risks, that now is a coordinated effort,” Dr. Mackay says “Those things are tantamount to risk mitigation and the control of risk.”
To me what Lockheed is building in their business is resiliency – perhaps an over-used word these days, but as good a descriptor as any. With organizations facing increased risks from cyber security to climate change, captives can lead the way to help create that resiliency, especially as many captives already work across silos if they cover diverse risks such as property and employee benefits. So as captive practitioners you can get the process started – by coming to VCIA’s Annual Conference to get some good education with sessions such as Expanding Your Captive Business Plan and Optimizing Your Captive’s Risk Profile and Reinventing Your Captive for Maximum Results.
Check it out: http://conta.cc/2vDCNrG
And a quick follow-up to last week’s blog: I reported about my concerns with the proposal to add a border adjustment tax (BAT) to any tax reform that Congress might attempt this summer, as it might cause additional costs to the captive insurance industry utilizing offshore reinsurers. Jim McIntyre just reported to me that the White House and congressional GOP leaders said that they are no longer looking at a border-adjustment tax as they work to get tax-reform legislation enacted this year. Good news as it eliminates one uncertainty in Washington!
I look forward to hearing from you.