Addressing the Risk Manager Shortage - Part I
Sep 13, 2022
We’ve all witnessed the staffing shortages at retail establishments, restaurants, hospitality venues and elsewhere. Help wanted signs are pervasive, companies can’t find good people, and managers worry about burning out their current employees.
The talent crisis is all too real in the risk management community. At Aclaimant we talk to many companies and from current customers about the shortage of available risk management professionals and the problems they are experiencing as a result. We’ve even heard from potential customers who would love to deploy our system but have to put it off until they can find somebody to coordinate the implementation.
The problem is structural and isn’t going to go away anytime soon. This is the first of a short series of articles meant to help corporate managers determine what they can do about understaffing when resources are limited, or overcoming the challenge of replacing your current talent. In this installment we’ll discuss some steps we recommend be taken before hiring the next person. These steps can be taken either before or after a vacancy arises.
Diagnosing your need
A good starting point is to take inventory of the key areas of subject matter expertise that the company needs. A couple items might come immediately to mind, but don’t be surprised if the full list is rather daunting. Here are some examples:
Workers comp law
Medicine and rehab
Training and awareness
Of course we could add much more to this list. But even if we didn’t, it's likely that nobody will possess deep knowledge in every area that might be deemed important. Decisions may need to be made about what skills are truly necessary, what can be learned on the job or at a later time, and what additional training or knowledge gaps the organization is prepared to support by other means. In any event, be sure to include things that the organization isn’t doing at all right now, but ought to be undertaking.
Keep in mind that it’s probably a sound strategy to find somebody who is adept at learning and adapting, even if they have some knowledge gaps, as opposed to somebody who checks a couple more boxes but possesses limited growth potential.
What processes and results are impacted by the Risk Manager?
As with the skills and knowledge inventory, some surprises might emerge by identifying the key business processes and results that are controlled or influenced by the Risk Manager. Again, a few might be obvious, such as selecting insurance providers or reporting and managing claims, but other areas may require further thought.
We know of Risk Managers, for example, who are critical to corporate budgeting, perform actuarial analyses, manage extensive return to work programs, oversee cyber security, are partners in corporate strategic planning, or are essential to regulatory compliance in critical areas such as wage-hour law. Some important areas of activity may be under-documented or seasonal, such that awareness of an unmet need may not emerge immediately after the departure of the incumbent. Similarly, cause-and-effect relationships, such as a gradual slippage in safety metrics, might have their roots in risk management staffing deficiencies.
It behooves the hiring manager to have a reasonable understanding of these processes and interdependencies before seeking new talent. And, one might wish to revisit the aforementioned skills inventory after considering all the affected processes and metrics.
Identifying the financial consequences
Once this fuller appreciation of the Risk Manager’s current and preferred role is at hand, those tasked with hiring will be better prepared to assess the Risk Manager’s financial contribution. Some dimensions are direct and obvious, such as the cost of any temporary fill-in contracted services, but others might need further analysis. Here are some examples:
- What would be the earnings impact of a five percent increase in corporate insurance costs?
- If accident rates rose by two percent, what is the likely annual cost?
- Given the scarcity of talent across the board, what is the additional cost of hiring if our return to work program were to be less effective?
- Is the Risk Manager keeping us from unjustified safety fines or penalties? How much are those worth?
- How much is it worth every time we keep a workers compensation claim from going to litigation, and how often does that happen now?
There are plenty of other examples that one could cite, but hopefully this provides a starting point. The key point is that Risk Managers make a much broader financial contribution than might be evident upon a cursory review.
One last preliminary step: the opportunity to re-engineer
Having taken a more expansive look at the Risk Manager’s role and contribution, there’s one last important preparatory step that we recommend: considering a re-stacking of the risk management role.
Business in general has changed dramatically over the past few years, making it less likely that staffing decisions made years ago are still the best choices for today. When an organization doesn’t face the inertia and resistance that often accompanies a static talent roster, there is a fresh opportunity to reconsider what is most important and whether the current role definition reflects what’s truly best for the organization. A critical aspect of this reconsideration is to re-assess what technologies are currently utilized and whether they are fully supportive of organizational priorities. This analysis should go beyond current applications and embrace what could be achieved by changing processes and exploring new possibilities.
By performing the baseline analyses recommended in this paper, the company will be well-positioned to ensure that the next risk management role closely aligns with today’s most pressing needs.
Join us on September 14 for more!
We’ll be publishing a couple of follow-up blogs that will address how to find risk management talent, what resources are available from within and beyond the organization, and how to deepen the risk management bench to enhance corporate resiliency. In the meantime we invite you to join us on September 14 for a webinar featuring experts on the issue of risk management talent.