NextGen Risk | Revealing the mystery risk scenario

Students participating in the case competition filed into a room at Bow Valley College in Calgary early in the morning on Thursday, March 12, nervously wondering what risk case scenario would be consuming their lives for the next two days. Leading up to the competition, most team members were putting in 10 hours per week to prepare for anything (like true risk managers).

And now, it all came down to this.

The students heard the terms of engagement. Today, from 8 am to 5 pm, they would share small breakout rooms with their teammates to prepare slides for a panel of judges. No internet, no phones. Property and casualty insurance industry experts would assess their expertise in an area that remained a mystery.

And then, what they’d all been waiting for — the big reveal.

The students were asked to present on wildfire risk. The scenario was based on Alberta’s Fort McMurray wildfire in 2016, which cost P&C insurers about $6.2 billion in insured losses (adjusted for inflation). The blaze destroyed roughly 2,400 buildings and forced the evacuation of 88,000 people, according to the Insurance Bureau of Canada.

And with that, the students were introduced to Boreal Outdoor Supply Ltd., a fictional outdoor equipment retailer and warehouse distributor located in Northern Alberta. The business is in a town located in a forested, wildfire-prone area.

Two former forestry workers founded the mid-sized outdoor recreation retailer and distributor in 2008. They saw an opportunity to serve the growing population of hikers, hunters, oil camp workers, and tourism operators across Northern and Central Alberta.

“The company began as a small storefront selling camping and safety gear but has expanded significantly over the past decade due to growth in outdoor recreation and industrial demand for protective equipment,” the case study reads.

Now, the operation has a retail storefront (4,500 sq ft) and an attached warehouse (12,000 sq ft). It operates as a walk-in retailer of outdoor goods, but also fulfills online orders. It offers bulk sales of safety equipment, wildfire personal protective equipment, and emergency kits to forestry contractors and energy sector clients. Its peak operations are during the summer months.

The business has a number of risks P&C insurance professionals would notice right off the bat. The buildings are mainly constructed with mixed wood and metal. The asphalt roof is nearing the end of its life (18 years old). A map provided to the students shows vegetation all over the grounds, on which lumber is haphazardly piled.

One-quarter of the business relies on online orders, which are shipped throughout Western Canada. Its supply chain counts on commercial and industrial supply contracts amounting to 35% of the business. And yet, Boreal is located on the only road out of town — a nightmare situation for many in Fort McMurray, who braved the only highway as sparks flew from the flames around them.

The business has expanded, and the management has focused on sales rather than risk. The company has no evacuation plan, informal safety protocols, and no risk management plan.

Enter the students in the competition.

Teams were instructed to present as a team of commercial brokers advising their client, Boreal, on how to manage their wildfire risks. The students had 10 minutes to present a PowerPoint presentation to a panel of judges, who played the role of the company’s management.

In addition to explaining their role as brokers, their advice had to include:

• Boreal’s Top Property and Enterprise Risk Exposures
• Loss Control Recommendations
• Implementation Roadmap

The teams had all of Thursday to prepare. Some worked into the wee hoyurs of the night, although the PowerPoint presentations could not be edited after 5 pm.

On Friday, Mar. 13, all 14 teams presented to a panel of judges in the first round. Judges’ grades were then tallied and the Top 3 teams presented in the final round late in the morning.

Who made it to the Final 3?

Tune into our final newsletter tomorrow to find out…