NextGen Risk | Top 3 Finalists | Fanshawe College

Back in 2007, the global brokerage Marsh introduced a report called ‘The Upside of Risk,’ calling for changing the perception of risk management from simple cost prevention to one of realizing opportunities for business growth.

Whether intentional or not, Fanshawe’s team leaned heavily into this approach when it emphasized the opportunities for Boreal’s business growth if it could manage its glaring reputational risk.

“Reputation is super-important to me,” one team member said. “You’re providing fire protection materials, or something to fight fires in general. If our building burns down, our reputation burns down. That’s a loss of trust in people who supply the materials. That reputation has a value of its own. These investments [we’re recommending] add value to your property, but they also protect that brand image. And if we’re able to operate in our own community that’s fighting the fires, that’s also a brand image boost. Those reputational bonuses are massive for a company, because once you lose reputation, never going to get it back.”

Fanshawe’s broker team also came up with a grid to identify Boreal’s priority risks.

On the matrix, the team explained, the vertical axis shows the likelihood of the risk happening, and the horizontal axis shows the impact of the risk happening. Risks on each axis are graded 1 for least and 5 for the most. “So, the highest risk score we can get is a 25. Let’s just take business interruptions, for example. So, on the likelihood scale, we have it rated a four and a 4 as well on the impact. So that’s a risk score of 16. So, looking at our risks altogether, you can see they’re in red. This is bad. We need to fix this now.”

Based on its risk matrix, the team made three main recommendations: investing in infrastructure, investing in safety protocols, and “we highly, highly encourage you to invest in risk management procedures,” the team said.

On the infrastructure side, the team recommended a repaired and upgraded fire-resistant roof. It also recommended installing a new sprinkler system, as well building a new warehouse location “that doesn’t shut us down” in the event of a wildfire.

Safety protocols are a must, the team said. “If your employees don’t know how to get out, that’s their lives you’re putting at risk,” the team said. “We encourage you to implement an IRP, an incident response plan. This procedure will help train your employees what to do if a wildfire occurs. It teaches them a proper escape route…and how they can ultimately save themselves and their business. This goes hand in hand with a [formal] training program.”

Plus, the team talked about implementing risk management procedures, including the addition of an enterprise risk management (ERM) plan. “This is going to help us determine our likelihood and the impact of our risk by scanning and identifying our risk, analyzing our risk, treating our risk, and monitoring our risk.”

At the end of the presentation, the team took the judges back to the risk matrix. Only this time, they plugged in the risk scores if all the recommendations were implemented.

“As you can see, [originally] we had our risks in red with a total risk score of 93,” the team said. “Now, after we’ve implemented our ERM, and we’ve done the process, we now have a risk score of 26. That’s a decrease of 72%.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.