About Jared Wade

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.

RIMS in Pictures

They say a picture is worth a thousand words. If that’s true, here are 10,000 words on Tuesday at RIMS 2010.

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RIMS President & Director Terry Fleming and RIMS Executive Director Mary Roth cut the RIMS 60th anniversary cake.

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Former RIMS President Joseph Restoule and RIMS Members Services Associate Shavonne Howlett pick the raffle winner of a new Kindle.

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Talking about global programs at Tuesday’s Exhibit Hall Lunch & Learn roundtable discussion.

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Chatting after the keynote.

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Enjoying a session.

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Everybody loves their Bermuda bags.

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Team photo shoot.

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Getting rich in National Underwriter’s Money Machine.

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Working the Exhibit Hall.

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Working the Exhibit Hall part two.

Insurance and Latin America

This morning at RIMS 2010 Boston, I got the chance to speak with Swiss Re’s Ivan Gonzalez, who heads the company’s Latin America and Caribbean Single Risk business. In our talk about the increasing opportunities for insurers in the region, the focus quickly, and predictably, turned to Brazil, which presents great promise to the re/insurance industry for two main reasons.

First, Brazil is among the fastest-growing major economies in the world. With nearly twice the population of Mexico and a much larger economy, this prominent “BRIC” nation (the name du jour for the four most most-promising emerging markets: B = Brazil, R = Russia, I = India, C = China), is one of the “next big things” for many business sectors, and as the GDP continues to rise along with the per capita income, more and more companies and individuals will be purchasing insurance.

Second, Brazil liberalized its once-monopolized reinsurance market in 2008, and many companies have been eager to steal market share away from the state-run reinsurer.

Here’s what I wrote about the change not long after it happened.

With this sweeping change, the region’s largest insurance market is now poised for a commercial lines takeoff as outside players begin writing business previously reserved solely for the state-run Reinsurance Institute of Brazil (IRB), which was formed in 1939.

“We had the monopoly of the IRB for 70 years,” says Marcelo Homburger, vice-president of Aon Risk Services Brazil. “Companies could compete in the direct market, but then they had to go to IRB for their coverage.”

Companies including Swiss Re and XL Re rushed into the open market, bringing a capacity influx for eager primary insurers, who have historically struggled to gain coverage beyond the boilerplate terms, conditions and capacity offered by IRB. “[IRB was] determining all the prices and terms,” says Homburger. “It was not very creative and it was not very competitive. We will be able to provide products that we never could before.”

According to Gonzalez, however, the business hasn’t exactly exploded.

“A lot has happened — but very little happened,” said Gonzalez. “People thought the IRB would, in the first two years, lose a lot of business.”

And while those people overestimated the speed of change in what Gonzalez characterized as a “not fully liberalized” marketplace, he does still think it is coming — slowly but steadily. “I think commercial insurance is going to grow significantly,” he said. “We’re bullish on Brazil. We’ve been bullish on Brazil for 60 years … The magnitude of projects [now occurring] is creating a shift.”

Gonzalez also noted that next year will mark the 100th year that Swiss Re has done business in Latin America. Plan to hear a lot more about that going forward.

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Listen to Me Speak About Diversity at RIMS 2010

The whole Risk Management Monitor team has now assembled like Voltron in Boston for RIMS 2010 and after a relaxing, jovial evening last night over drinks and music at the opening reception, it’s — unfortunately — time to get to work. I have been running around all morning, speaking with some risk experts on a variety of topics that you will hear more about later, but I just wanted to kick off the week by letting you know that I’m here in Boston and will be, among other things, speaking at a session later this week that anyone at the conference is welcome to attend.

On Wednesday from 10:45 am – 12:15 pm in a session called The Risk Management Melting Pot: What’s Cooking?, me, Alberto Felix of M. Hayes, Robert Cartwright of Bridgestone, and Tyler will be speaking about diversity. As a few of you may remember, I wrote a cover story about the racial diversity — or, more accurately, the lack thereof — in the risk and insurance industries for Risk Management back in 2008 (“The Complexities of Complexion”). It’s safe to say that the insurance sector, even more than most, is full of white males and that this reality will be increasingly problematic for the industry in the future if an effort to increase diversity is not made.

But, of course, it’s not just insurers and brokers that have to deal with these challenges. The United States is projected to become a “minority-majority” country by 2042 and all companies will need to address this transformative demographic shift.

We’ll be discussing that issue and all the many complex, difficult realities that it creates.

Here’s a full description:

Minorities will become the majority in the United States by 2042. Alongside this demographic shift, the globalization of risk management has encouraged all employers to seek out diversity. This panel of experts will address: the pitfalls associated with ignoring workplace diversity; obstacles in managing a diversity program; the benefits and misconceptions of stereotyping; how organizations have added value by diversifying their workplace; and how risk professionals should handle the complexities associated with workplace diversity as well as the upcoming demographic shifts.

Good seats are still available. Please do stop by and say hello.

The Risks of Social Media: Self-Inflicted Reputation Damage

reputation risk the world is watching

When we talk about social media and reputation damage, there are two basic types: (1) Damage that is self-inflicted, and (2) damage that comes externally from others. We will discuss type two later, but since that is inherently more difficult to control, let’s start with the type that companies can more easily manage.

There are are almost limitless way that companies can look bad publicly. Just recently, we have seen Toyota hurt its brand by failing to properly correct safety issues in its vehicles and the Massey mining company expose itself to scrutiny for prioritizing its need to “run coal” over the safety of its workers. Wal-Mart has infamously garnered consistent backlash for its business practices, ranging from discriminating against women/minorities and crushing local businesses to union-breaking and failing to provide workers with health care.

But the digital world offers many new ways for companies to hurt their own brands. And Wal-Mart knows about these, too.

The retail giant famously invited scorn in 2006 by partnering with two RV campers turned bloggers who drove around the country, spending their nights in Wal-Mart parking lots and detailing interactions with — what seemed to many — overly positive employees with nothing but nice things to say about the company. The trouble that ensued was not due to the fact that Wal-Mart had launched a PR campaign to help counteract some of its negative publicity. The fallout resulted because the bloggers, who were presented as regular Americans with homespun, folksy tales of how great Wal-Mart is, were not as independent as it seemed. They were, at least to some degree, on the Wal-Mart payroll. (The exact relationship between the company and the campers is detailed here and the plan did start out as an organic idea that was later co-opted and supported, financially at times, by the retailer. Ultimately, however, it was — like most things in the online world — the perception of impropriety that was the lasting memory, not the actual facts.)

The problem was transparency. Readers — aka, customers and critics — felt duped by the insincerity. They believed that Wal-Mart had set the whole thing up as a ruse. And there is perhaps nothing that those who can do damage to a company on the internet loathe more than being lied to.

So while this incident obviously didn’t do irreparable harm to one of the biggest corporations in the world, it did leave a bad taste in the mouths of many consumers. It was a good opportunity turned bad, simply because there was a lack of disclosure.

This is lesson one about using social media: Be honest.

You don’t have to always be perfect and you don’t have to always tell the world everything about your operations in social media, but you cannot lie. Inevitably, dishonesty comes out, and a firestorm of “WAL-MAAART SUCKS!!!!11!1!!!” backlash is the result.

The second lesson, which I will tell you before we even get to the example to ease your suspense, is: Be respectful.

The online culture that has developed on blogs, internet forums and social networks (all of which fall into the realm of social media and user-generated content, which are really one in the same) is not particularly polite. Anonymity allows people to write things they would likely never say in real life, and hostility often results.

But if you are a professional brand operating in this space, you must be careful to avoid mudslinging. When irrational, cruel voices enter the fray, you must take the high ground. You have to be better than that.

One employee at Ryanair did not heed such advice.

After a freelance developer named Jason wrote on his blog about a flaw in the airline’s system that allowed him to book a free flight, one of Ryanair’s employees reacted … let’s just say … inappropriately.

This was his/her response:

“you’re an idiot and a liar!! fact is! you’ve opened one session then another and requested a page meant for a different session, you are so stupid you dont even know how you did it! you dont get a free flight, there is no dynamic data to render which is prob why you got 0.00. what self respecting developer uses a crappy CMS such as word press anyway AND puts they’re mobile ph number online, i suppose even a prank call is better than nothing on a lonely sat evening!!”

After some follow up discussion from Jason, he/she added this:

“Website is not perfect, Life is not perfect… if you would work in your pathetic life on a such big project in a such busy environment with so little resources, you would know that the most important is to have usual user behavior scenarios working rather than spending time on improbable and harmless things.”

This was the wrong way to address the issue.

Companies always have to weigh whether or not to respond to online criticism. Some choose to do so aggressively while others choose to mostly ignore it.

Dell famously was able to reverse some of the reputational harm done to it by the many critics who had detailed their experiences with “Dell Hell” customer service online. According to Jeff Jarvis, one of the company’s most high-profile critics, Dell reached out and learned about how to improve from those with complaints.

After some prodding by Jarvis, who was a — if not the — lead instigator of this burgeoning anti-Dell sentiment, to “join the conversation your customers are having without you,” Dell began to address the issue. The company turned its customer service around. It contacted people who had had negative experiences. It launched its own corporate blog to publicly discuss its flaws. And, according to the company’s leading critic, it worked.

“Dell transformed itself from worst to first in the era of customer control,” wrote Jarvis. “Dell had been the poster child for what you should not do. Then it became the model of what you should do.”

Just because it worked for Dell doesn’t mean it will work in all cases. When dealing with the “loud minority” who perhaps have irrational anger towards your brand, putting your head in the sand and pretending you never saw it can be the proper response. The last thing you want to do is give credence to an outrageous claim by acknowledging it.

But if the criticism is valid — and coming from and at least marginally civil source — and you do decide to interact in social media in an attempt to improve how people view your company, make sure to do it with respect. There is no point in making things worse.

An article from WebWorkerDaily on what things do and do not work on company FaceBook pages provides some good perspective on both of these lessons:

Let’s face it. Social media is not about you being in control anymore. The customer is in the driver’s seat. You are along for the ride, but fortunately can give some directions or guidance in appropriate ways. Sure you can delete things from your Facebook Page, but in the world of social media, that is an attack on transparency (not to mention freedom of expression and spirit of online community). Someone says something negative about you on your Page? Look at it as an opportunity to right a wrong or to give your side of the story with unrestrained candor.

Appropriate candor should be the takeaway. Talk to your customers and talk to them like you would any normal person in a normal conversation. Be honest and be respectful and you should be OK. How you go about actually improving your reputation through social media is a whole different can of worms, but as long as you stick to these principles, you should at least not inflict self-damage.

Training your employees who will be the online gatekeepers of your brand is the key to success in this realm, and Ecoconsultancy tells us why in its post on the 10 Common Social Media Mistakes.

Social media may look easy, but it really isn’t. How your employees behave can have a big impact on your company’s social media reputation. For companies that are actively involved with social media, setting expectations and creating policies for employees is the best way to ensure that they help your reputation, not hurt it.

Education and guidelines/policies are necessary before you delve into social media. You wouldn’t hire a marketing exec to shape the face of your brand who didn’t know anything about marketing. And you shouldn’t allow anyone unfamiliar with the pitfalls of social media to speak for your brand online either.

We will talk more about social media policies in the future.

(And if you missed the introductory post of our ongoing Risks of Social Media Series, you can read it here.)