Greetings!

I pulled out of my garage the other day, and while still in my driveway, I glanced down at my phone; a notice came up that said, “27 minutes to work”. I was suddenly hit with the stark realization that my office address has become the default destination on my phone for every time I drive away from my home.

In all candor…I’m not sure how I feel about this. Is it a good or bad thing that I’m so consistent, predictable and boring that work has become my default destination. I will also share that after seeing this, I was curious what my default destination was when I left my office. I was happy to see that as I left work, it said “51 minutes to home”. I was honestly a little worried that the default destination from my office would say “Airport” or be the address of the nearest In-N-Out Burger or Chipotle restaurant. 

These automatic default destinations on my phone started me thinking about other “default” settings we may have in our lives that are not in our face as much as our phones are. Our daily habits, rituals and routines that we have become so accustomed to, that they have become automatic and part of who we are. Understanding that we all have our own default destinations to a certain extent, the question that raced through my mind was; How does an organization successfully embed Risk Management as the natural default culture for every operation and for every team member within their company?

This is not an easy task because Risk Management can mean different things to different individuals based upon their role within an organization and their experience. For an entry level employee on the manufacturing floor, Risk Management may mean wearing your safety glasses, lifting with your knees and keeping your work area clean. In the eyes of the Operations Manager, Risk Management is planning for and preventing operational disruptions and bottlenecks; assuring on time delivery of quality products and performance, compliance, and a dependable workforce. For the CFO of that same organization, Risk Management is the delicate balancing of financial operations while identifying and capitalizing on strategic growth opportunities. This requires CFO’s pulse to be on diverse financial trends and issues such as; Liquidity, AR, Inflation, Tariffs, Cash Flow, Commodity Prices, and myriad others. In addition to those, the CFO’s Risk Management world includes operational and strategic concerns; Capital Allocation, Internal Controls, Cybersecurity, Business Continuity, Regulatory and Legal, all while having the vision and foresight to see, and strategically plan 36…48… and 60 months into the future. Much of the time (almost always) to the CEO and Owner; Risk Management means all of the above plus many, many more.

So, with all of that…how do we make Risk Management a natural internal default? Like many things, I believe the answer may be simple; but…can be very difficult to actually accomplish. Studies have repeatedly shown that effective Risk Management is about “Culture” and “Repetition”.

We all understand the importance of repetition and training so let’s talk about Culture. Many firms see risk management as something they are required or mandated to do. Processes, procedures, documentation, and checklists that are forced upon them by regulatory bodies, governments, customers, trade groups, attorney’s and yes… insurance companies. In short; many firms see risk management only as a cost center and something they are compelled to do that distracts from their real operations.

The most successful organizations I have worked with are just the opposite; they have demonstrated and embraced the fact that risk management truly is a profit center to help fund their operational and growth objectives. 

Example #1: Heavy Manufacturing Company, 1,100 employees. In the last 7 years they have reduced their net workers’ compensation rate from $18.00 to $1.42. This savings has significantly boosted their EBITDA, helped them gain greater market share, and allowed them to offer more robust employee benefits designed to attract and retain the best employees while almost eliminating turnover.

Example #2: Transportation Company, 200+ Power Units. Over the last several years, with dedicated risk management priorities, this organization has reduced their incidents and accidents so dramatically that their commercial auto insurance rates are well under $1,500 per vehicle, per year. This represents a ten-fold savings over many of their peers and competitors. This savings has significantly strengthened their position as they look to acquire other entities and has allowed them to expand vertically and horizontally into other transportation areas and diversify their operations (another risk management and growth strategy).

With a Risk Management culture shift away from compulsion and to a culture of choice and accountability, strategic risk management can become a profit center and open numerous opportunities not previously possible.

Default destinations automatically pop up on our phones because they are the locations...our goals and objectives we drive to over, and over, and over again…every single day. It’s the regular constant repetitions that create our defaults. Creating, or shifting a risk management culture within an organization works the exact same way; over and over again, every single day.

My McGriff team and I believe in constant improvement and challenging the status quo of managing Corporate Risk. We are constantly learning so we can discuss strategies that will bring advanced tactics, solutions and value to you and your company. If you’re the type of organization or person who strives to get better every day, who believes in betting on yourself, if you want to take more control of your Corporate Risk, and better define your Risk Management “Default Destinations” please give me a call.