Risk International- Michael Davis, president and CEO, Douglas Talley, chairman
Q: Give us an example of a business challenge your organization faced, as well as how you overcame it.
Michael Davis, president and CEO: One evening our President, Del Jones, was in the old BFGoodrich headquarters in downtown Akron when Dave Burner stepped into the office. Dave was then the President of BFGoodrich Aerospace and later went on to become the chairman of Goodrich. As they were discussing the impact of their insurance premium increasing by $2 million, Dave commented, “At those prices we will have to decide if it is even profitable to be in the aerospace business.”
It was then that Del thought, “We cannot ever, ever, let our client be in a position where the cost of insurance determines whether or not they stay in business!”
Over the next week the Risk International team reviewed the entire program, developed an innovative design and reduced their premium by $2.4 million, a $4.4 million swing from the original proposal that was received from the broker. The Risk International team was elated! We certainly don’t want to take credit for keeping Goodrich in the aerospace business, but we did take a major worry off their mind.
That’s what Risk International is here for, that’s what we do for clients. We take the worries away and let our clients run their core business.
Q: In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Michael Davis, president and CEO: We were the first company to outsource a risk management department, which was incredibly innovative at the time. Twenty-five years ago, our founder was working for Zapata Corporation, an offshore oil drilling and marine company in Texas. Our founder was trying to help them reduce their costs including outsourcing the risk management function. Once external, the new organization continued to provide high quality risk management as it had done as a department, and began to add even more value. We helped Zapata improve their financial flexibility and offered them new services tailored specifically to various needs.
Then we brought the concept to Northeast Ohio and Risk International opened its doors in 1986 when we began providing a fully integrated program of risk management services to a Fortune 200 Company, BFGoodrich. Zapata and Goodrich remain clients to this day.
Today, we continue to innovate by crafting unique solutions to meet our clients’ needs. An example of this was the creation of our insurance archaeology practice. Our clients were facing claims that implicated decades-old policies, but they didn’t have records that far back. So, we created a system that allowed us to find and reconstruct policies. Looking back, it was just a way to solve a problem for a client, but from their perspective it prevented a big headache – to date we’ve found more than $40 billion dollars of policy limits. Then we started negotiating recoveries on those policies. Again we were just acting as a problem solver, but it had an incredible result for our clients because we have negotiated more than $600 million in recoveries.
It’s a great story, but only because we listened to our clients and crafted solutions that fit their needs.
Q: What is the greatest lesson you’ve learned and how have you applied it?
Douglas Talley, Chairman: There is no substitute for a reputation built on integrity. Warren Buffett said something like, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
In everything that we do, we attempt to act with the utmost integrity. We hope that this attitude pervades the work we do with for clients and with our partners and vendors. Acting with integrity shapes our relationships and the way we work and we wouldn’t have it any other way.
Q: How does your organization make a significant impact on the community and regional economy?
Michael Davis, president and CEO: We are committed to northeast Ohio. We recently had the opportunity to buy our office building and we didn’t think twice about it because we know we are here to stay. That was a multi-million dollar decision, which was certainly significant to our firm, but one that also positively affects Northeast Ohio. We’ve also increased our FTE’s by more 10 percent in 2010 and the internship program that we started in 2009 is expanding in 2011. We could run this business from anywhere, but we are in Northeast Ohio for the long term.
We’re committed to this area because many of our clients are based in this area and we have found great success in improving our clients’ risk management programs – saving them hundreds of millions of dollars along the way. We have helped our clients create more than $700 million in risk management savings and $600 million in claims recoveries. Over our 25 years in Northeast Ohio that is an average of $52 million a year that our clients are able to reinvest in their company, their people and their products. We’re pleased that we can have such a positive economic impact in our local area.
Aside from the financial boost our clients get, client leadership is free to focus on their business rather than worry about the management of their risk. I think this was clearly enunciated by one of our long time clients, Robert Patterson, senior vice president and Chief Financial Officer at PolyOne when he said, “Risk International has been a trusted and valued partner of PolyOne. They provide expert counsel in the area of risk management and behave more like an employee/owner than a supplier. I sleep better at night knowing Risk International is looking after our risk management activities and I would recommend them to anyone.”
When we started out we didn’t intend to be an economic catalyst for the region or the solution to corporate insomnia – we were just helping our clients effectively manage their risk. It turns out that a well managed risk management program provides corporate peace of mind and costs less than the alternative.