Applying ERM Theory with Elise Farnham

Welcome to RIMScast. Your host is Justin Smulison, Business Content Manager at RIMS, the Risk and Insurance Management Society.

 

Justin Smulison interviews Elise Farnham about how ERM has changed, how new policies like the SEC climate disclosures influence the ERM landscape, and Elise’s risk philosophy. They discuss whether organizational leaders are placing more value on ERM programs, and the biggest challenge for a risk practitioner to turn theory into practice. When did you first understand how the fundamentals of risk management can be used to form decisions beneficial to an organization? What are some commonalities among the risk professionals you've come across in the RIMS virtual workshops (or RIMS events)?

 

Listen for insight on risk management basics and more wisdom for your organization.

 

Key Takeaways:

[:01] About RIMS.

[:15] About this episode.

[:30] Events! We’ve got the DFW RIMS 2024 Fall Conference and Spa Event happening on September 19th in Irving, Texas. Learn more about that event in Episode 299, which features an interview with the Texas State Office of Risk Management.

[:49] Also on September 19th is the RIMS Chicago Chapter’s Chicagoland Risk Forum 2024. Register at ChicagolandRiskForum.org.

[:58] Registration opened for the RIMS Canada Conference 2024 which will be held from October 6th through the 9th in Vancouver. Visit RIMSCanadaConference.ca to register.

[1:11] Registration is also open for the RIMS Western Regional, which will be held from September 29th through October 1st at the Sun River Resort in Oregon. Register at RIMSWesternRegional.com.

[1:25] We want you to join us in Boston on November 18th and 19th for the RIMS ERM Conference 2024. The full agenda is live. It runs the gamut of ERM. Check it out! A link to register is on this page.

[1:40] All RIMS regional conference information can be found on the Events page at RIMS.org.

[1:46] The next RIMS-CRMP-FED Exam Course will be hosted along with George Mason University from December 3rd through the 5th. Links to these courses can be found through the certification page of RIMS.org and this episode’s show notes.

[2:04] RIMS Virtual Workshops! On October 9th and 10th, Chris Hansen returns to deliver Fundamentals of Insurance. He’s very popular in the Workers’ Comp space. Other dates for the Fall and Winter are available on the Virtual Workshops Calendar of RIMS.org/virtualworkshops. 

[2:27] Interview! We will be chatting with Elise Farnham of Illumine Consulting. Elise is very well known among the RIMS membership as she has been one of our instructors for the past 30 years!

[2:43] Elise will be leading two upcoming courses for us here at RIMS. On September 25th and 26th, we’ve got Applying and Integrating ERM and on October 3rd and 4th, we have Fundamentals of Risk Management.

[2:57] Elise will let us in on what it takes to apply and integrate ERM into an organization’s framework and operations and we will talk about her ERM philosophies. Elise Farnham, welcome to RIMScast!

[3:24] This year, Elise celebrated her 51st year in the risk and insurance industry. It’s been an amazingly great career. She started in claims in the mid-seventies. She got involved with RIMS when she started working with large corporate clients in the late seventies and early eighties.

[3:52] Elise took an interest in what RIMS was working to accomplish, reducing claims, all while she was working for a claims management firm. Elise has been working with RIMS since 1995.

[4:51] The RIMS ERM Conference 2024 will be on November 18th and 19th in Boston, Massachusetts.

[5:06] Elise became aware of the concept of ERM in the late nineties. She thought it would be a difficult job. ERM professionals have grown, frameworks have been developed, and we’ve seen some companies that lacked ERM fail spectacularly.

[5:44] It has become evident that every company has to take the resources and strengths that they have, look at their entire risk picture, and turn what could be a bad situation into something positive for their organization.

[6:17] Elise talks a lot in her classes about how to convert a problem into an opportunity that might help an organization. ERM has changed a lot in the last five years. Justin and Elise comment on how the pandemic may have helped companies realize the importance of ERM.

[6:42] All of a sudden, companies were faced with a type of loss that came out of the blue. COVID-19 was the “black swan” that we will remember and write about for years to come.

[7:00] How companies dealt with it, the resources they had to use, and changes to their work processes were all things that ERM considers.

[7:14] Elise Farnham will be leading Applying and Integrating ERM on September 25th and 26th.

[7:27] How does the SEC climate disclosure announcement change or influence the ERM landscape? It will impact how companies report their exposure. It will probably require some new technology to bring forward all of the information they will have to submit.

[7:53] Elise thinks that will be a challenge for companies because there is a rule they will have to follow. Collecting data from every bit of an organization will be a significant challenge. It may help organizations use a good ERM program. It requires penetrating the silos to follow the law.

[8:33] ERM will help companies to see the cumulative effect of risk. What if two bad things happen at one time? Getting more companies to have an ERM program will have a positive effect. It will be a lot of work to get there.

[9:02] Elise has always been an optimist. She always tries to look at how this can benefit us. Perhaps that’s why she has embraced ERM. It’s not about how we can get hurt but how we can use a bad situation to make things better for the organization. She knows how difficult it can be.

[9:55] Elise tells risk managers, “You don’t want to be the one to go in and say, ‘We just lost all of this.’ You don’t want that to happen. That’s a horrible situation to be in.”

[10:12] It’s much better to say, ‘I just saved you this much money because we have a policy in place, our people all know what to do, and this has never happened to us as it did to that other company.’” That’s where Elise wants her risk managers to be.

[10:46] Elise believes that today, organizational leaders put more value on ERM programs. The catch is understanding the amount of work that has to go into one. It takes resources and people to explore the organization, down to the risk owner, who may be on the factory floor.

[11:17] The risk owner may not have risk management experience. Almost everybody has the philosophy that “it couldn’t happen to us.” Understanding that something bad could happen and preparing for it in advance will be a challenge for them.

[11:42] The C-Suite understands the value of ERM. It’s a matter of applying the resources and following through. In her classes, Elise goes through the steps to take along the way. The feedback she gets is often, “Whew! That will take us a lot of time and effort!” They got the point!

[12:08] It’s RIMS Plug Time! RIMS Webinars! On September 12th, HUB International returns to deliver the third part of their Ready for Tomorrow series, Pivot and Swerve: Staying Agile During Shifting Market Dynamics.

[12:26] Also on September 12th is a complimentary webinar presented by the RIMS-CRMP and UCLA Extension, The Many Routes to Becoming an Enterprise Risk Management Practitioner.

[12:36] On September 19th, Origami Risk returns to deliver Leveraging Integrated Risk Management For Strategic Advantage. On September 26th, Archer returns to discuss The Future of RMIS: Beyond Traditional Approaches.

[12:54] On October 3rd, Diligent will host Mastering ERM: Leveraging Internal and External Risk Factors for Strategic Advantage. On October 10th, Zurich returns to present Long-Term Property Strategies for a Resilient Future.

[13:11] More webinars will be announced soon and added to the RIMS.org/webinars page. Go there to register. As always, registration is complimentary for RIMS members. 

[13:23] The Spencer Educational Foundation’s goal is to help build a talent pipeline of risk management and insurance professionals. That is achieved, in part, by a collaboration with risk management and insurance educators across the U.S. and Canada.

[13:37] Whether you want to apply for a grant, participate in the Risk Manager on Campus program, or just learn more about Spencer, visit SpencerEd.org.

[13:47] On September 12th, 2024, we look forward to seeing you at the Spencer Funding Their Future Gala at The Cipriani 42nd Street in New York City. Purchase your tickets in advance because there is no guaranteed seating!

[14:03] Our recent guest from Episode 293, Lilian Vanvieldt-Gray, will be our honoree.

[14:09] Lilian is the Executive Vice President and Chief Diversity, Equity, and Inclusion Officer at Alliant Insurance Services and she will be honored for her valuable contributions to supporting the future of risk management and insurance.

[14:26] That was a great episode, so after you finish this one, please go back and listen to Episode 293.

[14:32] Let’s Return to Our Interview with Elise Farnham!

[15:14] Elise loves this business, and helping risk managers do a better job. It’s very fulfilling.

[15:51] The philosophical aspect of risk management is very logical. The real-world work part of it is almost drudgery, pulling information from everywhere within an organization, making people understand that they could have a problem if we don’t take care of it.

[16:16] Thinking of combining several problems at once is hard for some people to imagine. Bringing people into the real world of risk is one of the biggest problems; getting them to understand that, yes, this could happen to them.

[16:40] Elise’s family members have called her for advice after some unforeseen event, saying “I didn’t know this could happen!” Yet, the stats are out there. The stories are out there. It’s just, “It could never happen to me!” Risk managers are still fighting that battle quite heavily.

[17:13] Elise will also lead the virtual workshop, Fundamentals of Risk Management on October 3rd and 4th, 2024.

[17:42] Elise first became involved with large corporate accounts in 1987. She worked with risk managers and saw how they had to identify risk, analyze that risk, come up with a solution for it, and then implement the solution. Those are the basics of risk management.

[18:03] The focus was always on hazard risk, not on opportunities that might be developed.

[18:10] Elise took the Associate in Risk Management (ARM) program, which helped her to define that knowledge and to understand better what her clients were going through.

[18:21] Then RIMS developed a program about risk management, providing fundamentals. Elise thinks the fundamentals are more important than ever, now, as there are a lot of new people in the industry, fresh out of college. They know the theory but haven’t seen it applied.

[18:43] In her workshops, Elise always tries to apply this to the real world so that the day they go back to the office they have something they can apply immediately to their organization.

[19:11] What risk managers learn in Elise’s workshops will change what they do in their organization. That’s a big challenge.

[19:50] What Elise has noticed from teaching risk managers is their energy. They are ready to go. They are thirsty for this knowledge. They know they have concerns. They know there are some things they could do better.

[20:08] They just need the resources in their brains to make that happen. Elise talks to them about that. You can only make decisions based on what you know. If you don’t know something, you can’t include that resource in your decision process.

[20:27] Elise says it’s great to see the wheels start to turn while she’s teaching. All of a sudden, the aha moment hits. They have a strong desire to go back and do good things. It’s a compliment when they tell her they have a list of things to do when they get back to the office.

[20:55] They want to have an impact within their organization. They are there to learn something new that will help their organizations. Elise loves teaching with folks who are like that. They are like sponges. It’s fun to facilitate discussions with them about how to manage risk.

[21:58] Justin says it has been such a delight to catch up with Elise Farnham. The next two courses Elise teaches are Applying and Integrating ERM on September 25th and 26th, and Fundamentals of Risk Management on October 3rd and 4th. The links are in the show notes.

[22:17] Justin looks forward to more workshops hosted by Elise Farnham and thanks her for being such a wonderful instructor.

[22:31] Special thanks again to Elise Farnham of Illumine Consulting for joining us here today. Alise will lead Applying and Integrating ERM on September 25th and 26th and December 4th and 5th and Fundamentals of Risk Management on October 3rd and 4th.

[22:54] Links are in the episode show notes, as is a link to the full virtual workshop schedule.

[23:00] RIMS members enjoy reduced rates on registration, which is yet another value-add of a RIMS membership.

[23:09] It’s RIMS plug time! The RIMS App is available to RIMS members exclusively. Go to the App Store and download the RIMS App with all sorts of RIMS resources and coverage. It’s different from the RIMS Events App. Everyone loves the RIMS App!

[23:43] You can sponsor a RIMScast episode for this, our weekly show, or a dedicated episode. Links to sponsored episodes are in our show notes. RIMScast has a global audience of risk and insurance professionals, legal professionals, students, business leaders, C-Suite executives, and more. Let’s collaborate and help you reach them! Contact pd@rims.org for more information.

[24:26] Become a RIMS member and get access to the tools, thought leadership, and network you need to succeed. Visit RIMS.org/membership or email membershipdept@RIMS.org for more information.

[24:43] Risk Knowledge is the RIMS searchable content library that provides relevant information for today’s risk professionals. Materials include RIMS executive reports, survey findings, contributed articles, industry research, benchmarking data, and more.

[24:59] For the best reporting on the profession of risk management, read Risk Management Magazine at RMMagazine.com. It is written and published by the best minds in risk management. Justin Smulison is the Business Content Manager at RIMS. You can email Justin at Content@RIMS.org.

[25:20] Thank you for your continued support and engagement on social media channels! We appreciate all your kind words. Listen every week! Stay safe!

 

Mentioned in this Episode:

RISKWORLD 2025 will be in Chicago! May 4‒7 | Last Call For Submissions Sept. 9!

DFW RIMS 2024 Fall Conference and Spa Event | Sept 19‒20

Chicagoland Risk Forum 2024 — Presented by RIMS Chicago Chapter — Sept. 19, 2024

RIMS Western Regional — Sept 29‒Oct 1, Oregon | Registration is open!

RIMS Canada Conference 2024 — Oct. 6‒9 | Registration is open!

Spencer Educational Foundation — Funding Their Future Gala 2024 | Sept. 12, 2024 — Last Call For Tickets

RIMS ERM Conference 2024 will be in Boston, MA Nov. 18‒19 | Register Now

RIMS DEI Council

RIMS-Certified Risk Management Professional (RIMS-CRMP)

RIMS Strategic & Enterprise Risk Center

NEW FOR MEMBERS! RIMS Mobile App

RISK PAC | RIMS Advocacy

 

RIMS Webinars:

HUB Ready for Tomorrow Series: Pivot and Swerve — Staying Agile During Shifting Market Dynamics | Sept. 12, 2024

The Many Routes to Becoming an Enterprise Risk Management Practitioner | Presented by the RIMS-CRMP and UCLA Extension | Sept. 12, 2024

Leveraging Integrated Risk Management For Strategic Advantage | Sponsored by Origami Risk | Sept. 19, 2024

The Future of RMIS: Beyond Traditional Approaches | Sponsored by Archer | Sept. 26, 2024

Mastering ERM: Leveraging Internal and External Risk Factors for Strategic Advantage | Sponsored by Diligent | Oct. 3, 2024

Long-Term Property Strategies for a Resilient Future | Sponsored by Zurich | Oct. 10, 2024
RIMS.org/Webinars

 

Upcoming Virtual Workshops:

Applying and Integrating ERM | Sept 25‒26 and Dec 4‒5

Fundamentals of Risk Management | Oct 3‒4, 2024

Fundamentals of Insurance | Oct 9‒10, 2024

See the full calendar of RIMS Virtual Workshops

RIMS-CRMP Prep Workshops

 

Related RIMScast Episodes:

“On Risk Appetite and Tolerance”

“Climate Disclosures with Jana Utter”

“Scenario Planning with the RIMS SERMC”

“Recipes for Success with Wendy’s CRO Bob Bowman”

“All Roads Lead to ERM”

“ERM’s Value Proposition with Chris Mandel”

 

Sponsored RIMScast Episodes:

“Weathering Today’s Property Claims Management Challenges” | Sponsored by AXA XL (New!)

“Storm Prep 2024: The Growing Impact of Convective Storms and Hail” | Sponsored by Global Risk Consultants, a TÜV SÜD Company (New!)

“Partnering Against Cyberrisk” | Sponsored by AXA XL

“Harnessing the Power of Data and Analytics for Effective Risk Management” | Sponsored by Marsh

“Accident Prevention — The Winning Formula For Construction and Insurance” | Sponsored by Otoos

“Platinum Protection: Underwriting and Risk Engineering's Role in Protecting Commercial Properties” | Sponsored by AXA XL

“Elevating RMIS — The Archer Way” | Sponsored by Archer

“Alliant’s P&C Outlook For 2024” | Sponsored by Alliant

“Why Subrogation is the New Arbitration” | Sponsored by Fleet Response

“Cyclone Season: Proactive Preparation for Loss Minimization” | Sponsored by Prudent Insurance Brokers Ltd.

“Subrogation and the Competitive Advantage” | Sponsored by Fleet Response

“Cyberrisk Outlook 2023” | Sponsored by Alliant

“Chemical Industry: How To Succeed Amid Emerging Risks and a Challenging Market” | Sponsored by TÜV SÜD

“Insuring the Future of the Environment” | Sponsored by AXA XL

“Insights into the Gig Economy and its Contractors” | Sponsored by Zurich

“The Importance of Disaster Planning Relationships” | Sponsored by ServiceMaster

 

RIMS Publications, Content, and Links:

RIMS Membership — Whether you are a new member or need to transition, be a part of the global risk management community!

RIMS Virtual Workshops

On-Demand Webinars

RIMS-Certified Risk Management Professional (RIMS-CRMP)

RIMS-CRMP Stories — New interviews featuring DFW RIMS President Emily Casso Ford!

 

RIMS Events, Education, and Services:

RIMS Risk Maturity Model®

RIMS Events App Apple | Google Play

 

Sponsor RIMScast: Contact sales@rims.org or pd@rims.org for more information.

 

Want to Learn More?

Keep up with the podcast on RIMS.org and listen on Spotify and Apple Podcasts.

 

Have a question or suggestion? Email: Content@rims.org.

 

Join the Conversation!

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About our guests:

Elise Farnham, Illumine Consulting

Tweetables (Edited For Social Media Use):

COVID-19 was the “black swan” we will remember for years to come. How companies dealt with it, the resources they brought to bear, and the changes to their work processes were all things that ERM considers. — Elise Farnham

 

I’ve always been an optimist. I always try to look at how this can benefit us. Perhaps that’s why I have embraced ERM so much. — Elise Farnham

 

I just love this business and I love what we do. I particularly love to help risk managers do a better job. It’s very fulfilling for me. — Elise Farnham

 

The stats are out there. The stories are out there. It’s just, “It could never happen to me!” I think risk managers are still fighting that battle quite heavily. — Elise Farnham

 

The most important thing that I have noticed from teaching risk managers is their energy. They are ready. They are thirsty. They know they have some concerns. They know there are some things they could do better. They just need the resources. — Elise Farnham