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The ARM Bob Uhorchak, CSP, ALCM, ARM reuhorchak@mindspring

[ No LEG(S) ! ]. The ARM Bob Uhorchak, CSP, ALCM, ARM reuhorchak@mindspring.com. Questions to consider:. Why can the VP of Operations be pleased with a declining OSHA Incident Rate, yet the VP of Finance be displeased ??. or.

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The ARM Bob Uhorchak, CSP, ALCM, ARM reuhorchak@mindspring

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  1. [ No LEG(S) ! ] The ARMBob Uhorchak, CSP, ALCM, ARMreuhorchak@mindspring.com

  2. Questions to consider: • Why can the VP of Operations be pleased with a declining OSHA Incident Rate, yet the VP of Finance be displeased ?? or What is “Enterprise Risk Management” and how does it apply to EH & S ?? or (for HPS members) How can insurance possibly be related to radiation safety, especially since “radioactivity” is excluded in virtually all property & casualty policies ??

  3. Associate in Risk Management (ARM) Sponsoring organization: American Institute of Chartered Property & Casualty Underwriters/Insurance Institute of America, (AICPCU / IIA) Translation: An independent, continuing education organization(s) for the property & casualty insurance industry

  4. General Requirements for Designations - no specific prerequisites; guidelines only • interest in property & casualty insurance • desire to show qualifications to current and/or prospective/future employers • ability to pass a national, multiple choice, examination; each ARM course exam is 2 hour, 85 questions Note: The Certified Risk Manager (CRM), designation is offered by another insurance, continuing education organization; the National Alliance for Insurance Education and Research

  5. Examples of Designations from AICPCU/IIA Certificate in General Insurance: 3 course sequence: P & C; Personal; Commercial; good basic courses CPCU: Chartered Property & Casualty Underwriter; 8 courses; the “standard” for insurance professionals ALCM: Associate in Loss Control Management; 5 courses [Note: No longer offered]; the CSP or CIH are now accepted ARM: Associate in Risk Management; 3 courses; strong foundation courses, but generally at a “management” level, not detail level; widely recognized & accepted – standard for risk managers AU: Associate in Underwriting; favored by underwriters

  6. Why pursue the ARM? • “Chance favors the prepared mind” Louis Pasteur “… I took the one less traveled by, and that has made all the difference” Robert Frost

  7. … recall the alchemist’s goal was to turn lead into gold … “… from technical nerd to administrator…” Bob Uhorchak i.e. potential for promotion/more $$$

  8. The ARM • 3 courses: • Risk Assessment, ARM 54 • Risk Control, ARM 55 • Risk Finance, ARM 56 Courses can be taken in any order No previous “insurance” experience required High degree of memorizing & understanding new terminology Basic Algebra skills needed

  9. My Observations From Teaching Review Sessions For Each Course • Risk Assessment, ARM 54: Introductory; Overview of Risk Management; Overview of 4 primary loss concerns [property; liability; personnel; net income] & risk control concerns; Basic concepts of probability & statistics & application to risk management (forecasting); Basics of evaluating insurance costs using Present Value concepts Probability & statistics applied to scenarios can be confusing if never exposed to these topics before

  10. 3 Types of PV Calculations: • Single Future Payment; use App’x A; • also: PV = Future Value x (1 + r) -n • Stream of Equal Future Payments; use App’x B; • PV =1st Annual Am’t +2nd Annual Am’t +..+ nth Ann. Am’t (1 + r)1 (1 + r)2 (1 + r)n … from ARM 54) Educational Objective 3 Present Value, (PV), calculations using PV tables: text Appendix A (p. 13.32 – 13.33) & Appendix B (p. 13-34 – 13.35); [also using formula’s]

  11. Risk Control, ARM 55 • Descriptive, no math; primarily understanding definitions; generally familiar territory for most safety folks • Course outline explores risk control concepts for 4 primary loss exposures [property; liability; personnel; net income] with some detail regarding each

  12. Risk Finance, ARM 56 • New territory for most “safety” professionals • Various risk finance concepts are explored and contrasted e.g. retrospective & prospective financing plans – cash flow advantages & disadvantages of each; the use of “captive” insurers; present value issues • Basic familiarity with balance sheets & income statements is helpful

  13. Other: • Cost: [per course] • Basic package: Text, CD, Course Guide ~ $160; Additional aids available • Exam: $170 - $380 depending on timing & one exam or segmented exam • Exam: • AICPCU/IIA currently uses Prometric as the examiner; Some insurance companies will host the exam

  14. Preparing for ARM Exams • Options are available: • - self study at home • - on-line tutorials/trial exams • - join a study group, either formal or informal Also: AICPCU/IIA offers many study aids Other companies, e.g. Keir, offer study aids

  15. Why can the VP of Operations be pleased with a declining OSHA Incident Rate, yet the VP of Finance be displeased ?? • Answer: Because of “the disconnect” 1 that can occur between IR and Loss Costs i.e. IR can be declining, but loss costs can be increasing Enterprise Risk Management is an example of a management system that attempts to integrate the organization to solve this problem

  16. Question: What is “enterprise risk management”? Enterprise Risk Management is: “an approach to managing all of an organization’s key business risks & opportunities with the intent of maximizing shareholder value” - it encompasses both hazard risk and business risk - it focuses on the organization as a whole

  17. Possible outcomes from two sources of risk (Interest Rate Risk i.e. Business Risk & Hazard Risk i.e. Pure Risk) Hazard Risk (Pure Risk) No LossLoss [Quadrant 1] [Quadrant 2] Gain [good] [Quadrant 3] [Quadrant 4] Loss [bad] - from the ARM 56 text, page 1.14, Exhibit 1-6 Interest Rate Risk (Business Risk) good - good good - bad bad - good bad - bad

  18. How can insurance possibly be related to radiation safety, especially since “radioactivity” is excluded in virtually all property & casualty policies ?? Answer: Because several “radiation” endorsements (additions which have been court tested) can be added to a basic property policy that give some coverage for radiation related accidents

  19. Useful Websites & References • www.aicpcu.org; the website for additional information regarding many certifications, examination information, practice exams, etc. • www.asse.org; web site for the American Society of Safety Engineers; their “Risk & Insurance” specialty practice is particularly helpful • www.rims.org; web site for “Risk & Insurance Management Society”; the professional society for risk managers • Glossary of Insurance & Risk Management Terms, International Risk Management Institute, Dallas, TX; a must have reference

  20. Footnote • 1 “Beware the Disconnect: Overcoming the Conflict Between Measures & Results”, Daniel Zahlis & Larry Hansen, Professional Safety, November 2005, ppgs. 18 - 24 A similar article: “Employee Injury: Effects on a Company, Workers’ Compensation & OSHA Compliance”, Robert Ray, RM/Insight, 2007, Vol. 6, No. 3, ppgs. 1, 8 - 10

  21. Any Questions ??

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