Selling Your Risk Management Program

1. Selling Your Risk Management Program

2. Max Koonce, Senior Director, Risk Management, Wal-Mart Stores, Inc.K. Max Koonce is the senior director of risk management for Wal-Mart Stores, Inc. responsible for their claims administration process in the general liability and workers’ compensation arena. Mr. Koonce received a B.B.A. degree in economics from Harding University and a J.D. degree from the University of Arkansas at Little Rock. Mr. Koonce is a member of the Arkansas and American Bar Associations, board member of the West Virginia Self Insured Association, board member of the Northwest Arkansas Medical Centers, member of the National Association of Social Insurance, and current president of the National Council of Self-Insured Employers. • Bob Peterson, Executive Vice President, Chief Marketing Officer, Sedgwick • Bob Peterson is executive vice president, chief marketing officer for Sedgwick responsible for account development, relationship management, product development, strategy, and overall marketing and business communications. Bob graduated from DePaul University with a BA in business communication and holds the Associate in Risk Management (ARM) and the Associate in Loss Control Management (ALCM) insurance designations.

3. What to expect • After attending this session you should be able to: Articulate the value of a risk management/safety program Enlist the support of all levels of your organization Identify and report on areas of measurement

4. Selling Your Risk Management Program Ground work

5. Align with company’s macro goals • What areas are important to your company? • Quality • Increased margins • Brand reputation • Expansion • Innovation • Compliance • Growth • Leverage • Returns • Productivity • Retention • Stability

6. Develop a solution-based plan • Link risk information to strategic decision making • Embed a risk-aware culture at all levels • Embed risk management practices and responsibilities within strategy and operations • Implement risk mitigation activities

7. Know your audience • Maintain a close relationship with all parties to increase success. C-Suite Operations Employees

8. Selling to the C-suite C-Suite • Risk management as an investment • Financial pay-off • Direct/indirect costs – more than just insurance buying • Direct – workers’ compensation costs/OSHA fines • Indirect – loss of productivity, training and retaining, recruiting • Support company’s macro goals

9. Selling to operations Operations • Request their help • Raise awareness • Increased productivity • Improved workplace conditions

10. Selling to the employee Employee • Drive behavior • Encourage safety discussions • Promote empowerment • Develop safety leadership skills

11. Selling Your Risk Management Program Walmart case study

12. Align with company’s macro goals • Growth in sales, number of customers, new stores and in new markets OPERATEfor Less • Growth BUYfor Less • Growing sales faster than operating expenses • Leverage GROWfor Less • Provide a stable level of returns to shareholders SELLfor Less • Returns

13. Solution-based plan • Growth • Leverage • Returns • Safety initiatives • Provider selection • Return to work • Claims scoring • Claims routing • Rx strategy – Prium • Legislative focus – WCRI, etc. • Texas non-subscription • Casualty allocation system • Litigation prediction • Vendor TPA optimization • Products liability • Funds flow integrity • RM compliance and optimization • Fraud detection Walmart’s metrics-based, strategic risk management initiatives support our corporate priorities

14. The best measures of success might not be based on lowest cost…. Strategic Company Priorities • Leverage • Returns • Cost-BasedMetrics • Growth ...but may be those that also enable growth, reduce volatility – or likely, all three

15. Other industry examples Company A Metrics driven, return on investment focused Company B • Quality, efficiency, lean/black belt approach Company C • Centrally governed versus antonymous

16. Other interested parties

17. Selling Your Risk Management Program Measure, report and communicate

18. Implementing analytical solutions • Build strategies around key leverage points Find • Learn the business processes & drivers • Identify and size potential opportunities • Create tools/models to facilitate these strategies • Refine processes, discard strategies that don’t work, continue testing • Design a test or experiment with a control group Develop Strategies Create Tools Test / Measure Refine / Implement

19. Tools of the trade • Internally developed metrics • Industry benchmarks • Total risk profiling/mapping (financial sector) • Value at risk (financial sector) • Risk management/business intelligence software

20. Messaging and strategy • Outside influences • Intended/unintended consequences • Messaging - positive versus negative interpretation

21. Questions, final comments and contact information • Max Koonce, Senior Director, Risk Management, Wal-Mart Stores, Inc.P.O. Box 1288 • Bentonville, AR 72716-1288 • Email: max.koonce@wal-mart.com • Bob Peterson, Executive Vice President, Chief Marketing Officer, Sedgwick • 1100 Ridgeway Loop • Memphis, TN 38120 • Email: bob.peterson@sedgwick.com