View from the top: David Arick, Risk & Insurance Management Society

David Arick, assistant treasurer, global risk management, at International Paper Co. in Memphis, Tennessee, assumed the presidency of the Risk and Insurance Management Society Inc. on Jan. 1. Mr. Arick, a member of the New York-based organization for more than 20 years, joined the RIMS board of directors in 2019, and has served as secretary, treasurer and vice president. Mr. Arick recently spoke with Business Insurance Deputy Editor Claire Wilkinson about risk management and artificial intelligence, and how captive insurers can help risk professionals in the current market. Edited excerpts follow.

Q: What are your priorities as 2024 RIMS president?

A: We’ve built a very clear vision and strategy for RIMS, so part of my role is to continue executing on that strategy and working with a really engaged and energetic board to make that happen. Where I’m passionate about how we move things forward is how do we continue to bring credibility and respect to risk management and the insurance industry more broadly? My anecdotal view is that it should be viewed like being an accountant or an engineer, a lawyer, a doctor. It’s very clear what that means when you meet people at a cocktail party and you say you’re a doctor; everyone understands you’re helping people be healthy or you’re fixing things that go wrong. But when you talk about risk management or insurance, it’s a lot more nebulous and probably leads to more questions than answers. I would like to see us move forward in that space. 

Q: What was your path into risk management?

A: I started out wanting to do mergers and acquisitions. I was a finance major in school and there was a job opening at a bank I was working for in corporate finance and risk management. I viewed that as an opportunity to get closer to the M&A group, which was also in corporate finance. I was fortunate enough to get the role in risk management, an entry-level technical assistant role, and had a wonderful boss who took me under her wing. I got involved in a lot of exciting activity, including the risk management elements of M&A. It was a bank that was buying 40, 50 banks a year. So, at age 23 or so, I was helping out with the due diligence team, doing the risk management part of it. I got hooked from there.

Q: How is artificial intelligence impacting the risk manager’s role? 

A: It’s early days from a risk management standpoint, and, depending on the industry you work in, it may be a lot more or a lot less important at the moment, but it’s going to be really important for all of us down the road. It’s going to change society, it’s going to change how jobs are structured, it’s going to change workflows. It’s going to change things dramatically. From a risk manager standpoint, we need to keep our eyes open for what’s happening within our firms when we use AI tools, work with our IT and legal folks around what compliance looks like and think about what the impacts could be. Risk is a plus or a minus. So, how can we use AI to benefit the firm, but what could go wrong if we don’t use those tools properly?

Q: RIMS has added an AI track at its upcoming annual conference. Why?

A: We want to be topical. We want to make sure that things that are hot topics, emerging issues, that we provide some content for people to learn. So, the hope would be that we can help bridge some of the gaps between risk professionals and the IoT and the risks, the legal folks that are looking at those issues.

Q: What can the risk management sector do to better attract talent?

A: We have to do a better job of selling the value that risk and insurance brings to the economy and to the world around us. People have a stereotype around risk and insurance, or insurance more largely being about selling policies to people. That’s an important aspect of insurance and risk management. There’s a lot more to it. Insurance is a tool, but it’s not the tool for managing risks. We have to do a better job of having the story, the elevator speech around why risk management and insurance is important. I’m hopeful that RIMS can help people prepare that elevator speech, so when somebody asks them at the cocktail party “What do you do?” the answer is very different than what they thought risk management would be.

Q: Many seasoned risk management professionals are joining brokers or insurers. Is it creating a talent gap?

A: There are a limited number of risk management roles within every organization. Risk isn’t core to most companies, but it is core to insurance companies and brokers. So, certainly, they draw a lot of talent. My hope would be that RIMS can help bridge some of the gaps you refer to, that we can make sure that it’s easier than ever for people to move between broker, insurer, TPA, risk manager, because we all speak the same language. We’re applying the same framework for evaluating risk. 

Q: How can captive insurers help risk managers in the current market?

A: There are a number of situations over the years where there wasn’t a viable insurance product for certain risks, and using a captive helps you put some structure around how you finance that risk. In a lot of cases and over time, you can maybe build a business case for an insurer or a reinsurer to help you take the edge off of that risk of that portfolio. Cyber is one over the last couple of years where companies have looked at how to fill gaps in their insurance program. How do we maybe take a higher deductible or retention and use it as a captive to fund what we think of as the working layer for that risk, and just buy the coverage for where it’s really catastrophic to the firm. I view captives as being critically important for me as a risk professional. Every firm has to look at its priorities and determine if a captive is viable.