View from the top: Patrick Sterling, Risk & Insurance Management Society

Patrick Sterling, vice president of legendary people at Texas Roadhouse, in Louisville, Kentucky, assumed the presidency of the Risk & Insurance Management Society Inc., effective Jan. 1. Mr. Sterling, a member of the New York-based organization for 17 years, joined the RIMS global board of directors in 2018 and has served as board secretary, treasurer and vice president. Mr. Sterling recently spoke with Business Insurance Deputy Editor Claire Wilkinson about RIMS’ upcoming annual conference and the outlook for risk management. Edited excerpts follow.

Q: RIMS will hold its first in-person annual convention in two years in San Francisco in April. How are preparations coming along?

A: The planning is going along great. It’s going to be our first hybrid annual conference. We are excited about that because that ensures greater inclusivity, not just for global audiences but for those folks that don’t have the opportunity to travel. It allows them to get engaged. We are in continuing contact with our partners in San Francisco to make sure we pull this off in a safe way. We are planning for many different scenarios, but we are doing everything we can to hold an in-person event. Safety is our top priority, and we’ll continue to monitor that, but we do know that people want to meet in person. We are hearing that loud and clear.

Q: How has the global risk landscape shifted, and what are the opportunities for risk managers?

A: The risk management profession has seized the opportunity over the last couple of years. The world of risk management is ripe to step up and help organizations. Why do I say that? Because risk managers are the ones providing insight to organizations on what the risk landscape is out there and what things are coming down the road. I love to talk about the VUCA world. It’s volatile, it’s uncertain, it’s complex and ambiguous. If anything, that’s what risk managers do. We make sense out of all that and provide information to our businesses to help them make smart risk decisions.

Q: What emerging risks are at the forefront?

A: Cyber risks used to be about data breaches, and now it’s about ransomware. That’s an emerging risk we’re keeping an eye on. Talent risk is another that didn’t always hit the radar of risk managers but needs to because without the right talent you can’t accomplish your goals. With the labor shortages so many industries are experiencing and the Great Resignation, you can have the best business plans in the world, but if you don’t have the right talent you’re not going to be able to even start. That risk has elevated. Supply chain risk wasn’t on the table for many folks years ago. During the pandemic, we saw how fragile supply chains are and how quickly they can break and what impact that has. 

Q: Many small businesses, especially restaurants, took a huge financial hit in the pandemic. On top of that, their existing insurance policies didn’t and don’t provide pandemic coverage. What are the risk management lessons learned?

A: We have learned a lot about business interruption risk. Many people had pandemic in their risk management plan,  but maybe it was not as elevated as it should be. Now, we know it can happen, and we’ve got to learn how we can be better prepared in the future. It was painful to see small businesses suffer like they did. For large businesses, their cashflow was affected by lockdowns, but they may have more access to cash, whether lines of credit or strong balance sheets to navigate that better than the mom-and-pop businesses out there. Those are some of the lessons learned. We can’t let that happen again. 

Q: Is a Pandemic Risk Insurance Act still a priority?

A: We need to be able to come up with a public-private partnership, a solution to help mainstream mom-and-pop businesses and all the people they employ. We need to provide that certainty if we have another pandemic in a year or two. This is a solution everyone should be able to support because it helps business and it helps people. We are continuing discussions about PRIA. 

Q: RIMS CEO Mary Roth is retiring. Can you update us on the search for her successor?

A: We have started the search. We have hired Russell Reynolds as our search firm, one of the leading executive search firms in the country. It is going well. There is a lot of interest. RIMS is a great organization, and this is an attractive position. We’ll announce it when we have the right candidate. 

Q: How would you characterize insurance market conditions?

A: Overall you’re seeing prices rise, but you’re seeing some softening in certain markets, especially in the directors and officers, property, and liability spaces. The cyber market is where you’re seeing the biggest increases because of ransomware. Talking to some of my peers, cyber is the line that is most challenging.

Q: How can risk managers strengthen their negotiations with insurers?

A: We should approach them as we always do. You have to be really good at telling your story, about what you are doing to mitigate risk. Having good enterprise risk management programs in place helps. When you go to market and show you take risks seriously, that all levels in the organization are focused on that and that you have great risk mitigation plans in place, that’s the most successful approach. 

Q: Are insurers asking too much of risk managers? 

A: Losses have always been part of insurance pricing — that is nothing new. 

Depending on capacity, depending on losses in the market and insurers’ financial performance, they are going to take a stronger look into risk management and loss prevention programs. Losses should and always have driven pricing. In some ways I prefer that to be the case. I like to be able to pay a fair price based on what my loss history is versus having to pay high prices because of other people’s loss history. I don’t mind insurers asking a lot of questions because that’s part of good risk management. It can help make your risk management program stronger.

This website states: The content on this site is sourced from the internet. If there is any infringement, please contact us and we will handle it promptly.