‘CFOs should embrace risk …’
Face and welcome risk: In insurance, we're paid to take risks. The important thing is making sure you fully understand the risk and continue to evaluate it over time, as the risk will change. You also need to make sure you're being appropriately compensated for the risk. Organizations have always faced a great deal of risk, but we may perceive that the risks have increased in number and magnitude because we have more information more quickly than ever before. Hopefully this also means we understand and evaluate the risks better. CFOs should embrace risk — try to understand the risk as much as possible and model various scenarios and outcomes. This is particularly true of emerging risks: We used to not worry about the tail risks because they were perceived to be so remote, but we're beginning to experience those risks more frequently now — and with a larger impact. As a CFO you should evaluate your tail risk and monitor it, because that risk might be the next global pandemic.
The pandemic changes the insurance industry: Prior to 2020, the insurance industry had not been confronted with the challenges presented by a global pandemic in the modern era. The last few years have substantially impacted our thinking on how to evaluate this type of risk, and how to conduct business operations during a public health concern. Everything from delivery of service to how an organization recruits has been impacted. As a result, all of us have become smarter in how we manage businesses and anticipate and plan for risks. It will be interesting to see how these learnings continue to evolve and benefit the industry in the years to come.
Grow your network to be ready for the unexpected: Build a network outside of your organization — both nationally and internationally. I spend a lot of time talking with industry professionals, most of whom don't work at an insurance carrier. This includes reinsurance brokers, economists, rating agency leaders, insurtech entrepreneurs, and even business school or risk management professors. They talk with leaders at insurance carriers across the world and really have their pulse on emerging trends.
Be a well-rounded professional: To grow and develop in your career, seek opportunities outside of traditional finance and accounting roles. This could be a formal position, working on a project team, or volunteering with a nonprofit. Building these relationships will make you a more well-rounded and valuable employee and leader. Build a strong network of professionals from various disciplines and organizations to help you stay informed about trends and professional opportunities.
Favorite book: Eleanor, a biography of Eleanor Roosevelt by David Michaelis.
Favorite tech tool: Roost water leak and freeze detector. This device recently alerted me to a water heater leak and saved my basement from flooding.
Favorite item to keep on my desk: A self-portrait my son drew when he was 5 years old.
— As told to Lea Hart, a freelance writer based in Virginia. To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com. Opinions expressed in this piece are personal to Elisabeth Sandersfeld and do not reflect the opinions of the W.R. Berkley Corporation or its affiliates.