Dan Glaser Addresses Houston Marine Insurance Seminar; Cites Need for Greater Innovation in Risk Management
Houston, September 23, 2009
Dan Glaser, chairman and CEO of Marsh Inc., the world's leading insurance broker and risk advisor, delivered the keynote address at the 44th Annual Marine Insurance Seminar in the nation's energy capital this week with a call to the insurance industry for ingenuity, discipline, and vigor to meet the emerging needs of clients in the energy sector.
"The tide of our times has served to elevate integrated firm-wide risk management to the level of the imperative," said Mr. Glaser, underscoring the need for energy companies to navigate increasingly complex challenges, including fallout from the global economic crisis, energy price volatility, and natural catastrophe risks.
Calling enterprise risk management (ERM) "a cultural, strategic and operational imperative" that "needs to be embedded in the culture and practices of the entire organization," Mr. Glaser said there is an understanding within the energy sector that "ERM is a framework of analysis that allows an organization to recognize and avoid a significant surprise."
In discussing the expanded development of alternative and renewable energy sources, such as wind and solar, Mr. Glaser acknowledged the need for major enhancements to the energy distribution grid, which may present opportunities for innovative risk approaches. He also observed that pending regulations, such as cap and trade, and other initiatives to reduce greenhouse gas emissions, are leading energy producers that rely on fossil fuels to seek new solutions, such as carbon capture and sequestration, noting that these projects "need sound risk management and transfer to attract investors."
"The challenge for all of us is to recognize that the 'tried and true' risk management approaches and strategies have to be continually challenged and improved. Innovation matters — and it's no longer elective," Mr. Glaser emphasized.
In recent years, the insurance industry has developed solutions to respond to the energy sector's needs for oil and gas reserve production protection, contingent capital for business interruption, as well as for coverage to help stabilize margins for refining and petrochemical plant production. In this context, Mr. Glaser pointed to Marsh's role in developing a surety solution to help protect plant performance, and insurance to provide decommissioning funding for nuclear power plants.
"The energy industry is the lifeblood of production and commerce, facing new and ever more challenging risks every day," Mr. Glaser said. "The good news — the excellent news — is that the insurance industry has the vision, intellect, tools, methods, and motivation to help companies manage risks on the road to reward."