Preparing for the worst
Competition gives risk management students a dose of reality.
Chris Townsend didn’t know much about an international cycling championship coming to Richmond until he tried to figure out a risk management plan for the event.
He was a member of a team of Virginia Commonwealth University students competing in the VCU-RISC/Spencer Risk Management & Insurance Challenge in March. University teams were asked to identify and assess the risks posed by UCI Road World Cycling Championships scheduled to be held in Richmond in September 2015. The high-profile nine-day event is expected to draw 1,500 athletes and 450,000 spectators, while attracting a global television audience.
Working on an actual event like the cycling championship was a great way for students to “bridge the gap from the classroom to a real world environment,” says Townsend, who graduated from VCU in May with a major in finance with a concentration in risk management and insurance. “You have to think about anything and everything that can happen, from security and traffic issues to medical and housing concerns.”
The students soon saw how serious these risks can be. A month after the risk management competition, three people were killed and 264 were injured in the Boston Marathon bombing.
The bombing has heightened awareness of the need for risk management planning for large sports and entertainment events, says Mac McElroy, managing director-Virginia operations for Baltimore-based insurance broker RCM&D. “It further underscores the need to attract people to this industry that can understand risk and the evolving nature of risks,” says McElroy, who was a judge at the March competition. “Any type of public event will require additional security and risk identification levels.”
This is the second year that VCU has hosted the risk management challenge, part of the annual Risk and Insurance Studies Center Trends Conference at the VCU School of Business. “We bring in speakers from across the country,” says Debbi Little, the center’s director. “Conference attendees get continuing education credits.”
Risk management is a growing field, and colleges are working to groom the next generation of risk managers. VCU started offering courses in risk management in 1968. “Most of the people in the industry are baby boomers, and they are going to retire,” Little says, noting that there are more jobs in risk management than there are students in the field. Starting salaries for risk management jobs run from $40,000 to $65,000.
An increasing number of companies are adding in-house risk management departments as a way to manage all types of risks, from fraud to terrorism. “We live in such a different world today,” says Townsend, who finds topics such as cyber liability fascinating. “It’s hard to know what the next big risk … in the U.S. will be.”
The risk management challenge “was like an additional class,” says Townsend, VCU’s team leader. “It takes time to put out this project. There is a lot of research and brainstorming.”
Besides VCU, teams from seven other universities participated in the RISC Trends conference: Ball State University, Illinois State University, Old Dominion University, St. John’s University, Temple University, University of Georgia and University of Alabama.
During the first round of competition, each team submitted a 10-page paper, and most teams followed with a live presentation. The judges’ scores for the paper and presentation were added together to pick the top three finalists. The finalists then presented their team’s case before the judges in round two.
VCU finished third among the finalists. Temple won the Challenge with Illinois State University taking second place. “There is no other event like it,” Little says of the competition. “Students learn that risk management is so much more than auto insurance. They talked about everything from terrorism to crowd control. It’s amazing the things you have to think about when you are putting on a large sporting event.”
Townsend describes the Challenge as “the most phenomenal experience” of his college career. “It was like an internship for me,” he says. “It was very hands on.”
In judging the March competition, McElroy and other judges “were looking for the students’ ability to utilize information and knowledge they gained in an academic setting and to apply it to a real-world case study. That is the unique element of this type of competition.”
McElroy believes that more students are gravitating toward insurance and risk management as a career path. “Historically, banking, investment banking and technology have been sexier fields for college graduates,” he says. “Students are recognizing that in the wake of the recession and layoffs on Wall Street and in the banking industry that the insurance sector is a more stable long-term career option.”
Insurance and risk management help to keep commerce and industry moving, he notes. “You couldn’t put a satellite in orbit if it were not for insurance programs, for example,” McElroy says. “This industry enables appropriate risk taking. It is an important function in the economy.”
The top three teams in the Challenge were “right on target in terms of what industry insiders would expect them to cover,” McElroy says. “I am encouraged by the talent of these students and how well they seemed to understand and identify the risks and address them appropriately.”