The challenges facing corporate risk managers and insurers today are daunting. Terrorism presents a new risk that must be managed and priced. Managing the escalating premiums and medical coverages for corporate employees and retirees are enormously complicated tasks. Liability risks, from D&O to medical malpractice to products liability, are becoming increasingly expensive to insure as a result of escalating verdicts and declining interest rates. Property insurers and customers face mounting losses from mold, a previously inconsequential peril. Traditional insurance products are becoming harder to market to a public that focuses more on short term gains than on long term investments. Insurance fraud is a problem that can no longer be ignored. The regulatory system within which industry operates is being tightened, and added pressures are being exerted to restrict the freedom of companies to make independent decisions. The field of risk management has expanded in new directions. Over the last decade, risk management tools and techniques have been applied to financial risks within the growing area of financial risk management. More recently, strategic and operational risks have been incorporated into an overall approach termed Enterprise Risk Management (ERM). However, industry in general, and the property and liability insurance industry in particular, continue to struggle with successful implementation of ERM.
In this environment, risk managers and insurers need to have access to quality, independent research on the major issues they face. Such research can be essential both for making appropriate decisions and for citing as authoritative work in regulatory and court hearings. In addition, authoritative research in Enterprise Risk Management is needed for organizations to successfully incorporate ERM in a practical manner.
The Office of Risk Management and Insurance Research (ORMIR) at the University of Illinois has been established to meet these industry needs. By participating in this partnership between industry and the University, corporate partners are provided the opportunity to help identify and design the direction of research on the most critical issues they are facing, participate in the research process by providing their expertise, and have initial access to the results of the research programs. Teams of faculty participate in multi-disciplinary research to address the key problems of today. Clearly, this partnership benefits both the corporate partners and the university.