A dedicated follower of fashion


Incoming Association of Insurance and Risk Managers chairman Colin Campbell is used to facing interesting and diverse risks as insurance buyer for fashion giant Arcadia. He tells Lynn Rouse what he will be modelling for his year in charge

It's not everyday you meet a senior male executive, arguably at the pinnacle of his career, who openly admits to being preoccupied with - and somewhat distracted by - Kate Moss. But Colin Campbell, incoming chairman of the Association of Insurance and Risk Managers and group insurance and risk manager for retail giant Arcadia, is only too willing to hold up his hands to the fact that the infamous supermodel has recently been on his mind - albeit in a strictly professional sense.

Last September, Ms Moss was recruited by Arcadia boss Sir Philip Green to design a fashion range for Top Shop - one of the eight high street brands whose reputational risk Mr Campbell is ultimately responsible for protecting and managing.

Following her appointment, the media's attention became firmly focused on the imminent launch of that range, set to take place a matter of months later. This culminated in thousands of eager shoppers queuing up outside Top Shop's flagship store on Oxford Street for the Monday night launch on 30 April, with a simultaneous roll-out across all 225 stores. And it's the second element that no doubt gave Mr Campbell his sleepless nights.

After all, for a major fashion retailer, supply chain exposure is right up there in the list of top risks that need to be minimized, mitigated and managed. While the risk manager may not influence the product or price, the logistical challenges of "ensuring the goods go to the right place at the right time" are all too real, says Mr Campbell. Indeed, he hopes to set the wheels in motion for research into supply chains during his year as chairman, explaining that this is "something that carries real risk to reputation and brand".

At the coal face

But it hasn't always been a rollercoaster ride of celebrity acquaintances and glamorous product launches for Arcadia's risk manager. Like many of his Airmic predecessors, he began working life on the other side of the coin - insurance.

Living in Scotland's Perth when the time came to take the plunge and pick an occupation, Mr Campbell explains the slightly limited range on offer: "The career options were to join the police force, head into the whiskey industry or work in insurance - most of us fell into insurance." So he joined General Accident and fairly quickly headed south to London, working in the City for the next six years, where he was primarily involved in claims but later multi-national risks. Even now he finds the fact this period of his career covered 10 years "unbelievable", and points out that the insurance industry at that time was "extremely slow" in terms of career development. Stressing that things are very different now, he recalls: "It took about six years to become a broker and 10 to become a claims superintendent."

So, perhaps somewhat frustrated by the speed at which his career was developing Mr Campbell describes the moment he saw his first risk management role advertised as akin to "seeing the light". The job in question was for the then Argyll group, a conglomerate of food manufacturing and distribution firms, supermarkets and small shops, which later bought Safeway. Learning the risk management ropes and being hands-on in dealing with risk transfer was "fantastic, a real education" he says, adding that he found the move to the other side of the fence "extraordinary". In fact, what struck him was "the reality that I had been shuffling bits of paper for 10 years".

Three and a half years later he moved on to work in the West End for his current employer - albeit then in the form of the Burton Group. Due to the fact that the group owned Debenhams at the time, which had a big financial services business plus property development both here and in the US, Mr Campbell found the diversity of what he could get involved with appealing. To illustrate this he refers to one period where he was effectively responsible for "fleecing collars", having moved into loss prevention, which in a retail sense ultimately means, "stopping stock either going out the back door or the front". He then became more involved with "quasi-operational, quasi-accountancy" roles, with many departments reporting into him. "As a result, I became very retail-focused and risk financing was something I didn't do for five years."

It was only when the Burton Group de-merged Debenhams in 1998 and became Arcadia that he returned to such a role and took responsibility once more for insurance buying and risk transfer. What he liked about this period was the ability to set up a completely new department, do things in a different way and be 'smarter'. "We concentrated on getting the basics right, understanding our loss record and over the years became more sophisticated in terms of what we are buying, our analysis of exposure and loss information, and our targeting of the money we spend."

Despite its size, Arcadia's risk management and insurance team - like most - remains small, meaning life is "incredibly busy" according to Mr Campbell. But the impression he gives is that he prefers it that way. "We operate a fairly lean team and try to get a lot of bang for our buck."

The re-structuring of the business also gave him the opportunity to both liquidate a captive and establish a new one in Guernsey. Explaining that retail is, "a simple business - hard to do well but relatively straightforward" the new captive was essentially a way for Arcadia to gain access to Pool Re for "top-end terrorism risk" because, generally speaking, he says the bulk of retail losses are "high frequency, low value and, therefore, fairly predictable".

A good grounding

The diversity of risk management roles and experience Mr Campbell has held and gained throughout his retail career will no doubt stand him in good stead to achieve his key priority as chairman of Airmic - communicating the risk management message afresh and getting back to basics. Asked whether he has settled on a theme and tag-line for his tenure, Mr Campbell admits: "What I would like to do is break with tradition and not have a theme but I suspect by the time conference comes around I will have - after all, you do need a hook."

But it is the substance of what he intends to achieve that is ultimately more important than any catchy phrase. Both within Airmic's membership and externally, he wants to generate a genuine "understanding of what we mean by risk management and how we interact and interplay; where one role stops and another takes over". In essence, he is determined to get across "what those processes actually produce by way of benefit".

This links in neatly with the theme of Airmic's current chairman Geoff Taylor - competitive advantage through enterprise risk management. In fact, the trade body has been carrying out research into ERM, developing case studies to demonstrate the financial, strategic and operational benefits that derive from that. And the findings of this research are set to be unveiled next week at the annual conference, which returns to London after a 20 year absence.

In Mr Campbell's eyes, the goal for risk managers is one that can sound strange: "The idea is to work yourself out of a job and although the reality of that is years away, in many sectors risk management is already practiced and embedded."

But he wants to build better relationships, internally and externally, by focusing on issues-based topics. "Airmic has become more outward looking and objective-led and I'm very keen to talk to people in a more productive way.

"I am a great believer in the idea that if you do things together you will somehow bond - take the Financial Services Authority and contract certainty as examples of that. We are now in a position where the FSA is coming to us rather than us having to go to them and it is good to be on their agenda."

However, this doesn't mean everyone is fully aware as yet of who Airmic represents and the input it can provide when matters of crucial importance to UK industry are decided upon. One recent example Mr Campbell holds up is that of the government's discussions aimed at improving the provision of compensation to sufferers of mesothelioma, the fatal asbestos-related disease. For the time being, the Treasury has ruled out the establishment of an insurer of last resort.

"We are slightly disappointed in the industrial disease agenda moving along, particularly in this area of long-tail cancer, without us being party to discussions. It would have been nice to be able to influence the debate. A Pool Re equivalent for uninsured losses could have been great." Corporate risk managers are understandably concerned about the financial burden of long-tail losses they are facing that stem from the negligent exposure of people to asbestos many decades previously.

Contract certainty

But Mr Campbell is more upbeat about the strides made by the insurance and risk management industries in moving towards contract certainty - something Airmic views as a "great success". He admits that "small chinks" remain, particularly with regard to the more complicated and bespoke contracts that Airmic members tend to have, but appreciates why timely documentation is much more difficult in such circumstances.

However, this moves his train of thought to Airmic's latest area of market scrutiny - insurer performance on paying commercial claims. The trade body has been information-gathering and has begun to scope the viability of introducing key performance indicators and produce a 'willingness to pay' index (see pp 25-26).

If this project can get off the ground, the idea would be to restrict it to one area initially, the simplest probably being that of material damage and business interruption "because it is short-term, more tangible and more meaningful in terms of loss numbers," explains Mr Campbell, while accepting that gathering and comparing such information from insurers would prove "quite sensitive".

Yet he is keen to emphasise that payment of claims is the ultimate gauge of contract certainty and thus the main driver behind this project, rather than just being intent on highlighting "who's good and who's bad". He asks: "Have we really got to the bottom of what the contract is there to do?"

Mr Campbell readily accepts that contract certainty, when viewed from this perspective, is not easy to evaluate: "Naturally, as risk managers, we don't want losses and work to prevent them so we do not always know if we have got that certainty." That is, until the worst happens.

Asked what he feels are the biggest challenges facing today's insurance and risk managers, Mr Campbell points to insurance market consolidation, the number of players and uncertainty about where the market is heading as matters of "constant concern" that are making risk managers "slightly edgy".

"Many underwriters are saying they are at the lowest point of technical underwriting with nowhere to go, although the market seems to be stable, if not heading in a downward direction.

"The risk manager's goal is obviously to gain value for money, but what we really want is stability." He concedes that insurers, brokers and buyers all have to accept part of the blame when pricing is forced downwards to what are deemed unsustainable levels, but adds: "It is difficult to say 'no' when offered a price that is attractive."

So, with the prospect of an imminent 'turn' in the market, he explains that risk managers will need to sharpen their communication skills and prepare once more for difficult conversations with their finance directors as the prospect of sudden hikes in insurance costs looms again.

"Certainly we are talking to our insurance and broker partners about how we can best manage this process, what we can do to smooth out rates and make them more predictable. But our concern is that the benefits we have gained over the last few years will be eroded very quickly and that is a tough one for us. We appreciate how the market works and that it is difficult. We can also talk about relationship building and encourage people to be open about expectations but, at the end of the day, if the market turns, it turns.

"One problem is that insurers - in my experience - rarely differentiate in terms of good risk management practice. While the information we provide is vast and sufficient for underwriters' needs, I wonder whether that information could be deeper in terms of understanding our organisations, how risk management works and the good loss records it produces. I am told those types of things influence prices down but, I have to say, it doesn't seem to stop prices going up. So I do wonder whether some of the information we provide is actually scrutinized all that well."

So come this time next year, what will really frustrate Mr Campbell if he has not seen it achieved? "If we have not increased our membership at all in a year's time I will not only be surprised but frustrated. I will also be annoyed if we have not re-engaged some of our special focus and industry groups, as these have lapsed somewhat.

"We must also improve from a regional perspective, as we tend to be very London-centric. While it is true that we have held events in Birmingham, Edinburgh and Manchester during the past year, the frequency is not as high as it could be."

But he is not about to point the finger in any other direction should these objectives not be achieved in 12 months time: "Frankly, it is up to me, and those in close proximity to me, to ensure our messages and objectives are delivered."

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