Inside a CRO’s toolkit for cross-continental risks

Captives, employee education and strategic planning are tools that this Belgian chief risk officer uses to manage a company spanning five continents

Inside a CRO’s toolkit for cross-continental risks

Risk Management News

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Katoen Natie is a Belgium-based logistics company with operations in 28 countries across five continents. Chief risk officer Carl Leeman sat down with Corporate Risk & Insurance to talk risks and strategies.

What are the challenges of operating in 28 countries?

The good news there is that we have a very global spread of risks. If we were affected by something in one location, most of the time it wouldn’t have an effect on other locations. Aside from one issue—cyber.

How are you managing your cyber risk?

We have a large department, with about more than one hundred people working in our IT divisions, because we do a lot of the development and design of the products that we use in-house. We’re working on having different securities and circles so that if one location gets hit, it won’t spread over to other locations. We also spend a lot of time in educating our employees on how to behave. We educate them and inform them about all the dangers that are out there and how to behave in certain situations.

What other risks are at the top of your mind?

The connected world, the political stuff, and the fact that things change so quickly. The involuntary migration we’ve seen over the past two years has put a lot of pressure on a lot of politicians and countries where you see unrest due to that. It’s very quickly shifting. Also, the extreme weather events we’ve seen recently seem to get more extreme.

How are you adapting?

We have successfully managed the risk of changing weather patterns by designing and building in a resilient way. For example, our buildings in Thailand, Turkey, and Houston were not damaged by the recent flooding or earthquakes and our operations were quickly up and running again. As a risk manager in your own field, you may not always be able to do something about big things like the extreme weather events or politics. I think the biggest message is maybe that you should always have an organization that is lean and mean and can quickly change and adapt to situations. Because things change so quickly, in most of the instances where companies go bankrupt, it’s due to wrong strategic decisions. I think there’s a big future for risk managers in trying to see that the strategy a company goes in is the right one.

How’s your captive going?

We have a very young captive. It was established only three years ago, and it’s still growing. We already had some claims in the captive, so we are actively using it. And I think the future expansion of it will partially depend on how the insurance market will evolve because we’re seeing a trend with some insurers who try to go more and more into standardized products, and if that standardization of policies goes on, then there will be more possibilities for the captives to develop and come to the need of companies who can’t find the necessary coverage in the traditional markets. There is certainly a future for captives.

How have you been seeing the regulations play out?

With all the ongoing regulations in areas like solvency, there’s been a burden of much more administration. As far as I’m concerned, it’s been a lot of useless administration. Luckily, some of the work that has to be done for Solvency II will be useful in the BEPS OECD exercise in order to show the rationale and substance of your captive, but it’s still another regulation that’s imposed on the captives in order to prove that they are not tax evaders. 99% of captives are professionally run, but in the past there have been exceptions to that, which gives a bad shade on the whole industry. We have to get rid of those.


 

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