Guy Lamand, president of the French risk management association AMRAE, replies to some questions posed by Lee Coppack.

LC: What are the main issues which concern risk managers in France today?

GL: At the moment, French risk managers have very diverse concerns. There are those who are preoccupied with mergers and acquisitions and who are worried about how this will affect them personally. Others, affected by internal restructuring within their own organisation, are facing increased pressure for results but often with reduced means. Finally, there are those who are not concerned about the problems of the first two groups but who continue to optimise their resources and adapt to the development of their organisations.

LC: We have seen many mergers between large businesses, on national,European and international levels. How is this trend affecting riskmanagement within the even larger group which results?

GL: Everything considered, I regard all mergers as international, even if they only concern national companies, since business has become global for all groups. All mergers, therefore, affect the international markets and foreign subsidiaries of the companies concerned.

The consequences of these mergers in terms of risk management are diverse and unequal. Most frequently the company which is being acquired integrates its programme into that of the acquirer, but it is not a hard and fast rule, and you also have to take into account the choice of personnel who will remain in place...

LC: Therefore, what are the effects of globalisation on risk management in France?

GL: There are two. Above all, there is an effect on the organisation; ittakes months for the new group to achieve its exact shape. Sometimesinternal battles hold up progress toward globalisation., so that seniormanagement will not have effected its organisation and strategic plans. The second consequence affects the insurance programme. The choice of brokers and insurers will be up for discussion, and here one has to say that the situation places at an advantage those large brokers and international insurers who can respond quickly to the requirements of the enlarged group.

LC: Has the reduction in the number of brokers in the last few yearslimited the risk manager's freedom of choice compared to previously?

GL: Certainly, but not in a very significant way. What is more worrying is the reduction in the number of insurers.

LC: Taking this limitation into account, are you happy with the services offered today by brokers and if not, why?

GL: Personally, I think that this situation has broadly contributed to an improvement in the quality of services, because there is less and less a sense of “private property” or captive clients. Competition is lively and brokers' renumeration by fees obliges them to justify the quality of their services.

LC: What about the contraction in the number of insurers? Does this limit the risk manager's freedom of choice?

GL: As I said earlier, this concerns me more because for the moment, it is masked by the soft market. It will, however, become real once the market hardens.

LC: In that case, would your concerns be primarily price, capacity orcoverages?

GL: Certainly price first and coverages also.

LC: On a different subject – to what extent and in what way are the members of AMRAE currently making use of the internet in their work? How would you see it developing in the future?

GL: According to our information, there has been an explosion of e-mailaddresses in 1999. It appears that e-mail is developing very rapidly both internally and with service providers. On the other hand, the use of the internet as a means of information remains very limited; many companies restrict access for security reasons. However, it seems clear to me that use of the internet is bound to increase especially as part of those corporate functions where there is an important need for communication.

LC: What are the risks which are likely to become the biggest concerns over the turn of the century? How do you see the role of the risk manager in five years time?

GL: That is the trick question! But I will try to read my crystal ball. Ithink it is easier to reply to the first part of the question. The risksthat concern me the most, if you leave aside that of the year 2000 itself, come from the development of the mega-mergers of which we have spoken; these companies are no longer on a human scale and among other things, their financial capacity brings into question the utility of traditional insurance. One has, thus, to develop new mechanisms to respond to the new exposures.

Further, I think that the vulnerability of these groups will come from damage to the reputation to their imagine, because the slightest problem, once publicised, becomes a real threat to their market share, and to their stock market quotation. It is more and more important, therefore, that they know how to communicate and to manage crises. Finally, the third great risk will come from the good management orotherwise of systems. Here I see a potentially important source ofparalysis for the enterprise, industrial espionage and disinformation.

Faced with this evolution of risks, I see the role of the risk manageritself in the process of complete change. I think that traditional lossprevention will be permanently decentralised to the operational units,which will be responsible as never before for their own risks. To enablethem to be so, the risk manager will have to use an intranet to makeavailable to them the widest possible information (methods, internal orexternal experience etc.).

The risk managers will need to build up a network of correspondents,whether by geographical zone or branch of business, which will allow him or her to bring forward information which is material to the notice of the group. It is through this global vision of the group that he or she will be able to detect the risks linked with complex organisations. That is to say, dependency risks, which are well known in the management of complex industrial projects but often under-estimated in the organisation of large enterprises. Finally, I believe the risk manager's responsibility for the risk finance of the group will be strengthened, from which he or she will know how to adapt to the new requirements.Guy Lamand is president of the French risk management association, AMRAE.

Tel: +33 (0) 142 89 33 16; Fax: +33 (0) 142 89 33 14; Website: www.amrae. He is also director of corporate risk and insurance management department for Cogema and the author of La maîtrise des risques dans les contrats de vente (risk management in contracts of sale) publishedby AFNOR. Lee Coppack is co-editor of Global Reinsurance.