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GRC Professional : GRC Spring 2012
30 GRC Professional • Spring 2012 IN A TIME WHERE A FLOOD IN THAILAND can affect manufacturing in Europe or the political situation in Libya can have consequences for business in the USA, risk managers cannot afford to be insular in their focus. That will be the message from one of the world's foremost experts in risk management at the GRC 2012 annual conference on the Gold Coast this month. Jorge Luzzi is head of risk management at Pirelli, one of the world's biggest tyre manufacturers. He is also president of the Federation of European Risk Management Associations and chairman of the International Federation of Risk and Insurance Ma nagement Association. In a post GFC world, Luzzi said it was important to look further than just insurance when it came to risk management. "You need to have a real understanding of what is going on all around you," he says. "It doesn't work to have a traditional approach. You have to have a n open mind." Citing examples like recent flooding in Thailand that affected the supply chain in Europe a nd how the uprising that killed Colonel Gaddafi in Libya influenced the way business was done with Arab countries, Luzzi said it was important to consider the potential impact of global events in risk management strategies. "We have a relatively new political situation in parts of the Arab world, the economic crisis and a growing amount of natural disasters," he says. "In all cases there is a worldwide effect." Disasters Luzzi is no stranger to dealing with natural disasters in the context of risk m a nagement. In 1999, Turkey was rocked by an earthquake measuring 7.6 on the Richter scale, killing 17,000 people and leaving many more injured and homeless. Thirteen worker s at Pirelli's Izmit factory were killed and 14 were seriously injured when half of the factor y's buildings were destroyed. "The earthquake in Turkey was an interesting case," Luzzi says. "There are different ways to approach a situation like that. While insurance for lost infrastructure was important to the company, it was only one of several considerations." Firstly, he said the team stepped in to provide food and shelter for the workforce, made homeless by the quake. "We had blue collar workers who lost members of their family; some had lost their home," he says. "We inter vened quickly to provide these people with a place to live until their municipalities were back working again. "From one point of view that was a very social thing to do, but from another point it was very capitalist. "We had a commitment to sell products and we had to ask ourselves from where we can provide these products that we cannot produce (in the Izmit factory)," he says. "It is very easy to lose things not covered by insurance, such as clients." CASE STUDY Man with wheels in motion Keynote conference speaker Jorge Luzzi, head of the risk at tyre juggernaut Pirelli, also has his finger on the pulse of global risk management. BY FRANCES SACCO Professional risk management was an evolution from different roles in the company
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