There has been much on LinkedIn and Twitter in recent years about the shortfall in analytical resource, for the U.S. and UK especially. Several years ago, I had the learning experience of attempting to offshore part of my analytics function to India, Bangalore to be precise. It was all very exciting at first, traveling out there and working with the team as they spent some time in the UK. Plus, on paper, offshoring looked like a good idea, to address the peaks and troughs of demand for analysis and modeling. The offshoring pitch successfully communicated the ease of accessing highly trained Indian graduates at a fraction of UK wages. However, as with all software demos, the experience after purchase was a little different. I always expected the model to take a while to bed down, and you expect to give any new analysts time to get up to speed with our ways of working. However, after a few months, the cracks began to show. Analysts in India were failing to understand what was required unless individual pieces of work were managed like mini-projects and requirements specified in great detail. There also appeared to be little ability to improvise or deal with "dirty data," so significant data preparation was still required by my UK team (who were beginning to question the benefit). Once propensity modeling was attempted, a few months later, it became even more apparent that lack of domain knowledge and rote learning from textbooks caused problems in the real world. Several remedies were tried. Further visits to the UK, upgrading the members of the team to even more qualified analysts (we started with graduates but were now working solely with those who held masters degrees and in some cases PhDs). Even after this, none of my Bangalore team were as able to "think on their feet," like any of my less qualified analysts in the UK, and there were still not any signs that domain knowledge (about insurance, our business, our customer types, previous insight learned, etc) was being retained. After 18 months, with a heavy heart (as all those I had worked with in Bangalore sincerely wanted to do the best job they could), I ended this pilot and instead recruited a few more analysts in the UK. Several factors drove the final decision, including:

1. Erosion on labor arbitrage (the most highly skilled cost more);
2. Inefficiency (i.e. need for prep and guidance) affecting the UK team;
3. Cost and effort to comply with data security requirements.

Since that time, I have had a few customer insight leaders suggest that it is worth trying again (nowadays with China, Eastern Europe or South Africa), but I am not convinced. On reflection, my biggest concerns are around the importance of analysts understanding their domain (business/customers) and doing their own data preparation (as so much is learned from exploratory data analysis phase). The "project-ization" of analysis requests does not suit this craft. So, for me, the answer is no. Do you have any experience of trying this?

I’m thinking more about the "Insurance of Things." I’m not alone. There’s an increasing amount of speculation about the "Internet of Things," and I’m wondering how this will apply to insurance. With an estimated 15 billion networked devices by 2015 and fridges that can already tell me they have ran out of eggs, it seems like it’s not a matter of "if," but "when." And a natural extension of that question is, "what does it mean for the insurance industry?" It’s a difficult topic to comprehend. As an industry, we have few, if any, reference points on which to form a judgment. In fact, outside the insurance sector, we don’t have too many reference points, either. So we may have to start using our imagination. The natural and easy place to start is in the auto industry, where geospatial devices embedded into vehicles will automatically notify insurers of driver behavior and impacts. (Incidentally, I think this is much more likely than driverless cars, except in theme parks.) The natural extension is into personal devices, and I was intrigued by the announcement by Michael Kors that it will release a range of jewelry with embedded devices. (Have they thought of the effect on infidelity investigators?) In commercial insurance, which is often heavily dependent on warrantees, won’t devices help insurers to see that a warrantee has been complied with? On industrial premises, the "system" will know if fire doors were closed out of working hours, or the sprinkler system tested regularly. But shouldn’t we be bolder in our thinking? Insurers have traditionally thought about moving from being reactive to being proactive. Will the Insurance of Things allow them to undertake that transformation? Will the proliferation of devices eventually allow insurers to move into becoming virtual risk managers, by automatically monitoring the condition of the vehicle, person or property and then "pushing" alerts to the policyholder to take action (or be in breach of the policy conditions)? And perhaps, with the right permissions in place, might one device "talk" to another and take "active intervention?" If the tire pressure of the vehicle is a safety hazard, might the engine be immobilized after due warning is given to the driver? How much will the "Insurance of Things" change the traditional insurance model? Who knows, but the good news is that at least we will have some music to play while it all happens. As Duke Ellington put it, "Things ain’t what they used to be." His style of music might not suit everyone, but he got the title right, at least.

In an important op-ed piece in the New York Times, "An Epidemic of Thyroid Cancer?", Dr. H. Gilbert Welch from Dartmouth University wrote that he and his team of researchers found that the rate of thyroid cancer in South Korea has increased 15-fold! 15X! How can this be?! Were South Koreans exposed to massive amounts of radiation? Did South Koreans start using some dangerous skin product? No. And no. South Korean doctors and the South Korean government encouraged increased cancer screening. More screening must be better, right? No. Not at all… This is an important concept for employee benefits professionals to understand: More screening is not necessarily better. What happened in South Korea is that the thyroid cancer had been there all along, just undetected. The most common type of thyroid cancer -- papillary thyroid cancer -- is usually very slow-growing, and people with this cancer never know it is there. It does not affect their health, and it does not kill them. According to the article, it is estimated that 1/3 of ALL ADULTS have thyroid cancer. Thyroid cancer screening is performed by an ultrasound of the neck. It is an un-invasive, painless, fairly simple test. So what happened in South Korea was not an epidemic of thyroid cancer but, as the article puts it, “an epidemic of diagnosis.” There is potential harm in treating a cancer that will likely not cause you any problems. Two out of every 1,000 thyroid surgeries result in death. Removal of the thyroid means a person will have to take thyroid replacement medication for the rest of her life. This medication can be hard to adjust, leading to problems with metabolism, such as weight gain or low energy. In the U.S., there are many screenings that the U.S. Preventive Services Task Force has deemed "unproven" for application across entire populations of asymptomatic individuals. For example:

• Screening the skin for skin cancer
• Screening the carotid arteries (neck blood vessels) for narrowing

It is important to address the converse. Increased screening that has been shown to reduce morbidity and mortality is a good thing. Screening for high blood pressure is a good thing. Screening for diabetes is a good thing. Screening for certain types of cancers is a good thing. What does this mean for the employee benefits professionals and the healthcare consumer?

• Beware of "blanket" statements that more screening is better or of companies that are offering screenings that are not vetted.
• Know that screening can actually cause harm because of side effects or complications of treatment for a "disease" that is really not a problem.
• As you set up prevention programs for your employees, ensure that those programs are based on scientific evidence.

Two lawsuits seeking to define drivers as employees rather than independent contractors could end up forcing ride sharing services like Uber and Lyft to start providing workers’ compensation and other employment benefits to their drivers around the country. Separate lawsuits (filed by the same attorneys) in U.S. district court in San Francisco are seeking class action status to represent Uber and Lyft drivers nationwide. The suits are using California's labor law, because both Uber and Lyft refer to that state's laws in their driver contracts. Both cases have already earned class action status but only for representing California drivers. Attorneys involved vow an appeal on that decision. If either suit succeeds, it could be very expensive for the companies targeted. It is hard to tell if the drivers will actually see a benefit. The way class action suits go, drivers could end up reclassified as employees, with a host of new benefits, or the attorneys might take millions while every driver gets a free air freshener; we just won’t know until the suits have played out. One plaintiff attorney accuses Uber and Lyft of shifting costs, such as fuel and auto insurance, to drivers by classifying them as contractors. If those drivers were employees, Uber and Lyft would have to pay those costs and also provide workers' comp and other benefits as mandated by law. The math makes a loss in court look downright disastrous for Uber.  It would instantly shift them overnight from a software company coordinating independent commerce to one of the nation's largest employers. According to Uber, more than 162,000 drivers completed four or more trips using the service in December. That is 162,000 people who will suddenly have their fuel costs and insurance paid for (both Uber and Lyft currently offer umbrella liability insurance for their drivers) and will need to be offered workers’ comp. That comp won’t be cheap. These guys aren’t exactly desk jockeys. I’m not even getting into payroll taxes, unemployment or the like. Obviously, a win by the lawyers here would dramatically reshape, and likely end, the budding ride-share revolution. People on the payroll will need to drive far more than four trips in a month, so immediate consolidation will probably ensure a vast swath of that 162,000 will find they no longer drive for Uber. That will result in less availability and slower ride response. In fact, the entire ride-share phenomenon, one based in pure capitalism that brought road warriors clean cars, friendly drivers and prompt service, will be on the edge of extinction. Those cars will be on the same monopolistic path that brought us every rattling, vomit-encrusted cab in America. Oh joy. From my experience with Uber, the drivers seem to meet the criteria of true independent contractors. They are their own business. They use their own cars and work when they want to. No central dispatcher directs them to any pick up, and they appear to work for no one except themselves. They do use a central software system that puts them in direct contact with potential customers, but in the end they have complete discretion to accept or decline an available ride request. Uber and Lyft get a percentage of the fare for facilitating the transaction. In the interest of full disclosure: I have a severe bias against class action suits, which I largely view as nothing more than a wealth redistribution vehicle designed for the enrichment of attorneys. Over the years, I have become party to a few of these, not by anything of my doing other than playing the part of consumer somewhere in America. One such suit, against my beloved Southwest Airlines, apparently determined that Southwest had violated my rights by an improper roll out of expiration dates on free drink coupons. The result was that, if I would declare that I had flown on a Business Select ticket before a certain date, the settlement entitled me to (wait for it) one free drink coupon. (I didn’t bother, and I didn’t care.) The attorneys who brought the suit were seeking $7 million for their efforts. In another suit, related to the purchase system set up over the then-new domain extension ”.biz,” attorneys took $2.75 million of the $3 million made available for a settlement in what was determined to be an illegal lottery. My company, which originally spent about $300 for the “chance” to buy WorkersCompensation.biz (we won), didn’t bother filling out the paperwork for our piece of the action, mostly because our time was more valuable than the $3 or so we would have been paid. If attorneys succeed in having Uber and Lyft drivers declared to be employees, with all the associated rights and entitlements associated therein, they will have killed off one of the most revolutionary and entrepreneurial creations we have seen in the world of ground transportation since, well, the invention of ground transportation. Workers’ comp would, indeed, kill Uber or, at the very least, the independent spirit with which it sprang to life.

OSHA’s promulgation of an infectious disease rule/standard to protect healthcare workers and employees in healthcare facilities from microorganisms that cause illness and infection would be a welcome expansion of the work OSHA has already done related to bloodborne pathogens. A standard of national caliber would not apply any more pressure to healthcare employers than they already place on themselves to protect the patients and healthcare workers they serve. On the contrary, a rule would highlight the importance of the safety and health of healthcare workers. However, just when we, as a nation, are designing programs to protect healthcare workers from exposure to emerging infectious diseases, like Ebola virus, small businesses say, “No thanks, OSHA, we’re all good.” Just recently, the Small Business Advocacy Review (SBAR) Panel issued a report to OSHA Assistant Secretary Dr. David Michaels that said small healthcare businesses (to include ambulatory surgery, doctors' offices, dental offices, specialty clinics and dialysis centers, to name only a few) weren’t interested in better protections for their workforce. Small entity representatives (SERs) decided that the guidance that is already in place is good enough and that OSHA would just be adding more requirements. The SBAR report stated: Many SERs felt that this rule would overlap with and/or duplicate other relevant guidelines and regulations, including, for example, materials issued by the Centers for Medicare and Medicaid Services (CMS), the Joint Commission and other voluntary accrediting organizations, and state accrediting boards. SBAR has a point: Guidance is in place from CMS, the Joint and others, like CDC. But the guidance is almost completely to protect the patient, not the worker. The American Public Health Association (APHA) disagrees with the SBAR panel and firmly believes that an OSHA standard should be fast tracked to protect the working public. The APHA issued a national policy statement just last month. We learned from the Ebola exposures in Dallas that those infected after exposure were the healthcare workers, not other patients. If a patient enters an emergency department feeling generally ill, it is not typically the other patients who are potentially exposed to a yet-to-be-identified pathogen; rather, it is the string of healthcare workers with whom the patient comes into contact. Those include workers who examine the patient, take vitals, take blood or other specimens, assess, diagnosis and eventually treat. In the case of the Dallas Ebola victim, that was dozens of healthcare workers both in and outside of the hospital over more than a week’s time. The population of healthcare workers that a standard like OSHA’s infectious disease standard could protect is vast. It is typically in smaller healthcare settings that greater protections are needed, as these operations often intersect more closely with the community and have lesser controls in place compared with hospitals or larger health systems. In fact, nearly 10% of the U.S. working population is employed in healthcare settings of all sizes, and healthcare will generate millions of new jobs through the next decade (Bureau of Labor Statistics 2013). This sector of the workforce represents the largest segment of employment growth in the U.S. and serves the largest proportions of Americans, ensuring proper and timely diagnosis, treatment and care. Healthcare employment is marked as the industry sector with the largest growth (2.4%). Better controls to protect our most important healthcare assets -- its workers -- are needed now. OSHA’s bloodborne pathogens standard (BPS) alone will not address these important and constantly emerging occupational risks associated with hazards that are not often visible to the naked eye.  Promulgating an infectious disease role nationally, much like CalOSHA did with its aerosol transmissible diseases standard (ATD, §5199), would provide OSHA the opportunity to work with healthcare facilities and providers of care to develop standards that protect their employees from not just physical or chemical hazards, but biologic ones. Healthcare facilities would have the ability to control the environment of patient care and make it safer for all who enter: patients, family, friends, volunteers, contractors and caregivers alike. This standard, if done right, has the potential to provide the following benefits: -       Prevent transmission of microorganisms that cause illness and infection -       Improve safety for healthcare workers -       Make care for patients safer -       Increase the viability of the healthcare work force and the healthcare economy -       Reduce costs associated with workers' compensation, time away from work, staff turnover -       Provide a collaborative, bridge-building role with other U.S. agencies like CMS, CDC and the Food and Drug Administration (FDA) -       Serve as a model for other countries OSHA’s continued journey down the path of promulgating an infectious disease standard illustrates the role that it can play in bridging the gap between infectious disease and occupational safety and health experts.

Depending on the day of the week, one of three buzz words seems to fill every column inch, to be used in the marketing of every new product or service and to be cited in every press release. To me, these are, digital (insert anything here), big data and the Internet of Things (IoT). It’s no surprise that the IoT is at the peak of Inflated Expectations in Gartner’s Hype Cycle. In this post, I want to explore IoT a little further, specifically with the insurance world in mind. Like any self-respecting early adopter (technology geek/gadget magpie), I personally see the IoT as a game-changing disruptor, regardless of industry. My kids won’t know a world without almost every conceivable thing being connected to the Internet. Depending on which report you read, there will be anything from 100 to 500 sensors in every home and a market for the IoT worth $7.1 trillion by 2020 (IDC), with more than 4.9 billion connected things by 2015 (Gartner). Very few of the technology giants are not investing heavily in this secto. The IoT is not a fad. So what is the IoT? It’s simply the ability to interact with a network of physical objects that feature an IP address (directly or indirectly) and can connect device to device or device to human. Today, you can connect lots of things to the Internet, some of which you would never expect. Examples include:

• Homes and commercial buildings -- Smart buildings with smart sensors and smart utilities, security systems, environment monitoring, smart carpet, etc.
• Automobiles -- tracking when, how and where you drive. Transport vehicles of any kind, including driverless cars, could be connected, as could individual items/packages on a cargo ship.
• Livestock -- WiFi sheep; see here from the BBC on why sheep are being fitted with WiFi sensors,
• Human beings -- the latest in wearables allows companies such as Vitality Health Insurance to reward healthy behavior, reducing your premium for the more active and healthy you are.
• Smart cities -- where everything is truly connected. Libelium has 50 great examples here. Have you walked down Regent Street in London recently? It’s an interesting experience. We live in a truly context-aware world.

As Ben Evans said in his great piece, "Mobile is Eating the World," "Sensors profoundly change what a computer can know." Perhaps an easier question to ask is: What can you not connect to the Internet these days? This is a rapidly diminishing list. Look back 12 months or so to the Top 25 weird things to connect to the Internet; all of a sudden they don’t seem so weird. What will happen in the next 12 months? For fans of contactless payment cards, how do you feel when you can’t use it, as a retailer hasn’t yet adopted the technology? Inconvenienced? These are the sorts of simple things that give me time back and are simple and convenient. Ultimately, it’s all about automated data collection from the source itself. As insurers, our success depends on this. It’s what drives our very industry, right from the very first research, through to quote, bind and every event thereafter that drives our risk, pricing and actuarial teams. Getting this data and monitoring this directly from its source has huge potential in today’s traditional insurance business model. Another example of positive uses is from Uber, whose data is now supporting city planners with urban transport. As insurers, we could use the same data to avoid accident black spots, congestion and much more. Traffic systems would be linked directly to the flow, density, type and vehicles themselves. Basic data such as time of day, postal code or gender is simply not enough anymore. IoT connected services can change everything. Opportunities
 The cost of connecting things today has becoming almost insignificant, and, importantly, the desire for things that are not connected is diminishing at a greater pace. Ten years ago, you would test drive a car and, nine times out of 10, focus on the driving experience. The first thing people do today is check the "infotainment," how your smart phone can connect, what you can control via an app. It’s not just cars; I recently moved house and, when looking at new house alarms, a key consideration was what can I control and monitor via my phone or an app. Manufacturers are quick to jump on the bandwagon. Have a look at ADT Pulse (unfortunately not yet available in the UK, but many others are). It seems there are lots of options, but they are still working on old-fashioned business models. When will alarm monitoring be undertaken by your crowd sourced/handpicked local community as opposed to the centralized service center, which then calls the police? With IoT, who needs middlemen? The first notice of loss (FNOL) or claim process becomes automated (we have talked about this for years). The level of fraud can be dramatically reduced. Everything you can interact with or monitor, you can now predict better than ever. How does the IoT affect the carrier, agent or broker? Have a look at the infographic below -- which of these "things" did you expect to monitor? (The site for the infographic is here.) As the local city administration, can you reduce accidents or claims from understanding smart roads, pothole damage and more? Reduce health costs by understanding pollution? We as insurers typically struggle because customers rarely want to speak to their insurers. In the new economy, we have the opportunity to be connected all the time to each other. This brings a vast number of possibilities and new potential business models to us, based on this new wealth of data. Insurers now have the ability to know in advance of an event, ultimately improving their customers' and potential customers' experience, security and well-being. With everything connected, what could go wrong? However, the IoT has to come with a health warning, too. For me, three of the key things to consider here as insurance organization are:

1. You are now really competing on data, nothing more. We never produced any products, anyway; now it’s even more transparent. Make sure you know your data, can process it efficiently and effectively, understand it and most importantly use it. How we use information to enrich our world will be key. Don’t drown; the volume is about to explode. As an example, every minute, OCTO stores more than 118.000 data points from drivers around the world. How will you stand out from the crowd? I wrote recently here on how brand will be critical. Ownership of the data will also be key. BMW recently announced that it would not share any of its connected car data. It does, however, have a significant partnership with a large global insurer already.
2. Another key risk is from cyber security. There are already stories of usage-based insurance (UBI) car devices potentially being hacked. What happens if your driverless car gets hacked and then crashes, causing serious damage or, worse, a fatality? Who will carry the risk?
3. You must see how the IoT can drive new business models, based on customer demand. Ray Wang recently said that we are now supporting mass personalization for a market segment of one. What can you now insure that you never could previously for individuals and organizations? New business models don’t mean we have to go alone, either. New partnerships will drive innovation and, importantly, convenience for the end user. Be careful not to miss out on the output, as British Gas has with Hive and nPower has with Nest. Ignore the Hive and Nest connected devices; the data they collect is what matters.

For once, the insurance industry could be as quick to adopt as everyone else to adopt, or ahead. We are on the forefront of data enrichment and much more. We can better price, engage and interact with our customers and prospects. We can interact with each and every stage of the insurance life cycle; we can join and automate the dots faster and better than ever before. It’s an exciting time, and while it may be a while before the legacy oil tanker turns, we had better be ready and at the wheel if we are to own the opportunity.  

Since independence, all governments of India have committed to gradual rather than revolutionary means for spreading democratic and socialist principles (as attested notably by the preamble to the constitution of India). Independent India averted the revolutions (and most of the debates) that have shaped the role of the state in the western world for some 500 years. In recent history, India never had to face its Thomas Hobbes, Jean-Jacques Rousseau, John Stuart Mill, Georg Wilhelm Friedrich Hegel, Karl Marx, Beatrice and Sidney Webb, Franklin Delano Roosevelt or Margaret Thatcher, John Maynard Keynes or Milton Friedman. India was saved the horrors of the French, American, Russian, Turkish, Cultural (Chinese) or Iranian revolutions (to mention but a few). India was largely spared the two World Wars and most of the “…isms” (fascism, communism, Marxism, capitalism, etc.). For every political fad that swore by TINA (“There Is No Alternative”), India responded with its inimitable TATA (“There Are Thousands of Alternatives”). It had its gradual transition away from non-democratic practices (e.g., abolition of privy purses in 1971 and of debt bondage in 1976) to a welfare democracy. Even the embrace of the “Washington consensus” (a combination of open markets and prudent economic management) under the guidance of Manmohan Singh has not changed the essential nature of the state. This “Fabian” model meant that the state was committed to provide welfare, not merely security, to the citizens, and that central government was in the main responsible for funding, producing, procuring, allocating and distributing most goods and services. This has been done in large measure through subsidies to public enterprises, producers of inputs, private-sector producers and consumers. The goods and services whose availability and price have been modified through subsidies include food, water, energy, financial services, labor, education, healthcare, fertilizers, information and media. As the public demanded more and more, the state promised more and more, sometimes through milestone measures (e.g., the largest debt waiver and debt relief program for farmers, in 2008) but mainly through quasi-permanent subsidies, which have led to a sizable fiscal deficit (almost 75% of the 2014-15 budget estimate, and 4.1% of GDP). The net cost of these handouts and subsidies is much higher than their nominal value, for three reasons: the interest payable to fund the deficit, the losses because of intermediation (e.g., it has been reported that for every kilogram of subsidized grains delivered to the poor, the government released 2.4 kg from the central pool) and the societal effects of enhanced inequity (an IMF working paper titled "The fiscal and welfare impacts of fuel subsidies in India" argued that the richest 10% of the households benefited from fuel subsidies seven times more than the poorest 10%). This is why a policy of “less government” could have much scope by divesting ownership of public sector undertakings (PSUs) in manufacturing, services and distribution and reducing subsidies substantially. However, the existing system has created many winners that would presumably be motivated and suitably represented to protect their vested interests by militating for status quo. Additionally, certain social services must be improved considerably (mainly water-sanitation-health, financial protection, food security and education), but acting on those needs would lead to more rather than less government. Similarly, actions to remedy inequitable targeting and inefficient distribution of subsidies could bring “more governance” only if preceded by more government intervention and spending. So, what is the road to “less government and more governance” that would both engage the many who today enjoy representation without taxation and protect future taxpayers from the financial and societal ramifications of today’s consumption? We submit the answer is in “localism.” “Localism” means encouraging people to be involved in elaborating and governing local solutions, with only subsidiary support from government. Most of India’s population is rural and in the informal sector. For this vast majority, the world is local, and local is the measure for most things. It is a moot point to argue whether people wish to be in the informal sector (to be excluded from the framework through which the government collects taxes and imposes regulations) or whether they are victims of circumstances (of being de facto excluded from the practical measures through which the government delivers universal rights for all citizens). The essential point is that people belong to local groups through which they access benefits that are not otherwise available as public goods. Therefore, communities reinforce the norms and networks that enable individuals to act collectively, influence decisions of single community members on the economic and social engagements they can/must/must not enter into, who can/cannot do so and on how benefits are distributed. Compliance with consensus flows from members’ reliance on the community’s patterns of reciprocity. As the community reaches most everybody on a continuing basis, it can be mobilized to play a role in “more governance” of local activities and structures. Experience from rural India and from other countries confirms that underserved rural communities have been able to operate community-based mutual-aid schemes that create welfare and distribute benefits, which are funded by resources of the members. Such collective action of groups, by groups and for group members is a major paradigm shift from the mentality of reliance on government handouts, decisions and entitlements. The change in mindset is from being dependent to being dependable; the change in the financial model is from relying on inflow of charity to relying on pooling of own funds, which are otherwise invisible and inaccessible, to obtain welfare gains. The argument in favor of empowering community-based mutual aid is not merely that it is more opportune, but that it is more legitimate. Recalling the words of Abraham Lincoln (a speech from 1854, quoted in G.S. Boritt, 2004: Lincoln and Democracy): “the objective of government is to do for a community of people whatever they need to have done but cannot do at all or cannot so well do for themselves in their separate and individual capacities.” If now the case is that communities of people can do for themselves what the government cannot so well do for them, is it not then self-explanatory that the government should do all it can to support such action at the local level? Moreover, the argument in favor of encouraging the proliferation of local action is consistent with the democratic system of India, where interest groups are well established.  In his book The Logic of Collective Action: Public Goods and the Theory of Groups (1965), M. Olson pointed out that small local groups can form more easily and function more effectively to advance their interests. Olson also asserted that it is easier for the government to support many small groups than few large ones, and by supporting community-based self-interest the state can also advance its interests more easily and less expensively. If the reason for seeking “less government” is to encourage more self-reliance and hard work and a decrease in dependence on acquired rights and corruption, then does it not follow that government should provide tangible support to encourage voluntary action? The pooling of part of people’s resources for the advancement of community-based welfare gains serves the interest of the members of such groups (who can take charge of rationing and of priority-setting relating to the use of their funds) and also of the government (which could leverage the community-based risk management by limiting its intervention to subsidiary coverage of only rare events). The development of community-based health insurance in India as a mutual-aid activity, replacing entitlements or debt, is one of the most effective mechanisms for voluntary social change. Just as after independence India abolished several homegrown systems based on inequality of rights (e.g., chaudhary, deshmukh, jagir, samanta and zamindar) and favored equality through democracy, so asset creation should take primacy over money lending (in all its forms, from village shark to microfinance and to banks), for the same reason. India also abolished bonded labor (which also involves interlinking debt and exploitative labor agreements), even if this practice is not yet dismantled completely, according to the International Labor Organization (ILO). And the infamous phenomenon of farmer suicides is also linked, at least in part, to debt: Farmers are held morally deficient for inability to repay loans, when in fact the reason for that insolvency is crop failure (occasioned by the inherent risks of agriculture: too much or too little rain, too hot or too cold climate, pests etc.). Many other countries developed crop insurance to protect both farmers and farming. In India, agricultural insurance is used mostly to securitize loans rather than farming (farmers must pay the premium when they borrow, but the payout goes to the lending bank). Disconnecting crop insurance from borrowing and connecting it with “what a responsible adult does” to avert the risks of agriculture can bring about safer agriculture and more governance with less government. This change is best accomplished when embraced by local communities, not merely single individuals. When agriculture is a safer economic activity, more farmers are likely to continue farming (and thus provide food security). When crop insurance becomes an act of mutual aid, something everybody in our village does, it is easier to mobilize the community to also encourage asset creation, and better financial protection. The virtuous cycle of more community-based cooperation fosters multiple positive changes, including improved targeting of government support for financial protection, better advisory to farmers on how to improve their agricultural productivity and thus food security and enhanced equality. These are objectives that have never been achieved by debt/credit extension or debt relief, because such programs missed completely the opportunity to leverage the collective energy that, what the community can do together, none of its members can do alone. Creation of such local asset pools may start with modest amounts, as many villagers are cash-poor, and will first want to gain trust that the new form of collective action will deliver welfare to many members of the group, not just to a few powerful or privileged persons. However, the accumulation of funds will grow over time, especially if such growth is stimulated by the government. The government can encourage such solidarity-based collective action by passing enabling regulations to recognize mutual and cooperative insurance schemes (as part of the revision of the insurance law). Indonesia has recently changed its insurance law to recognize mutual and cooperative insurance at par with commercial insurance, to facilitate the development of mutual micro-insurance in rural communities. The European experience has shown that today’s large financial institutions originated from exactly such community-based local initiatives. As these were allowed and supported to grow, they served as the basis for universalization of health insurance, agricultural insurance and natural catastrophe insurance. In some countries (e.g. Switzerland, France, the Netherlands, Belgium or South Africa) ,the local schemes have morphed into large private or cooperative insurance companies. The local origin of the activity was essential to ensure that local groups can define their local priorities (which enhance local willingness to pay) and operate their scheme with locally dependable persons (which enhances flow of information, notably through gossip, about the fair and equitable treatment of all members of the scheme). Government support for community-based asset creation can provide the government with information that it does not have currently but that it needs to enhance governance and the government’s revenue side. The shift from remote governance to local governance relies on local trusted elites, a new kind of elite, different from the capitalist elite and the bureaucratic elite. The local elite needs to be given a good start (by imparting private sector methods for social sector activities, minus the profit-taking), and the government must still provide worst-case protection. But for the rest, government should encourage communities to devote their talents to create public goods, to fend for themselves, to concentrate on assuming responsibility for their own welfare. This is so much better than the present situation, in which many people entertain huge, unrealistic expectations and contradictory demands from the government based on messages, disseminated for years, that welfare is a right; and when they receive welfare or debt/credit benefits, rather than being grateful, many people feel that their due has reached them too little and too late. Anchoring the support to local asset-building by community-based collective action enhances the notion that we can do more on our own and allows each local group to design and do itself some of the work that hitherto it waited for the government to do. Supporting “localism” means that welfare creation is the legitimate domain of each community, delivered bottom-up rather than entirely top-down, supported by the government rather than the exclusive responsibility of the state to each individual. Localism will enhance governance because communities, governing their own priorities and resources, are very good regulators of their local scheme, because they are responsible for doing, not debating, and their actions are transparent locally. This transition from external to community leadership entails transition to performance-related legitimacy and away from formal title or appointment. It can also be the transition from short-termism (with the next elections as implied statute-of-limitations) to the long-term, recognizing that to achieve universal access to financial services, or to health insurance, or to secured livelihoods, or to relevant agricultural insurance or better sanitation may take decades. Notwithstanding the patience needed to get results, localism can provide the platform for less government and more governance now.

Last year, I decided to pursue a career transition as a full-time occupation. I’ve been out in the market for the past six months, assessing business opportunities as I network with executives in financial services, healthcare, media and retail, as well as with VCs, private equity investors and advisers. What’s been great is that invariably any role in any organization, however broad, will be framed by the priorities that drive the business, which may be using a short-range lens defined by the annual plan, or one that doesn’t offer much of a peripheral view.  Transition-as-occupation offers full permission to set the aperture and depth of field for insight-gathering and exploration. What has also been remarkable is not only the generosity of many people at the top of their respective fields to share perspectives, but also how I’ve been able to help others by playing the role of connector among people who may not normally meet up with each other, but who are excited to understand how others are addressing common questions in a complex and changing environment. Here are six connected trends on the collective mind of the leaders with whom I’ve met. They represent a snapshot of what I am hearing. Within them are opportunities to be realized across this industry:

• Customer-centricity – is it talk or walk? C-suiters certainly verbalize that “customer-centricity” matters, but few teams demonstrate that empathizing with the customer is bedrock for viable, win/win relationships, growth and profit improvement. The phrase has as many definitions as (or more than) the number of people defining it. Most significantly, the connection to concrete, quantifiable business priorities is generally missing. For those who get beyond the buzzwords, there is tremendous tangible value, even disruptive opportunity, in being a customer-focused player in this sector.

• Old norms don't work...digital and innovation are essential. Businesses are faced with redesigning processes, structures and metrics, recruiting more agile learners who are also able to deliver and overcoming legacy infrastructure to adopt new technologies. This level of change in the way businesses operate is not for the faint-hearted. The companies that take on these real implementation requirements will gain ground.

• Yes, technology truly is changing everything. Even with greater efficiency, there is no growth without compelling offerings that meet big market needs. For companies engineered to serve baby boomers, serving the millennial generation requires profound change, not just a digital coat of paint. The implications go way beyond having a social media presence, cool apps and clever advertising. The millennial generation is inheriting a different world, re-shaped in good and bad ways by prior generations.  The starting point for progress is to be truly insight-led, and not presume you know what people want and need.

• The marketing bar is being raised. This discipline has been disrupted, and more is being demanded. Traditionally viewed as "support" people, marketers are now being held to results that require a different seat at the table, a different talent profile, processes and resources and an entirely new set of connections with colleagues and external partners. Begin by redefining relationships, especially with product, IT and sales internally, and with the advertising and media agencies as key outside partners.

• Two tales are playing out within financial services. Legacy institutions remain heavily focused on regulation, compliance, expense reduction and cyber security…while fin tech is hot, with capital flowing into payments, wealth management, consumer lending and related start-ups pursuing market disruption and reshaping the industry. Start-ups are doing great things in this sector and will keep incumbents on their toes, as well as representing potential acquisition opportunities as a strategy to modernize. Alignment around a clear strategy and a collaborative culture are at the foundation of leading change vs. playing defense.

• Healthcare disruption is creating opportunities, but the pace is slow. Payers and providers are aiming to address Affordable Care Act and other government, employer and consumer-driven impacts.  Using electronic medical records, controlling employer healthcare expenses and enabling patient accountability for medical care decisions are just three of many big and complex challenges. The road to change will be long and slow given the sheer complexity and fragmentation of healthcare delivery. As in financial services, new entrants are leading innovation with solutions that address elements of the ecosystem. As in financial services, there is room for incumbents to realize opportunity with the right strategic and cultural conditions.

This is Paper 4 in a series of five on risk appetite and associated questions. The author believes that enterprise risk management (ERM) will remain locked in organizational silos until boards comprehend the links between risk and strategy. This is achieved either through painful crises or through the less expensive development of a risk appetite framework (RAF). Understanding of risk appetite is in our view very much a work in progress for many organizations, but RAF development and approval can lead boards to demand action from executives. Paper 1, the shortest paper, makes a number of general observations based on experience in working with a wide variety of companies. Paper 2 describes the risk landscape, measurable and unmeasurable uncertainties and the evolution of risk management. Paper 3 answers questions relating to the need for risk appetite frameworks and describes in some detail the relationship between risk appetite frameworks and strategy. This article, Paper 4, answers further questions on risk appetite and goes into some detail on the questions of risk culture and risk maturity. Paper 5 describes the characteristics of a risk appetite statement and provides a detailed summary of how to operate based on the links between risk and strategy. How are risk appetite, risk tolerance and risk limits related to one another? A range of differences in philosophy are influencing the gradual determination of internationally accepted definitions. Notwithstanding, we recommend the definitions and the sequence of diagrams and explanations given in the Institute of Risk Management’s (IRM) guidance, which are A number of models exist that seek to describe the relationship between risk appetite, tolerance and risk; for instance, the Ernest and Young Risk Pyramid below: How are organizations using risk limits and risk tolerances around those limits? Our experience in working with clients shows that organizations are continuing to struggle with basic risk concepts, definitions, language, responsibilities, reporting and delivery. Accordingly, while risk limits are set to contain risk-taking practices, lack of common language and loose interpretation of concepts is causing confusion within organizations and leading to limits being seen as negotiable within the context of risk tolerances. As a corporate discipline, risk management is in its infancy, and the quality of risk practitioners is generally poor. Risk limits are perceived negatively by business practitioners, who use their limited knowledge of risk tolerances to argue for greater flexibility in applying limits. How do organizations facilitate early warning of potential breaches of risk appetite? In practice, we find that there is limited facilitation. Rather, business people see the concept of risk as limiting practices that drive value and, thus, adopt the business school mantra of "seeking forgiveness rather than permission." This is made easier in organizations where risk is seen as a nuisance and impediment to business and where appreciation of quality risk management is not apparent at senior levels. Business generators tend to view risk as friendly and flexible, designed to support business generation. Thus, risk limits are treated like speed limits on the public highway, more for observation than observance. Accordingly, we find few cases where early warnings are seen as anything other than flashing lights on the dashboard. In many cases, early warnings result in a case's being presented to the risk committee for raising limits, rather than resulting in severe braking to ensure conformity in risk management. Much of the foregoing represents the cultural challenge of embedding risk as a serious discipline rather than a faux science treated as an add-on. This reflects the nascent nature of risk management and its failure to be seen at board level as front and central to strategy and its effective and safe execution. Culture and "tone from the top" are critical here. So is strong support for risk executives at senior management level and an appreciation that risk management is akin to the medical profession, where hygiene is embedded in all procedures and provides a safe and secure means of conducting business, rather than being an impediment. The absence of good-quality risk officers and of universally accepted definitions of risk also undermine the discipline in organizations where there are few effective sanctions against limits being broken. How do organizations assess risk culture? Optimal risk culture is designed and nurtured on building blocks practically described as blocks ABC: The building blocks are briefly summarized as follows:

1. Training, values and beliefs, reporting and continuous improvement directed at outcomes driving attitudes displayed by people, which
2. Influence their behaviors and thus the quality of their discussions and decision making, thereby
3. Manifesting as demonstrably credible risk culture.

Other than retrospective analysis of poor risk culture following various corporate crises, there is a limited body of reliable knowledge, and experience, on assessing "existing risk culture" and successfully navigating to a "target risk culture." The IRM's "Risk Culture, Under the Microscope: Guidance for Boards" describes multiple interactions: Diagnostic tools are available to track the components described within the framework above. In our experience, however, such is the poor state of risk maturity in very many organizations that they are not sufficiently advanced to practically determine how they might chart a course from the existing to the target state of risk culture.

You've done the hard part building a successful insurance agency. But production has plateaued. So you focus on growth and spend less time in the office. This prevents you from overseeing your staff, and you begin to worry about what's happening back at the office. It's the biggest challenge owners of agencies face. How do I drive growth and lead my organization? Solve it by implementing these three steps:

1.  Focus on what you do well. You can't do everything, so don't!  Focus on tasks that add the most value. Most people, when they first assume a management role, want to make all the decisions. It's a management style called "command and control." In today's flat organizations, it doesn't work. The business world moves too quickly for employees to wait to be told what to do. Successful organizations hire the right people and divide up roles and responsibilities to maximize each individual employee's contribution. It applies to the agency owner, as well. You need to identify what you do best and focus on that task.
2. Empower your employees to act. It's your job as the organization's leader to create an atmosphere that fosters initiative over order taking. Make sure your employees understand that you will stand by their decisions. Don't be quick to correct the way they are doing something if the method they use solves the problem. The more you micro-manage, the more you send the message to an employee that you don't expect her to make a decision. Move responsibility down to the lowest level in your organization. Your front-line employees know what's going on. Give them the power to solve the problems facing your organization and get out of the way.
3. Be patient. It's natural to try to solve a problem or issue you see at the office. Hold back. Wait. Allow your staff to figure out the solution. It's not easy....especially when you watch someone make a mistake. But over time what you will discover is that an employee will own a specific task she feels responsible for.

Well-run companies don't depend on one individual. They institutionalize employee development enabling knowledge transfer among the existing work force. At many organizations, managers are required to develop their replacement and can't get promoted until their designated successor is deemed ready. In other words, part of their job is to make themselves redundant. Analyze what you do daily. Ask yourself what part of your daily tasks you could transfer to someone else in the agency. Then spend the time training your staff to assume your additional tasks. This will free you to focus on the most important business issues affecting the agency. Inspire your people to be great!