RIMS Executive Report The Risk Perspective Risk Management ...€¦ · The Risk Perspective Risk...

RIMS Executive Report

The Risk Perspective

Risk Management’s Role in Mergers & AcquisitionsJosh Salter

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As the preeminent organization dedicated to advancing the practice of risk management, RIMS, the Risk Management Society™, is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS brings networking, professional development and education opportunities to its membership of more than 11,000 risk management professionals located in more than 60 countries. For more information on RIMS, visit www.RIMS.org.

Author Josh Salter, RIMS

ContributorsGordon AdamsRisk ManagementSERVCO Pacific, Inc.

Julie PembertonDirector, Enterprise Risk and Insurance ManagementOuterwall Inc.

Jennifer SantiagoDirector, Risk Management and InvestigationsNovartis Pharmaceuticals Corporation

Carolyn SnowDirector, Risk ManagementHumana Inc.

EditorsMorgan O’Rourke, RIMSCarol Fox, RIMS

Art DirectorJoseph Zwielich, RIMS

Risk Management’s Role in Mergers & Acquisitions

2 Copyright © 2016 Risk and Insurance Management Society, Inc. (RIMS). All rights reserved.

RIMS EXECUTIVE REPORT

Risk Management’s Role in Mergers & Acquistions

For stakeholders, news that the organization they invest in is making a business transaction to acquire a new company is indeed “great news.” It implies that the organization has reviewed its strategy, that it has assessed both the positive side and negative sides of the risks and has a made a decision that will hopefully make the organization stronger as it moves into the future.

For risk professionals, this greeting can elicit a different set of emotions. While, of course, there is always the excitement associated with their employer’s success, the complexity and added responsibilities associated with an acqui-sition can leave a risk professional concerned, unsure and scrambling for answers.

With global merger and acquisition activity reaching a record-high in 2015—including the formation of Willis Towers Watson, Anthem’s acquisition of Cigna and ACE’s acquisition of Chubb—it is clear that more and more organizations are utilizing the acquisition of an-other company as a vehicle to strengthen their foothold in the marketplace. Risk professionals must be prepared to help guide their organiza-tions through the complexities of these deals and the frantic transition time period in which two entities become one.

Based on interviews with RIMS officials, this report aims to provide risk professionals with more clarity about their role during the business transaction–from the perspective of an acquir-ing company–and explores fundamental risk management responsibilities to consider.

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Understandingthe Deal True mergers are very rare. More often than not, a larger company is acquiring a smaller company. However, in many cases, some of the assets, processes, services or even employees are acquired by the greater entity–making the com-monly used phrase “merger and acquisition” or “M&A” still applicable.

The motivation for a deal is generally simple. “The major contributing factor for an organiza-tion to acquire another is to gain revenue and market share while cutting costs,” said Carolyn Snow, RIMS 2014 president and the director of risk management at Humana Inc. “Organic growth is getting more difficult to achieve and is a much slower process.”

While the end results are always top of mind for the organization’s leadership, specific challenges, such as confidentiality and time constraints, can drastically impact the ability of the organization and the risk professional to adequately complete the due diligence process.

“These types of transactions must be kept confidential, especially for publicly traded companies,” said Gordon Adams, a RIMS board director and risk manager with SERVCO Pacific. “If the secret gets out, there could be stock implications for both companies. It is a double-edged sword though. Such confidential-ity constraints might keep key players–like risk professionals–in the dark about the transaction until the very last moment.”

Recalling her M&A experience, Jennifer San-tiago, a RIMS board director and the director of risk management and investigations at Novartis Pharmaceuticals Corporation said, “It’s a very collaborative effort but the difficulty is timing. It can be an intense period of time, especially when you’re competing for a company. Due diligence is so important to these deals and, despite time limitations, you have to be thor-ough.”

The Strategy Behind the DealEssentially, there are four types of acquisitions:

• Acquiring a competitor to gain market share

• Acquiring a smaller company whose business is similar to yours in order to strengthen your industry standing

• Acquiring a complimentary business or a business from your supply chain

• Acquiring a business in a totally different space that will allow your organization to move in a different direction in the future

The good news is that the responsibility to identify acquisition opportunities is not that of the risk professional alone. While practitioners are encouraged to contribute to organizational strategy, many organizations have a team of pro-fessionals whose sole responsibility is to identify potential M&A targets and conduct the proper due diligence to determine the new entity’s compatibility with existing corporate strategy before the idea is agreed upon by leadership.

“Mergers and acquisition teams are often put together in major companies and normally include a risk management representative—whether it’s the chief risk officer or someone at the director level,” said Adams.

There are, however, organizations that do not initially invite risk professionals to the mergers and acquisition conversation. “It is impera-tive that risk professionals create a healthy line of communication with the M&A team,” said Snow. “Be sure to share with them risk management’s ability to evaluate exposures and opportunities, as well as our ability to improve coverage and ideally reduce premiums.”

3Copyright © 2016 Risk and Insurance Management Society, Inc. (RIMS). All rights reserved.



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Most companies have guidelines around the types of companies they would pursue in an ac-quisition. “For Humana, it has to be companies that the acquisition team considers ‘adjacen-cies’ or that expand our market share, comple-ment what we do and, most likely, extend our reach,” said Snow. Such parameters will help the organization stay focused and help ensure that potential transactions are in line with strategy.

Ultimately, the decision to acquire a company should address long-term goals and industry trends. For example, “Novartis acquired an eye care company because people are living a lot longer,” said Santiago. “The company saw a potential opportunity to serve that aging demo-graphic. Strategically, we thought that would be a good fit. Understanding strategy is always im-portant in anything you do. Whether included in the initial acquisition process or not, the risk professional’s first order of business must be to review the deal agreement and determine its impact on strategy.”

DevelopingRelationshipsRelationships are pivotal to the risk profes-sional’s success during the merger and acquisi-tion process.

“Treat everyone with respect,” said Snow. “The brokers and staff of the acquired company have pride of ownership in what they have built but, sometimes in the rush to get the acquisition done, it can be easy to forget that people’s feel-ings and careers are involved.” As part of risk management’s due diligence process and with permission to proceed, it would be in the risk professional’s best interest to engage the acquired company’s risk manage-ment department (if one exists) or the person responsible for the risk management program. In many organizations, that point-person might be the treasurer or CFO.

Discussions about insurance coverages are a given but, perhaps more importantly, their risk professionals will have an in-depth understand-ing of operations. “They have their finger on the pulse of the organization’s exposures, its strategy and future opportunities,” said Adams. “Engaging the acquired company’s risk manage-ment team can unlock the door to valuable information about why certain protocols and policies are in place. Initiating this relationship allows you to provide senior leadership with a perspective that they might not otherwise have.” Another relationship that would be valuable to initiate would be with the acquired company’s insurance broker. Communication with the company’s broker is a typical occurrence but could be a sensitive one because of the change in business. This is because, shortly after the deal closes, risk professionals must begin the process of consolidating insurance programs.

With the list of policies in hand, risk profes-sionals need to decide which ones should be cancelled immediately, which will transition into run off and which should be continued. “Depending on when it is canceled, organiza-tions can get a certain amount of money back either on prorated or short rate basis,” said Santiago.

All of this can be accomplished by establish-ing a working relationship with the acquired company’s brokers and maintaining a strong, communicative relationship with your existing broker.

“Insurance brokers are professionals and understand that if the company they represent is being purchased they will most likely lose business,” said Snow.

Julie Pemberton, RIMS 2016 president and the director, enterprise risk and insurance manage-ment at Outerwall Inc. said, “Brokers of the acquired company also must realize that this is an opportunity for them to demonstrate their value to the acquiring company’s risk team.

There could be an opportunity to actually maintain a part or grow business as a result of this interaction.”

To avoid difficulties in these sensitive situations, Snow recommends that a Broker of Record Letter be signed to ensure cooperation and that important information is furnished promptly upon request. Additionally, details about prior broker commission arrangements should be disclosed.

Managing your relationship with your current broker is just as important as managing the relationship with the acquired company’s former broker. Taking on a new company that provides a service or product that your organization has not dealt with in the past could cause concerns for underwriters. The more information you are able to provide, the better prepared they will be to help you develop a strong risk financing program.

“In theory, they could refuse to write the coverage if the new exposures are outside of the insurer’s risk appetite,” said Santiago. “Problems could arise when trying to create separate cover-ages. Some kind of spillover exposure could impact your existing coverages already written with that underwriter. As much advance warn-ing as you can provide to the insurer is critical. Good, open dialogue is always best.”

Information is Key

Once the deal is in motion, it is time to ex-change information. To facilitate the dissemi-nation of documents, organizations typically create a data room—an online repository for documents and information to be exchanged between parties. At the onset, confidentiality agreements must be signed before anyone is granted access to the data.

If your organization has an acquisition team, risk professionals should be part of that team or

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Risk Management Data RoomSome of the risk management informa-tion typically found in an M&A data room includes:

• Organizational documents, such as constitution, bylaws and annual reports

• Contracts

• Schedule of insurance policies for the last five years. For each policy, it would be important to see the policy type, pol-icy form (claims made vs. occurrence), per occurrence/claim limits, aggregate limits, deductibles/self-insured retention amounts, insurance carrier name, policy period, policy number, annual premium amount

• Copies of all current insurance policies

• Description of any current or legacy self-insurance programs that were in place over the last five years

• Five-year detailed loss history for each insurance policy. If there are no claims for a particular policy, it should be indicated

• Summary of any uninsured claims (e.g., environmental)

• Summary of unusually high claims

• Description of any current or legacy captive insurance programs

• A list of all owned/leased properties including occupancy type, address and copies of lease documents

• Details of all letters of credit, surety bonds, escrow accounts, parental guarantees, etc.

• Lawsuits against or pending

• Copies of any actuarial reports

• Payroll and number of employees by location and class

• Register of Certificates of Insurance

“The data room will have a certain amount of information but not until the different func-tions enter the room and review the data will they know what’s missing,” said Santiago. “For example, it could require human resources going into the data room and noticing that em-ployment contracts have not been uploaded for the organization to realize something is wrong. In our organization, human resources would flag this in their due diligence review.”

As the data room becomes populated, you can begin to pull information needed to develop a risk management report that highlights unanswered questions and identifies potential exposures.

“Outlining risks is where the risk manager can really bring their worth to the program,” said Snow. “Breaking down what you see as risks and what you see as opportunities will be invalu-able to the organization. And, most of the time, there will be cost-savings opportunities that the risk manager can bring to the transaction by combining insurance programs. Your ability to identify these cost-saving opportunities will be greatly appreciated by leadership.” “This is also an opportunity to demonstrate the value of your enterprise risk process or an opportunity to tease your leadership into adopting one,” Pemberton added. “Engagement in an M&A due diligence effort gives the risk professional an opportunity to highlight the value cross-functional partnerships add to the

risk management process. Most importantly, it gives risk professionals the ability to encourage risk taking instead of perpetuating a risk adverse stereotype that is often associated with the risk management profession.”

In an acquisition involving a seller’s subsidiary, contracts—and insurance policies in particu-lar—may be written in the name of the parent entity that your organization is acquiring. Those assets are acquired, along with the entity. This becomes particularly important with insurance contracts if the underlying policies are written through a seller’s captive. Such identified poli-cies should be confirmed as transferrable assets in the transaction documents or underlying agreements.

IdentifyingRed FlagsWith a thorough review of the information add-ed to the online data room, risk management will be better prepared to help the organization identify red flags, including the following:

Loss Run ReportsWhile the risk profile of organizations evolve, a look back at losses the target company has expe-rienced historically can provide great insight for a risk leader. Loss runs are reports that provide a history of claims filed against the company’s insurance companies and can be easily obtained by sending a letter to the agent or insurance company. However, an insurance company loss run will not reveal all the warts. There may be uninsured losses (including those falling within a large deductible/self-insured retention) the tar-get company has experienced that will not show up on a loss run. Probing questions in a due diligence initiative may reveal these unknown losses.

That said, with the information gleaned from a loss run report, risk management would be able to pinpoint business areas that might present greater exposures or that might require a further review of operations. From there, the processes that operation managers have implemented to carry out certain duties or even existing safety protocols can be enhanced to prevent reoccur-rences.

“Loss run reports are a great tool to look deep into an organization’s operations and determine where additional risk management might be needed,” said Snow. “Knowledge about the

be prepared to provide them with a list of infor-mation required from the target organization. “In some cases, risk professionals are not part of the acquisition team but there are subtle ways to change that,” said Pemberton. “Asking the right questions to that team might get you the invite. For example, insurance questions might cause team members to reconsider their decision to exclude the risk professional from the process.”

Examples of questions that could prompt an invitation to the M&A discussion table include:

• Does the target company insure through a captive?

• Do they have a good loss history?

• Have they had coverage denied for any reason?

• Do they have directors and officers insurance?

• Have there been any claims filed against that policy?




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organization’s claims history will allow risk professionals to make the appropriate changes faster.”

Workers’ compensation claims, in particular, pose a significant challenge during the acquisi-tion process. “I have been a part of a business transaction where the organization acquired a company that had hundreds of outstanding workers’ compen-sation claims,” said Santiago. “Upon completion of the deal, those claims became our responsi-bility and we worked on them until they were closed. We had to determine the nature and severity of each claim and the best approach for handling those long-tail exposures.”

At times—and depending on the size of the exposure—risk management’s analysis of claims development can be leveraged by the legal team to negotiate a reduction in price or a run-off arrange-ment that may be incorporated into the deal.

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Insight about the operations of the acquired company can also be drawn from letters of credit (LOC)–or notes from a bank guarantee-ing that certain liabilities are “collateralized” and any required payments will be made on time. Also, part of determining how much money the company owes can be ascertained by identifying any outstanding LOCs. “The need for letters of credit is especially important when reviewing an acquired company’s self-insured insurance program or programs,” said Adams. “Too many outstanding letters of credit reduce the new organization’s borrowing ability, and buying out the letters or replacing them with new ones un-der the acquiring company’s name is generally required by the financial institutions mandating their posting.”

When reviewing letters of credit, risk profes-sionals should pay attention to:

• The number and the amount of the out-standing LOCs

• Whether or not they have been released over time

• Whether or not the LOCs are transferable

• The length of the settlement period

The acquisition of the target company’s LOC is not a “one and done” deal and the risk leader should be sure they communicate that, in future program renewals, the overall LOC require-ment will increase for the combined company as a result of the increased exposures and will be reflected in the financial statement.

Legal Action

Unfortunately, in today’s litigious society most risk professionals have experience dealing with lawsuits against the organization.

Much like you would manage suits against your own organization, your due diligence process should uncover major lawsuits, lawsuits filed for repeat infractions and claims that could potentially lead to litigation against the acquired organization.

“Repeat offenses against the acquired company should sound the alarm that an operation is not functioning properly or does not adhere to regulation and that changes need to be made,” said Santiago.

Insurance Reporting Periods

There are often events that occurred prior to the date of acquisition that can give rise to a claim post acquisition. Insurance policies written on an “occurrence basis” can live on for the target company after the close of an M&A transaction if the policies are a transferable asset.

However, a “claims made” policy can present coverage gaps in an M&A environment. Claims made policies provide coverage for events oc-curring and reported within the policy term.

The new owner cannot take these policies over despite the potential for a claim to be uncovered after the transaction is completed.

It is common for a purchase and sale agreement to address liability transfer, and, in some cases, the deal is contingent on it. Some claims made policies may include extended reporting provi-sions. For those that do not, risk professionals should assess the opportunity to purchase “tail” coverage or extended reporting periods.

Good examples of long-tail events are envi-ronmental issues induced by oil and gas, but a much more mundane example is the local dry cleaner. Not long ago, virtually all dry-cleaning facilities used toxic cleaning agents that, at the time, were not thought to be dangerous. Unfor-tunately, prolonged use resulted in the contami-nation of the underlying soil and groundwater. Once the contamination was discovered, claims ensued.

For environmental issues, it would be impor-tant to know whether the seller purchased a pollution liability policy, what contaminants are covered and whether coverage will continue upon the acquisition’s completion.

During an acquisition, risk professionals must examine the insurance policy for these extended coverages and adjust the new entity’s insur-ance policy accordingly. Also, discovering an insurance policy that does not align with the acquired company’s apparent business model, should raise red flags and will require a deeper investigation by the risk professional.

“There are always going to be liabilities you must take on during an acquisition,” said Adams. “Risk professionals are charged with not just knowing whether the insurance they have adequately covers exposures, or whether they can be added to policies that already ex-ist, but also identifying and communicating insurance consolidation opportunities. When this information is shared with the appropriate channels, cost-saving opportunities are more easily achieved.”

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Certain policies, like D&O, fiduciary and some of the cyber coverages, can extend coverage for claims reporting post acquisition by extending the reporting period. Frequently, the company that is being sold will include in the transaction deal an agreement that D&O coverage will be extended. This is done to not only cover any-thing that occurs up to the acquisition but also to cover claims that could come later. It is com-mon that a D&O tail coverage extends three to six years following the transaction date.

“There is usually a section in the agreement that requires the organization to purchase D&O liability insurance for an extended reporting period,” said Santiago. “While coordinating the D&O tail before the deal closes is not necessary, you do want to have your ‘ducks in a row’ so that when the time comes, you and your broker are able to avoid a lapse in coverage.”

Also, knowing that this requirement is almost always included in the acquisition agreement helps risk professionals more accurately calculate the cost so that they can inform either the M&A team or senior leadership of the expected expense.

“When compiling my risk management assess-ment regarding the acquisition, I look at each line of business to see what the coverage actually is, what the premiums are, what I think I could save the company and areas where I think the organization would need to invest in additional coverage,” said Snow. “This analysis gives the M&A team a good perspective on costs and savings opportunities specifically related to insurance premiums.”

Legal and Compliance IssuesWhile the legal department typically takes the lead, risk professionals can provide insight to the legal team on potential problem areas, such as key risks noted in annual reports, out-of-the-ordinary contract indemnifications and liability limitations.

“It is very important to have an alignment dis-cussion with your general counsel to understand the potential new risks that accompany the new entity, if any, and how the acquisition might impact the overall combined company,” said Pemberton. “The conversations will provide the risk professional with a better understand-ing of ‘known’ risks and, potentially, a roadmap for integrating the acquired company into your existing enterprise risk management or strategic risk management program.”

Similarly, if the target entity is involved in activities that fall under specific regulatory re-quirements, a joint review of corporate policies, compliance with regulatory requirements and customer complaints may be revealing.

“Most large organizations have governance programs that are managed at the corporate

level,” said Pemberton. “The risk leader can play an integral role in bringing those corporate governance partners (compliance, informa-tion security and internal audit) together when evaluating the risk an acquired company might present. Advanced alignment with these func-tional areas is important for the ERM leader so that messaging in the ERM report is consistent with the functional reports that are provided separately to executives and board directors.”

OperationsAs mentioned earlier, risk professionals can demonstrate added value by extending the scope of their risk management reports to the M&A team beyond traditional areas. For example, recommendations might be made on potential operational dependencies or cost-saving and productivity changes in operations post-acquisition that would add value going forward. In one instance, a recommendation from risk management resulted in conversion from sol-vents to non-solvent solutions post-acquisition, addressing human safety, property protection and environmental concerns, while ultimately increasing production cycles and outputs.

In advance of preparing individual written reports and recommendations, a number of organizations have instituted end-of-day meet-ing reviews for each of the acquisition team members to report verbally on key findings.

“Conversations to review information and provide status updates should be in-person, if possible,” said Pemberton. “These discussions add color and detail to the written reports risk professionals are required to develop for leader-ship.”

Cross-functional conversations may also reveal inconsistencies and interdependencies that were not apparent in the individual reviews.

For example, the legal department may have discovered a number of key customer or sup-plier contracts that expire within the acquisi-

tion window. Operations may have identified processes that only a handful of employees manage and are dependent on suppliers with short-term contracts. Human resources may uncover employment contracts or pension ob-ligations that were not included when making the original bid.

These findings, in and of themselves, may not appear to be material for the success of the acquisition. However, when taken as a whole, a different picture may emerge. Risk management can facilitate discussions about the findings within the organization’s risk appetite and toler-ance levels, related to the transaction, as well as the implications and criticality of the findings for the strategy. Adjustments to the transaction bid and potential post-acquisition solutions can be implemented in an execution strategy earlier.

Future RiskUsing an existing enterprise risk management program can be extremely beneficial when assessing the probability of future risk to the greater entity moving forward.

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With the acquiring company’s enterprise risk portfolio in hand, the risk leader should comb the data room for insight around how the target company influences or impacts the overall risk profile. There may be indications that a key risk will increase in nature with the acquisition, but there may also be benefits and natural offsets to a risk portfolio, including diversification of risk. The acquisition team at the senior most level may have already captured some of this, but your insights may add a new perspective that has yet to be considered.

All AboardOne of the trickiest parts for an organization undergoing the process of acquisition or a merger is introducing the new entity and its employees to the processes they will use moving forward. Additionally, new professional goals, operational expectations and strategies set for the now-combined organization must be com-municated and understood by all.

Individually, each operation will play a role in onboarding and educating new employees. Risk management, though, has a responsibility to ensure that every new employee is aware of the organization’s risk management protocols, as well as the organization’s position on risk taking.

“When bringing a new company and new employees onboard, you want to kick off that relationship on a positive note,” said Santiago. “I always reach out and welcome them to the organization before getting into the details of what the risk management function is all about. Once that relationship is established, we can start the integration by providing the tools, resources and contact details to help them get up-to-speed with how we operate and think.” Risk professionals need to be sensitive to the time demands on the newly acquired entity’s personnel, given the multitude of meetings and activities that will be required of them. An onboarding risk management packet is helpful

in addressing these time limitations. Issues to be reviewed with the management of the acquired company, and jointly communicated to the rest of the organization, should be prioritized.

“Your company may appoint an integration leader for purposes of managing the extensive demands and numerous ‘asks’ of the acquired entity’s personnel,” said Pemberton. “A good practice is to use the appropriate process to opti-mize your interaction with the acquired entity.”

Documents that may be included in a risk man-agement onboarding packet might include:

• Executive summary of the mission, scope and responsibilities of the risk management program

• Organizational chart and contact informa-tion for the risk management function, including risk managers by assigned territory

• Emergency protocols and contact information

• A risk management integration plan for the acquired entity, with a proposed timeline for implementation

• Risk management policies and procedures

• Risk management program overview and resources (e.g., training, risk assessments and analyses, safety and health, business continuity, emergency management, insurance schedule, claims reporting)

“After Humana acquires a company, risk management sends them an overview of our company’s risk management program, a list of emergency contacts and we educate them about employee communication processes that our company already has in place,” said Snow. “In the cases where we’re acquiring a new physical location, risk management conducts onsite visits to introduce our new employees to our risk management philosophy.”

With an understanding about the risk manage-ment communication process, new entities will be prepared to pursue opportunities that support the overall objectives of the organiza-tion and report incidents or claims in a timely manner.

Onsite visits can uncover new exposures that were undetected during the deal process, includ-ing employee practices that could cause spikes in workers’ compensation claims, faulty infra-structure, safety issues and environmental or community concerns that are important for the organization to assess and, if required, develop a risk management strategy.

The existing risk management strategy for the acquired company might also be very different from the acquiring company, especially if the recently purchased company is much smaller in size and financial standing.

“Often smaller companies are very risk averse because they have little room for financial loss,”

said Santiago. “They buy a lot of insurance and take very low deductibles because any kind of accident or loss could shut their business down. When they merge with a larger company, the conversation shifts from focusing on financial backstops like insurance to focusing on manag-ing the actual risk.”

“Discrepancies about risk appetite, while sensi-tive, are an opportunity to clarify corporate culture and help to align the approach to risk taking between the acquired and the acquiring companies,” said Pemberton.

Corporate culture will certainly play a role in the organization’s risk decision-making post acquisition. What is the culture of your organi-zation? What is the culture of the organization being acquired? Do they merge or meld? Or, does the stronger organization’s culture prevail? Ultimately, senior leadership will be responsible for setting those guidelines.

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But, what happens when the executive leader-ship of the acquired company are terminated? “This void of senior leadership and the learning curve new leadership requires to get an organi-zation up-to-speed will have a drastic impact on risk appetite and tolerance,” said Adams. “By interjecting themselves into the initial steps of the process, risk professionals can once again showcase their value and lead development of the risk appetite and risk tolerance statements, thus ensuring these statements reflect the direc-tion of the new organization.”

Becoming An Integral ContributorWho are we acquiring? And, who do we want to become? These two seemingly simple questions can open the flood gates to a world of uncer-tainty.

There are challenges within the risk manage-ment area–like broker relationships, review of insurance programs and introducing new employees to risk management protocols–but the uncertainties that often accompany a merger or acquisition have a much wider reach.

Technology integration, shifts in supply chain, new physical assets, staffing redundancies or even the question marks surrounding new mar-kets and cultures are just a few of the resulting factors practitioners will need to be aware of. The way organizations approach each of these factors will impact its ability to emerge from the business transaction a stronger, more viable entity.

With so many factors to sort out during a merger or acquisition, risk professionals must develop a game plan. The plan must address specific and actionable risk management priori-ties but, at the same time, be adaptable to fit each unique transaction.

During a merger or acquisition risk profes-sionals’ involvement, in many cases, provides value by helping the organization identify and leverage hidden savings within the newly com-bined insurance programs. But, the potential value practitioners can add extends far beyond financial savings.

Risk professionals are in a position within their organizations to be a conduit of informa-tion. Their holistic perspective allows them to communicate processes and protocols of the existing organization while also relaying critical information or red flags that senior leadership must be aware of before, during and after a deal is completed.

Additionally, with a comprehensive under-standing of both operations and strategy, risk professionals are primed to influence and imple-ment change that ensures a successful business transaction.

Demonstrating the ability to provide insight and value for both the transaction and its alignment with strategy will help risk profes-sionals reserve a “seat at the table” and become indispensable contributors to the organization’s merger and acquisition process.

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