Kylie Minogue greets everyone entering Prudential's Laurence Pountney Hill office with a big, waxy smile from behind the reception desk. Two giant photographs of the pop princess's Madame Tussauds' dummy, close up enough to see tourists' fingernail marks in her cheeks, hang directly behind the receptionist.
Kylie's smile in a marble-bedecked life insurance office is as incongruous as the smile Mark Butterworth is wearing, even more evident now he has shaved off his trademark moustache, as he prepares to talk about the beleagured Institute of Risk Management (IRM).
Prudential's group insurance risk manager was elected chairman of the IRM at its annual general meeting (AGM) in February 2002, making him only the second man, after Terry Sparkes, to have been chairman of both the IRM and the Association of Insurance and Risk Managers (Airmic). This gives Butterworth a foot in both the educational and trade camps and should help him tackle an institute in turmoil.
The list of the IRM's troubles is long. It has admitted serious financial difficulties. Its long-time chief executive Maureen Gibbins departed acrimoniously in June 2001. Five examiners quit en masse in October 2001 over what they described in their resignation letter as the IRM's decreasing level of professionalism. Last year's Annual Report had to be shredded after it was found to contain defamatory remarks. Students were given automatic pass grades after exams went unmarked. There were several allegations that controversial or damaging documents were known to disappear from the IRM's basement offices. Some members claimed they were barred from entering the AGM, which had been postponed in December 2001 following "unforeseen administrative difficulties". Others suggested the IRM could not continue to exist in its present form, and must become part of Airmic or rise from its ashes in another guise.
In March 2002 the troubles came to a head. IRM fellow Clive Thursby called for an Extraordinary General Meeting (EGM). He had already declined to stand for election as a governor on the institute board, or court, at the AGM. A month later, he wrote a letter to a number of IRM fellows, explaining he had not let his election go ahead because he felt the board had not "behaved honourably in failing to disclose to members the true condition of the IRM".
Thursby asked the fellows if they would support a call for an EGM.
"Every effort must be made to restore it [the IRM] to vitality," he wrote.
"Given its recent record, this is not something that can be just left on trust to the court to achieve."
More clarity
If the EGM has the necessary 10% of fellows supporting it, which looks likely, it will go ahead later this month.
The need for a strong institute setting stringent educational standards in risk management is great. "Risk managers have never had it so bad," Butterworth says.
"The key word for the December renewal season was confusion. Now there's a little more clarity, but, in a way, that just means we know the size or shape of the challenge."
Butterworth says market conditions like these have resulted in the demand for a broader range of knowledge.
"More risks are uninsured and there are more self-insured retentions, which will drive up the use of captives and other risk financing methods," he says.
"The bottom line is insurance risk managers have to think about building an array of risk financing tools, as insurance declines into being one component part of the risk transfer array."
Butterworth says this has resulted in a greater need for training. "Insurance companies, brokers and employers of risk managers, both in the private and public sectors, are increasingly expecting their staff to be professionally qualified."
Despite this demand, membership of the institute has dropped from a one-time high of 1,700 to the officially quoted figure of 1,500, though others say it has gone as low as 700. How could the IRM have got itself into such a position and is the recently appointed Butterworth the man to save it?
The first 16 years of IRM existence were peaceful. It was formed in 1984 by a group of Airmic members who saw a need for an educational arm. Soon after, their consultant David Ovenden hired Maureen Gibbins to establish and co-ordinate the institute's education and administrative functions. Over the next 16 years, the IRM built up membership, established a range of courses, took over Airmic's old basement office and hired a staff of five. But the first sign that turbulence had been increasing beneath the outward calm was Gibbins' dramatic departure last June. As one member says: "It only really came to light on Maureen's departure that things had started to fall apart."
Accounts of the split, which took place soon after Gibbins returned from maternity leave, vary greatly. At the time, senior vice chairman Andrew Mills told Insurance Times: "Maureen went on maternity leave and there had been some issues before she left.
"While on leave, some of the staff made some comments to the governors. Some of this was idle gossip, but some needed further investigation. We decided to launch an investigation into the allegations, but didn't tell Maureen because we didn't want to put undue stress on her while she was pregnant."
Gibbins maintains the investigation was carried out two weeks after the birth of her child and centred on petty allegations such as the dinginess of the basement office and the type of seats chosen for administration staff. "I was told a report had been passed to the chairman and the issues would be raised at the board meeting the next day," she said at the time.
"How can they make a full investigation without notifying me, when I was running the office?"
Gibbins sued the institute for constructive dismissal and sexual discrimination and the situation festered for some months. Last year's annual report, funded by Zurich, had to be shredded before copies were released because, insiders say, it contained defamatory comments. However, the chairman at the time, Terry Simister, says the report had to be reprinted on the advice of the IRM's company secretary, who feared dates given for the AGM might contravene the Companies Act.
Discussed properly
Gibbins' hearing at a London employment tribunal was set for the end of January 2002. The case was eventually settled out of court, but not before it had caused recriminations among board members. Soon after the clash first emerged, vice chairman Kate Boothroyd wrote in an email to the board that she was "appalled" by the situation and implied Simister, whose wife Betty was one of the IRM administrative staff involved in the investigation, had kept information on the situation from the board.
Boothroyd wrote: "I find that this whole matter beggars belief and is going to get completely out of hand, unless the issues are discussed properly and not prohibited from the full courts' attention.
"We are at risk of having no IRM to govern unless this is dealt with openly, honestly and professionally."
Simister, meanwhile, says Boothroyd had missed the board's original discussion on the issue and was seeking clarification.
In late March 2002, Butterworth announced the appointment of Steve Fowler, a senior manager from Royal & SunAlliance (R&SA), as the IRM's new full-time executive director. Fowler is to spend 15 months with the IRM on secondment from R&SA, which Butterworth says is "an excellent vote of support for the IRM".
In the meantime, trouble had been simmering between the IRM and some of its examiners. The first spat to break out publicly concerned an August 2001 report in Insurance Times, in which a board member alleged an examiner had gone AWOL, leaving essays from her Occupational Health & Safety course unmarked. The board member assured Insurance Times readers that the examiner had been "disciplined".
The examiner hit back in a letter to Simister and the board, in which she said she had received the essays too late to be able to mark them and had informed the exam administrator as such, returning the essays by special delivery. She alleged she had received an "abusive late night phone call" from Simister over the issue, but had not been disciplined and "would strongly dispute that my actions would merit this in any event". Simister denies outright that he phoned the examiner.
All students of the course received automatic passes. This did not sit well with some students, prompting one to write to another examiner, Julie Kerr: "I find the way that this situation was handled completely unprofessional.
"I am seeking professional accreditation from the institute. Their basic failing to supply me with feedback and commentary on the course I am studying, practically without any help from them, makes me wonder what accreditation is really worth."
It was to be followed by a larger disagreement. Five examiners - Nick Andrews, Emma Cundiff, Julie Kerr, Stuart Martin and Craig Paterson - resigned in October 2001. In their resignation letter to Ovenden, they accused the IRM of releasing misleading and contradictory information, failing to provide minutes from meetings, failing to agree the timetable and course content for 2002 and failing to pay examiners.
Butterworth acknowledges that a revamp of the syllabus is needed. He says one of the challenges currently facing the IRM is "updating courses and recommended reading lists, introducing new courses and making the examinations more accessible".
"We've relaunched the website under a new address and are going to add member-only sites, student dissertations, risk information, hot links and general help for our members."
Greater transparency
A constant theme running through the complaints about the IRM is the veil of secrecy adopted by some members of the board. Members complained Butterworth would not answer allegations at February's AGM. Butterworth admits it could have looked like he was being secretive, but says he didn't know the answers then. As far back as June 2001, Thursby, having been approached by several members unhappy at the state of the institute, wrote to Simister, referring to the "remoteness of the court from the membership".
Simister won't be drawn on the issue. "We're not getting involved in the rights and wrongs of it," he says. "We could argue over this forever and get nowhere."
Members are desperate to know the truth. As one says: "It's important to know how the funds have been mismanaged so any suggestion of improper use can be ruled out as soon as possible.
"No one in their right mind would wish to renew their membership by throwing good money after bad; it's in both Terry Simister and Mark Butterworth's own interests to allow greater transparency."
Butterworth refuses to comment on the IRM's past difficulties, saying he and his fellow board members have agreed to draw a line under the period. He does say the IRM is going through a "process of revitalisation and modernisation of both its business and educational offerings". He rightly points out - "it's not cheap running what we offer".
"The rapid increase in costs of running the institute in the past couple of years, without commensurate increase in revenues from examinations, website advertising and the conference, has placed a huge strain on IRM's finances."
Butterworth and the board have come up with a strategy to overcome the monetary hiccup. In March 2002, Butterworth announced a £100,000 sponsorship programme for educational activities from R&SA, Zurich, Aon and Marsh, Airmic and the Association of Local Authority Risk Managers (Alarm). It has been estimated that the commercial organisations paid £20,000 each, with around £10,000 coming from each of the trade associations. Butterworth says this will allow him to put into place the revitalisation plans he announced recently.
"These organisations are all committed to the professional development of their people and to the growth of risk management learning more widely," he says.
"Airmic and Alarm have clear interests in the success of IRM's education offerings, with over 500 IRM members also being members of the two trade associations."
Butterworth says he also expects a number of companies to put a significant amount of their staff through IRM training this year.
The financial rescue plan includes boosting attendance at the IRM's October conference in Cambridge.
"Many risk managers often work in isolation - although Aon and Marsh, between them, have over 200 IRM members - and the conference will bring people together for topical focused learning," Butterworth says.
"I've created a rod for my own back, but I'm seeking to double the number of attendees from 150 last year to 300 this year."
He has also managed to attract Lord Justice Brookes, one of the Court of Appeal judges who oversaw four landmark stress cases, to deliver the IRM's annual lecture in June on the current trends in stress and psychiatric injury.
Butterworth is chipper about the difficulties of his new chairmanship. "I think it's worth it; I'm motivated by the examiners' feedback on the efforts the students make.
"I left school without any qualifications and I'm a believer in self development."
Of course, many are sceptical that the IRM can continue in its current guise, regardless of any amount of revitalisation. One member says: "I doubt that the IRM has a future in its present form.
"Losing so much of its assets hardly speaks volumes for the ability of the court of governors or its nominees [Simister and now Butterworth] to manage risks."
Other cynics attribute Butterworth's eagerness to accept the chairmanship to a desire to be able to say he was the hero of the piece, who did his best but could not avoid an inevitable merger with Airmic. However, a merger is not as simple as it might sound. Airmic is aimed solely at risk managers; its constitution does not allow service providers to become members.
The IRM allows insurance professionals other than risk managers to become members, meaning any merger would require a change to the Airmic constitution. However, the income stream that would result from taking over the IRM's educational money-spinners would offset the problem of constitutional change.
Separate organisation
An Airmic member says the association is divided on the issue. "Some do want to see it happen, some don't," he says.
"[But] they are in agreement that they'd like to see the academic side come in, because of the money it could generate."
Airmic chief executive David Gamble says a merger has never been discussed directly.
"You have to remember they're a separate organisation and service a wider audience, but we've talked to them over various issues," he says.
"If, at some point, they felt there was something they wanted to talk to us about, we'd be happy to talk to them, but there's certainly no set plan.
Even Butterworth, who is an eternal optimist as far as the IRM is concerned, is careful not to project too far into the future.
"Nobody would guarantee anything, but we believe we've got good support from our membership and we've built a good financial platform," he said.
Given the secrecy that surrounds the IRM, it could need the EGM to tell if this is true.
