The culture at technology startups like Uber, Airbnb and PayPal is all about risk-taking. They start by offering a unique, untested or reimagined product or service or by disrupting an industry’s established production, distribution or sales methods.
To succeed long-term, they must be smart enough to know what risks they are likely to encounter and which ones to take, which ones to mitigate and which ones to avoid. That’s, of course, where risk managers come in— helping firms, whether in technology or other fields, understand their risks.
“It’s interesting because risk is part of the language in technology firms. It’s positive. You want to take more risks but you want to take the right risks,” Laura Langone told Insurance Journal in a recent interview upon assuming the presidency of the global association for risk managers, the Risk and Insurance Management Society (RIMS).
“I think as risk managers you have an opportunity to have a seat at the table for that conversation, which is always exciting to me.”
Langone knows her way around technology start-ups. She is currently head of Insurance Operations at the home-sharing and short-term rental giant Airbnb. Prior to Airbnb, Langone was the head of Insurance and Risk Management at PayPal and Juniper Networks. She has also held positions with Genentech, Marsh, Oracle, American International Group and the insurance defense law firm, Gordon & Rees, throughout her more than 20-year career in insurance and risk management.
According to the veteran, the mindset in technology is to remain nimble and move quickly.
“And with that you’ve got to be able to adapt quickly to understand those risks and be able to help the business and strategy along to mitigate the types of risks that you’re assuming,” she said.
She believes risk management should be an integral part of the strategy for these risk-taking organizations.
“It definitely is at Airbnb. It is part of a strategy. Insurance is actually strategic, which is great, so these are important. Cyber issues are critical in terms of reputation. So understanding our data and compliance to data requirements is critical. So definitely I think when you look at tech companies, I think risk is definitely at the forefront,” she added.
Understanding the risks around technology is imperative for more than technology-based startups like Airbnb. Technology risk management needs to be part of the strategy of nearly every company because nearly every company depends on technology, benefits from its advantages and is exposed to its risks, from reputational to cyber to regulatory to privacy and more.
“I think you might in a tech company that’s coming out, you might be a little bit more innovative in what your delivery is. You might be straddling different industry groups to deliver something different and unique. But technology is everywhere and in every industry. It’s one of our top risks for CFOs, top risks for risk managers,” the RIMS president said.
Langone said risk managers must not only understand the technology risks but also be able to communicate with other professionals in their organizations about how to offset, transfer or manage those risks.
“[T]echnology is a positive thing. It really allows companies to become more efficient, improve processes. It allows you to gain more insight, better data, really understand your customer and be able to offer the goods and services that they want in a timely manner. But then your [risk manager’s] job is to help them understand some of those exposures like cyber fraud, misapplication, misappropriation — things like that.”