In this episode of Bracewell Covered, host Vince Morgan talks risk management with David Gresko, owner of Strategic Risk Management Services LLC.
They’re doing what’s at the forefront of risk management today, which is risk management on demand. Tell us how your career developed and how you got to where you are now.
I am a graduate mechanical engineer. When I finished college, I worked for an oil and gas company on their project group. I managed the design and construction of offshore platforms. This job was based in Dallas. While in Dallas, I researched business schools and eventually ended up at SMU and got my MBA. Around that time I moved to the chemical department of the ARCO Chemical company. I was still in projects, but after a few years I was moved to the finance organization. Then a few years later back into projects but then ARCO was bought by Lyondell Chemical so I got back into finance at Lyondell.
In 2004 I switched to risk management and have been there ever since. I was risk and insurance manager at Lyondell and then at Lyondell-Bassell. I then moved to Dynegy and was Dynegy’s Director of Risk Management. Eventually I ended up at Noble Energy. When Chevron bought Noble, we agreed to part ways and I started my risk management consulting firm.
Tell us about your risk management consulting firm.
One of the things that struck me about working for Noble is that we dealt with a lot of companies, big and small. What I noticed was that the smaller companies, especially many small midstream companies, didn’t have a risk and insurance department or even a point of contact. It was usually assigned to the treasurer, the chief accounting officer, someone in accounting, sometimes even someone in the legal department, but they had no background in risk and insurance. This convinced me that there are small businesses out there that need risk management expertise but don’t need a full-time risk manager. So that’s how I got into the consulting gig.
Do you have a regular client base that you do a set amount of work for, or is it more on demand?
It’s more on request. When I get hired, they usually come in and say, “Can you help us with that?” I’ll start working on it with them. Then they might come back and say, “Hey, when you’re done with that, can we have a look at that too?” I just keep going and when all the work is done, I just step aside. That’s the purpose of an on-demand risk manager.
We’re hearing things about people wanting to start prisoner and risk tie groups. Do you see a return to alternative risk management approaches?
You’re seeing an increase in companies not considering setting up captives because, among other things, captives can fill gaps in your program. A captive has access to the reinsurance markets that you may not be able to access if you don’t have a captive. When I was with Noble, we had a prisoner in Bermuda and a prisoner in Texas. We thought about what things we could take to the prisoners and run away from there to save money. Again, you want to exercise the captive as much as possible to get the most financial benefit for your business. I actually did a captive drill for one of my clients. We’ve concluded that it saves money from a financial standpoint, but it doesn’t save enough money at this point to justify all the admin stuff you have to go through to run the prisoner.
As you look back on how you got into this field and what you did then and what you’re doing now in your new role, do you have any guidance for younger people in that direction that you might want to pass on to them? Next Generation?
You should always keep your options open. Many companies tend to focus on the younger workforce when filling risk management positions because they want to hire someone who will stay there for 20 years. In counseling you want to hire the person with all the experience. The worst thing a company can do is hire a consultant who says, “I have no idea what you should do right now.” They didn’t hire you to tell them, “I don’t know.” They did have you hired to lay a trail or a few trails to consider and say, “Here are your options.”