As part of a Fortune 300 company that opens a new store every 17 hours, Family Dollar’s Divisional Vice President of Risk Management David Smith doesn’t show up for work and wait for the phone to ring. See how his background, approach to risk management, and emphasis on analytics helps him handle 55,000 employees and 20,000 incidents every year.
Q. What was your early career like?
A. I started like a lot of people, I think. I began as a workers’ comp claims trainee with Kemper Insurance in New Jersey about 30 years ago. As my career progressed with several other companies, I worked my way through the ranks, building up multi-line experience and management skills. My first risk management position was in 1991 with Guardsmark, a private security company. In 2003, I took the lead risk management spot at Family Dollar, and that’s where I’ve been ever since.
Q. How does a diverse background help you in your job?
A. I’ve done a smattering of everything: workers’ comp, general liability, auto, med mal, even a stint on the health insurance side handling long- and short-term disability. The experience has been terrific. I think it gives you a broader outlook, particularly as companies look more and more at driving enterprise risk management. Having that diverse experience makes me more sensitive to the opportunities in other business units and how the risk management/insurance/claims/benefits piece really infiltrates the entire culture of an organization.
Q. How important is it to be inquisitive?
A. I think it’s the essence of survival. I think it’s very easy for anyone—not just risk management or claims—to get comfortable and into a routine, doing the same thing over and over again. If you are constantly looking to improve a product or the result, though, you have to have an inquisitive nature to say things like “What if we try this?” It’s being inquisitive, creative, adaptive, and not being afraid of change. Just because it’s working well today, doesn’t mean it’ll work well five years from now.
Q. What are some emerging risks for Family Dollar?
A. As a retailer, we source the majority of our products from overseas. To become more efficient as an organization, we now have set up offices in China where we have individuals employed by Family Dollar, rather than just working through brokers or third parties. This helps control some of our costs when we do it ourselves, and it helps protect our brand.
We also want to make sure we have proper risk management procedures in place, which includes purchasing insurance coverage for things like product liability issues. In the global sourcing area, however, insurers aren’t always interested in offering coverage for higher-risk products, such as step stools and nutraceuticals. To offset that, we are looking at expanding the role of our five-year-old captive insurance company to include a products liability coverage piece.
Q. Can you tell me about your analytics approach?
A. It’s been an evolutionary process. We have a manager of risk analytics here who is just very intuitive; it’s not just someone crunching numbers, it’s someone asking, “What if?” scenarios. It’s asking questions based on the data, not just compiling numbers.
Q. What are your top three exposures?
A. Slip and falls are our number one cause of accidents in our business because it happens both with customers and team members. The second is sprains from lifting. Trucks come in and deliver products, and it might be 900-2,000 or more boxes on a weekly basis, which is a lot of unloading and placing on shelves. The other priority concern is robbery. We have around 7,700 stores nationwide, and the nature of retail is such that we want to be welcoming to our customers so they will come in and shop. In spite of best practices to protect our stores, sometimes it’s the bud guys who come in. We have a crisis response program in place to help manage that risk.
Q. Is every risk an opportunity?
A. The challenge is how to assess the risk and treat it as a positive opportunity and not just a bad thing that can happen. For example, when Superstorm Sandy was approaching, we risk-mapped all of our stores in the target zone, and there were 771 in the storm’s path. That will scare a risk manager right to the point that they may not consider the opportunities. However, using proper risk management strategies, we also can work with our merchandisers to determine where to send more batteries, water, and other products that support our customers in need. There is always an opportunity.