Captives As A Rainy-Day Fund For Climate Losses with Deyna Feng

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Why Captives Suit Climate-Driven Volatility

Deyna argues captives' flexibility supports evolving, long‑term climate risks and multilayered financing strategies.

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Episode notes

Welcome to RIMScast. Your host is Justin Smulison, Business Content Manager at RIMS, the Risk and Insurance Management Society.

In this episode, Justin interviews Deyna Feng, Director of Captive Programs at Cummins, about her role at the company. They discuss the reality of climate change risks and how Cummins uses captives to address them in the short- and long-term in the U.S. and 36 countries globally. They talk about the various facets of the company, from property to supply chain, to business continuity, to human resources, at risk from climate events. They discuss the variety of regulatory sustainability reporting requirements around the globe.

Listen for steps to take to use captives for your climate risk planning and strategy.

Key Takeaways:

[:01] About RIMS and RIMScast.

[:17] About this episode of RIMScast. Our topic today is the interconnection between captives and climate risk. To help me delve deeper into this connection, I've asked Deyna Feng of Cummins to rejoin us. It will be great to catch up with her!

[:49] You're going to walk away from this episode with a lot of great ideas for your captive programs. But first…

[:55] RIMS-CRMP and Some Prep Courses. The next virtual prep course will be held on March 110th and 11th and again on April 21st and 22nd. Links to these courses can be found through the Certification page of RIMS.org and through this episode's show notes.

[1:12] RIMS Virtual Workshops are coming up. On January 21st and 22nd, Chris Hansen returns to deliver the course, "Managing Worker Compensation, Employer's Liability and Employment Practices in the US".

[1:26] On February 4th and 5th, Ken Baker will return to deliver the course, "Applying and Integrating ERM".

[1:36] The full schedule of virtual workshops can be found on the RIMS.org/education and RIMS.org/education/online-learning pages. A link is also in this episode's notes.

[1:47] RIMS members always enjoy deep discounts on the virtual workshops.

[1:57] The RIMS-CRO Certificate Program in Advanced Enterprise Risk Management is hosted by the famous James Lam. This is a live virtual program that helps elevate your expertise and career in ERM.

[2:10] You can enroll now for the next cohort, which will be held over 12 weeks from April 14th through June 23rd. Links to registration and enrollment are in this episode's show notes.

[2:24] On with the show! Deyna Feng is rejoining us for the first time since 2021. She is the Director of Captive Programs at Cummins.

[2:38] Cummins designs, manufactures, distributes, and services a broad range of power solutions, from traditional diesel and natural gas engines to advanced electric, hybrid, and hydrogen fuel cell technologies.

[2:50] Deyna is here to discuss how climate change has had a huge influence on how she manages captives for Cummins. We're also going to speak a little more broadly about the ways you might think about climate risk as you launch or alter your captive program. Let's get to it…

[3:06] Interview! Deyna Feng, welcome back to RIMScast!

[3:21] Deyna Feng has been working for Cummins for the past 15 years. She was always with the risk insurance team and, since 2015, she's managed the captive operations, the insurance programming inside it, and the whole insurance company.

[3:52] Deyna started with Cummins as Regional Risk Manager for Asia Pacific. Then she joined the company to manage its captive. Deyna has been really passionate about this career path because captive is such a wonderful risk management and risk insurance tool.

[4:08] Deyna says Cummins has been using its captive constantly and actively managing different types of risk and profiles.

[4:34] A captive is an insurance company. Cummins's captive is a pure captive, or a single-parent captive, so it purely insures the parent company's risks and business.

[4:44] The benefit of a captive insurance company is that, instead of buying insurance from the commercial market, you can really tailor your insurance program within a captive.

[4:55] They also provide financial benefits like tax benefits and some other things you can manage through the captive.

[5:03] For the past few years, it's been hard on the insurance market on the property and the liability side. Cummins uses its captive, proactively, managing the whole program in a really unique way. Everything is tailor-made to your own program, your own risk.

[5:21] If you are a good risk management account, you will receive benefits by doing such a self-insurance arrangement.

[5:38] Justin recalls from reporting that in 2025, there are hundreds more captives among medium and small businesses than there were 20 years ago. Feng agrees. It's a booming market for the whole captive industry. It's growing for all captive domiciles around the world.

[6:01] Deyna and Justin believe that captives are a big part of the future of risk management.

[6:09] Justin reconnected with Deyna because of her unique philosophy that climate change can greatly impact a captive and, therefore, a company.

[6:38] Deyna thinks everyone is feeling the effects of climate change in the current environment. They see more things happening, more frequently, with more severity; events like wildfires, floods, and hurricanes.

[6:53] Deyna says, Before, it's rarely showing anywhere, or a 500-year event, then suddenly, something happens. We experience such dramatic events in different facilities globally. So, we are thinking such events can escalate super quickly and become catastrophic.

[7:17] Deyna asks how we can manage such events, especially when you are dealing with a large insurance program, and it involves a big business interruption to your global company.

[7:29] Deyna thinks there is a growing concern for global companies like Cummins for a few important reasons. First, frequency and severity are rising. Also, it's less predictable in certain areas, and there will be increasing exposure for large, global facilities.

[8:08] Deyna speaks of supply chains. For a large manufacturing company with a global footprint, it's important to manage supply chain risk in a better way. The climate risk is changing globally, so it will impact Cummins's supply chain risk to a large extent.

[8:30] Deyna says it also increased the complexity of managing claims, like a hurricane claim. Hurricane Helena is our recent example. It happened over a year ago, but it impacted multiple locations in that area and also impacted Cummins's warehouses and logistics centers.

[8:50] It impacted the whole business revenue and the whole area. So, it becomes a much more complex claim to manage and handle. Even now, Cummins is still dealing with the whole impact of that Hurricane Helena flood claim.

[9:11] Justin asks about polycrisis and how one event triggers others that the captive manager has to oversee and try to resolve.

[9:31] Deyna says, Cummins has suppliers in that area. If those suppliers don't have good insurance coverage, then Cummins helps them out, so they can help Cummins's local business. That impacts a lot. Cummins is still dealing with a business interruption claim from that event.

[10:06] Deyna says one important area for climate risk management is dealing with government regulatory requirement reporting changes, not just in the U.S, but worldwide, with international reporting.

[10:25] Certain countries are more advanced in regulation development. So, for those countries, Cummins has to make sure to do a proper evaluation and prepare for those government reporting requirements.

[10:44] That involves a whole set of reviews from different lenses. To manage the risk more effectively and efficiently, Cummins needs to consider a few options. One is about data.

[10:59] The whole risk management and risk insurance program is data-driven, so Cummins makes sure to gather important climate risk-related data and then models it globally in CAD. This way, Cummins can anticipate future risk and business impact.

[11:24] The second is the partners Cummins works with. Those are insurance, reinsurance, and brokers. They offer different types of climate risk-related data analysis.

[11:38] From there, certain captives can use such data-driven arrangements and cat modelling to plan their parametric solution. That's a unique type of risk, tailor-made.

[12:00] Deyna says Cummins's global insurance program has broad coverage, already covering such climate risks. That's useful for specific risks in certain areas. You have the trend, you see the need, and then you use this to pay claims quickly without complex claim procedures.

[12:28] The other area Cummins has been doing is leveraging the data it receives and then utilizing the captive to do the strategic planning. That is how Cummins utilizes the captives to structure its global property liability program.

[12:46] And then Cummins uses the captive as a fronting mechanism, and then puts more layers within the captive to manage large claims more flexibly.

[12:58] Then the other part is using the captive to buy reinsurance to transfer certain catastrophic events or the higher risks to the reinsurance market. So it's a diversified captive strategy.

[13:15] Justin asks about business continuity planning. Deyna says that to manage climate risk, business continuity planning is important. Lots of companies use it to manage traditional risks, like a flood or a fire, but it is also important to deal with future climate risk resiliency planning.

[13:39] The supply chain risk is part of that, and then when you identify the high-risk area, like a heat wave, or cold stress, or water stress, how can you make sure your local businesses are well prepared to deal with those situations, especially in the long run?

[14:00] Quick Break! RISKWORLD 2026 will be held from May 3rd through the 6th in Philadelphia, Pennsylvania. RISKWORLD attracts more than 10,000 risk professionals from across the globe. It's time to Connect, Cultivate, and Collaborate with them. Booth sales are open now!

[14:22] General registration and speaker registration are also open right now! Marketplace and Hospitality badges will be available starting on March 3rd. Links are in this episode's show notes.

[14:37] Let's Return to Our Interview with Deyna Feng!

[14:45] Deyna says Cummins is based in Indiana. Deyna lives there.

[14:53] Deyna says, This year, the snow hit us super early. Before, it's after Christmas time, when we start seeing snow, and January is super cold, and this year, like, early December, we're already in cold weather.

[15:05] Justin says, Yeah, we're recording in mid-December right now, and we received somewhere between 6 and 12 inches of snow on Sunday, just a few days before recording this.

[15:17] Justin continues, And now, today, we're gonna be hitting the 50 degree mark. So everything is finally gonna melt away, but it's also gonna wreak havoc on our senses, and people are gonna get sick, right? That just happens. Yes, I'm just venting here about climate change.

[15:41] Globally, Deyna has regional risk managers, a renewal team, and a claims team, who work together as one big team of around 16 people in total.

[16:07] Dena describes her role as Director of Captive Programs. The insurance company is complex. They have to deal with all the government requirements and year-end matters, program renewal, and Cummins's captive, covering the international employee benefits side.

[16:20] Cummins's captive covers the medical and the non-medical program for over 36 countries.

[16:29] Justin interviewed the Risk Manager of the Year for 2025, Jennifer Pack, with Hilton. In addition to her role in risk management for Hilton, she was also the captive manager, and she said that sometimes that's a one-day-a-week job, and sometimes it's a four-day-a-week job.

[6:47] It really depends on various things, and climate change was one of the items that she mentioned. Justin says, It's something that our audience should be thinking about, because captive management is not going away.

[17:05] Justin says, It is something that you want to have in your arsenal as a risk professional, and it can enhance your career, like it's doing for Deyna.

[17:16] Justin says, We've seen how some policymakers in the U.S. try to debunk climate change, even though there's overwhelming evidence to suggest that it is a real thing, and it still ranks very highly on the World Economic Forum's list of top risks.

[17:31] Justin asks, Against that backdrop, how are you swaying the decision makers at Cummins these days? You just said you were going to speak to some of your internal stakeholders, so what do you need to do to convince them?

[17:45] Deyna says that the World Economic Forum emphasizes that climate change now represents massive physical and transition risks, with over $3.6 trillion in damage from disasters since 2000. So, it's a serious number.

[18:10] Deyna says, Our CEO takes climate change seriously. We are trying to be the environmental sustainability advocacy lead in the industry and market.

[18:23] Deyna says, Cummins has a strategy and commitment to the 2030 environment goals and 2050 targets. We are doing Destination Zero, which is helping not just our own facility, but also our customers and suppliers to navigate the energy transition and environmental goals.

[18:46] Cummins's CEO is Jennifer Rumsey. Deyna says she's an awesome, wonderful CEO.

[19:07] Justin says, It sounds like you have a line of communication to her.

[19:11] Deyna says, We do. This is an important topic. We do annual reporting, including all the aspects relating to this Destination Zero goal. It involves so many functions within Cummins to work with these goals and targets.

[10:38] The goals include decarbonization, material changes, community goals to address the site and community greenhouse gas emissions, and also, volatile organic components, water, and waste.

[19:56] There are so many things that can be leveraged and developed perfectly with this approach.

[20:06] A Final Break! The Spencer Educational Foundation's goal to help build a talent pipeline of risk management and insurance professionals is achieved, in part, by its collaboration with risk management and insurance educators across the U.S. and Canada.

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[21:25] Visit SpencerEd.org/scholarships. You'll find the different application buttons. See the link in this episode's show notes for more information.

[21:37] Let's Return to the Conclusion of Our Interview with Deyna Feng!

[22:00] Justin asks Deyna what makes captives uniquely suited to handle climate-driven volatility, compared to traditional insurance solutions.

[22:06] Deyna says, Climate risk is quite dynamic, systematic, and also regulatory-driven. It needs continuous investment to understand your climate risk and the government reporting requirements. It's not just one-time managing the risk.

[22:25] Deyna says, We look at now as the baseline, with the short-term, mid-term, and long-term, all the way to the end of the century, how the climate risk score is changing for our global facilities. Those are evolving risk scores, not just a one-time risk score.

[22:51] Cummins takes a systematic and holistic approach to evaluate the climate risk, so it's not like a daily market change.

[23:10] Deyna says, The other part is regulatory diversity, for the whole climate risk aspect, how you manage the risk, matching with different compliance requirements.

[23:22] In the U.S., the federal government sets the broad framework, like the Clean Air Act, the Inflation Reduction Act, and some national emission standards. But then, across the 50 states, over 35 states enforce renewable portfolio standards or clean energy standards.

[23:41] Different states have different goals, like greenhouse gas reduction targets, and then some other things. And some states are super aggressive on their targets, with much higher standards and quicker standards than the federal guidelines.

[24:05] Cummins has a designated team focusing on all the government requirements, the reporting, etc. We share data internally across the broader function teams.

[24:24] If we collect data on the climate risk score, we want to make sure everybody leverages the same set of data. We have the same tone and the same message passing on to the global leaders, regional leaders, and even site leaders.

[24:37] Justin asks about having systems in place.

[24:42] Deyna says, We are building a risk framework around this area. That includes the centralized data. We share the same set of data with the stakeholders. We do need internal stakeholder alignment.

[24:55] Deyna says, We have strategic alignment, talking about the same thing. Then we also need to work with site leaders at the site-level resiliency on their business continuity planning.

[25:10] Deyna's team provides global training because climate risk is still quite a new concept to many people managing the risk. Deyna wants to make sure they understand where we come from, how we manage the data, and the risk.

[25:21] Justin asks about Cummins's risk insurance and captive strategy.

[25:28] Cummins uses captives strategically. From this climate risk management, Deyna says, we also have different approaches, from a few lenses. First is the risk data.

[25:41] Deyna says, We select a good partner to help us review our global portfolio, and we gather the individual site climate risk score.

[25:51] Deyna says, Then we put them together so that we can generate the whole company profile, the regional risk map, down to the country level and site-specific level about where the risky areas are for the individual site from a climate risk perspective.

[26:06] Deyna says, Then, from the insurance program perspective, we also have a layered insurance program with our captive actively involved in leading the strategy and also, doing the transfer of the larger layers or risks to the reinsurance market.

[26:23] Deyna continues, So, we buy the multi-year aggregate stop-loss in the captive to cap our volatility. Then, there are some other ways about parametric insurance that other companies can consider.

[26:36] For Cummins, because we have broad coverage, we already consider such cat risks, including future rainfall, wind, and heat-related scenarios.

[26:48] In addition to these, supply chain risk is an important piece to manage. So, contingency BI is also an important area to be considered in your insurance program, and it also covers the climate risk profile.

[27:02] Deyna says, We have been using captive funding for the business resilience project. We do the business continuity planning stress test globally, and we also fund the climate risk project from the captive.

[27:34] Deyna says, The most important thing is how to manage your employees' well-being. That's not just physical health; we are talking more about mental health. And to be frank, in certain areas, people already experience the climate risk impact, like heat, in the summertime.

[27:52] Cummins has its International Employee Benefits Program in its captive, leveraging this program together with the climate risk management and working with HR, about how to better manage climate risk, with resiliency, in the future.

[28:09] Deyna continues, talking about mental health support during disaster, emergency relocation, and making people, employees, and their families feel they are safe, working in a safe environment, and also that they don't need to worry about climate risk impact on operations.

[28:20] Justin asks Deyna for words for young risk professionals coming up and organizations beginning to explore captives for climate risk financing. What are the misconceptions or blind spots that she sees?

[29:44] Deyna says a blind spot about climate change is thinking that climate risk is too long-term for a captive and that captives are for managing whatever is coming up suddenly. In reality, floods, wildfires, and hurricanes are happening now and more frequently than before.

[30:26] If we can model these types of risks for short-term, medium-term, and long-term retention strategies, that's important for captive or risk insurance for large companies to consider the future strategy.

[30:41] The other thing Deyna hears is that captives only handle traditional reinsurance programs. Cummins uses the captive to fund risk insurance strategies or projects. Gathering climate risk data, building up the model, and cat modelling.

[31:00] This also includes thinking about how to integrate this type of risk into risk financing and the insurance program. Cummins is managing it actively.

[31:12] The other thing Deyna hears is that data is optional. So, especially for captive, everything is data-driven.

[31:25] We have to do cat modelling, we have to make sure we buy the proper insurance program with proper premium payment, and also whether the retention level is appropriate for our site level, for captive, and for the overall program. So, data is the key, or data is the king.

[32:00] Deyna says this touches employee safety, employee benefits, supply chain risk, and environmental liability. Lots of areas touch climate risk, not just the property program.

[32:26] Deyna lists some suggestions. Build a holistic climate risk profile within the company, across all the global sites, that covers all the countries. Each company will change dramatically in climate risk. It must be data-driven.

[33:01] To gather the data, find a proper partner to work with a reputable climate-risk expert to help you check legislative changes, access the hazard or cat modelling, and provide good climate risk data matching with those regulatory changes and compliance requirements.

[33:24] Then support your thorough risk evaluation. That's the data part.

[33:28] Then, on top of the data, build a good insurance management program, and leverage your captive to build the captive strategy relating to retention, the limit, and the parametrics, insurance program design, like parametric triggers.

[33:45] In addition to the insurance program, you have the ERM, the Enterprise Risk Management, ESG reporting, and all the compliance relating to country requirements and state law requirements.

[33:58] In Europe, it's CSRD. In the U.S., it's an SEC filing. So, there are lots of different regulatory requirements relating to this area. You want to make sure your data can support your reporting and then can be sustainable, year over year, not just a one-year data point.

[34:15] Then, the other thing is the business continuity. Make sure that the good BCP management or integration, including climate risk, especially for all the high risks you are capturing, you should have really good operational resilience to face that.

[34:33] Justin mentions that CSRD stands for Corporate Sustainability Reporting Directive, which sets the standard for how EU companies need to report on their sustainability work. He had to plug that in because there are so many abbreviations and acronyms in risk management.

[34:53] Deyna's last point is to share the data internally with a cross-functional group, with internal stakeholders, including senior leadership reporting up to the CEO and COO level.

[35:05] Share the data with the middle management team, global team, global leadership team, global management team, and then down to the site level.

[35:15] All the parties need to work together to shape a holistic strategy around climate risk management. It's not just for risk insurance or captive only.

[35:25] Justion says, Excellent. And so these are great tips for everybody. If you're thinking about launching a captive against your climate risk data profile, I think this is the way to go.

[35:37] Justin says, Ms. Rumsey is your CEO, but before that, she was the Chief Operating Officer. So, you must have already had a good working relationship with her before she was promoted, right?

[36:02] Deyna says, Yes. This is an important area, because we have not only climate risk, but also the whole risk relating to this area, managed by an environmental sustainability team.

[36:16] They organize all the different functions, trying to achieve the goals, and then figure out all the different aspects of our operation and what we can do to meet our future goals.

[36:27] This is long-term-driven. It's not like a five-year project; you get it done, and the project is completed. It's long-term.

[36:35] Justin says, Ms. Rumsey had come on as COO in March of 2021. You and I first met, or at least recorded the RIMSCast episode, in May of 2021.

[36:46] So right around that time, you were probably having higher-level discussions with her, and now you already had her ear, so I think that just speaks to the value of relationship building along the way. Would you agree?

[36:58] Deyna says, We have the designated team internally managing this area, and we do connect through that lens, trying to gather the data a long, long time ago.

[37:10] Justin says, But it's the sort of thing where, first of all, it's nice to see that people are promoted from within. I think that's a really great thing that Cummins did.

[37:18] And second, the fact that you already had that line of communication, and it's not like you had to establish a new one with a new CEO. You already had that line of communication with somebody who was moving up into the role.

[37:30] So, I think that speaks to Cummins's credit. I think it speaks to your credit and to your advantage, because you don't have to start from scratch and build that line.

[37:40] Deyna acknowledges, Yes, it's super important.

[37:44] Well, Dana, it has been such a pleasure to see you again, to record with you again here on RIMSCast. It's been almost five years, and we hope to see you at RISKWORLD.

[38:00] Thank you once again for rejoining us, and hopefully, the next time I see you, it won't be five years in between.

[38:06] Deyna says, Definitely. I love RIMS events, and all the conferences, the webinars, and even your podcast, so it's super good.

[38:17] Justin says, Thank you so much. You're a wonderful guest.

[38:20] Special thanks again to Deyna Feng for joining us here on RIMScast. Links to other RIMSCast episodes about captive insurance management are in this episode's show notes.

[38:34] I've also got links to RIMS Risk Management Magazine articles about captives, as well as other RIMS resources, so check it out and go to the Risk Knowledge page of RIMS.org.

[38:46] Plug Time! You can sponsor a RIMScast episode for this, our weekly show, or a dedicated episode. Links to sponsored episodes are in the show notes.

[39:14] RIMScast has a global audience of risk and insurance professionals, legal professionals, students, business leaders, C-Suite executives, and more. Let's collaborate and help you reach them! Contact pd@rims.org for more information.

[39:32] Become a RIMS member and get access to the tools, thought leadership, and network you need to succeed. Visit RIMS.org/membership or email membershipdept@RIMS.org for more information.

[39:49] Risk Knowledge is the RIMS searchable content library that provides relevant information for today's risk professionals. Materials include RIMS executive reports, survey findings, contributed articles, industry research, benchmarking data, and more.

[40:06] For the best reporting on the profession of risk management, read Risk Management Magazine at RMMagazine.com. It is written and published by the best minds in risk management.

[40:21] Justin Smulison is the Business Content Manager at RIMS. Please remember to subscribe to RIMScast on your favorite podcasting app. You can email us at Content@RIMS.org.

[40:32] Practice good risk management, stay safe, and thank you again for your continuous support!

Links:

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