Risk Decision-making in 2026 with Joseph A. Milan, Ph.D.

RIMScast

chevron_right

00:00

AI, analytics, and modern risk tools

Joseph encourages embracing AI for data cleaning and efficiency while warning about hallucinations and human checks.

Play episode from 24:58

chevron_right

Transcript

chevron_right

Transcript

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 Joseph A. Milan, Ph.D., about the core philosophy or mindset for risk managers, the definition of acceptable risk, and how acceptable risk changes, depending on the organization's culture, strategy, or industry. Joseph shares his view on common mistakes and how biases can lead to gut decisions that are the least effective solutions. Justin and Joseph discuss Joseph's upcoming two-day virtual seminar, "Facilitating Risk-Based Decision Making", on March 4th and 5th, and how participants should prepare for it. Finally, Joseph shares closing thoughts for those in one-person risk departments.

Listen for thoughts on how to keep the gut reaction out of decision-making.

Key Takeaways:

[:01] About RIMS and RIMScast.

[:17] About this episode of RIMScast. Our guest is Joseph Milan, Ph.D. You know him from the RIMS CRMP Insights Series.

[:40] As one of our virtual instructors, he's here to discuss his own risk philosophies ahead of the RIMS Virtual Workshop on March 4th and 5th. He'll be leading "Facilitating Risk-Based Decision Making". But first…

[:54] RIMS-CRMP and Some Exam Prep Courses. The next virtual prep course will be held on January 14th and 15th, 2026. These are virtual courses. 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] 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.

[1:38] RIMS members always enjoy deep discounts on the virtual workshops.

[1:48] 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.

[2:00] You can enroll now for the next cohort, which will be held over 12 weeks from January to March of 2026. Registration closes on January 5th. Or Spring ahead and register for the cohort that will be held from April to June, 2026. Registration closes on April 6th.

[2:20] Links to registration and enrollment are in this episode's show notes.

[2:25] On with the show! Today, we will discuss facilitating risk-based decision-making with our friend Joseph Milan, Ph.D. He is the Principal at J.A. Milan & Associates and is also an Adjunct Professor at the University of Colorado.

[2:43] He is a RIMS CRMP Commissioner. You get a lot of his insights from the RIMS CRMP Insights Series. A link is in this episode's show notes. In this dialog, we will get a preview of his upcoming workshop, "Facilitating Risk-Based Decision Making", on March 4th and 5th.

[3:02] But we're really going to get into Joe's risk philosophies, which are the sorts of things the RIMScast audience can use as they develop their careers and as they move into higher positions, ascend the corporate ladder, or become a department of one.

[3:20] Interview! I've known him for years, and I'm so glad to finally be saying…

[3:22] Joseph Milan, welcome to RIMScast!

[3:41] Justin notes that he and Joseph have recorded so many things through the years, but not RIMScast. Joseph says it's great to be back with Justin, and on this medium, and he looks forward to sharing more information with Justin and all the RIMS members.

[4:21] Joseph shares his RIMS history. It started in the olden times of 2005 when he got involved in a committee Carol Fox set up, called at the time the ERM Development Committee, now known as the RIMS Strategic and Enterprise Risk Management Council.

[4:46] Then Joseph started helping with curriculum development and in-person professional development, before COVID.

[4:58] After COVID, Joseph has been involved not only in delivering seminars but, as a commission member for the RIMS-CRMP, helped develop that curriculum and governance structure. Joseph has been involved with RIMS in different ways over the years.

[5:12] There's a good chance that someone listening to this podcast will think, Hey, I know that guy! I recognize that voice!

[5:26] Joseph is an Adjunct Professor at the University of Colorado, Denver. He's been active in the Risk Consulting Space since 2008, doing projects that range from simple commercial insurance placements to complex ERM implementations. He brings a unique perspective.

[6:02] Joseph teaches at the University of Colorado Business School. He helped develop a course on Enterprise Risk Management. ERM is truly becoming a mature discipline. Joseph thinks RIMS is establishing a global presence for ERM. Justin credits Joseph, in part, for that.

[7:05] When Justin saw that Joseph was going to host a two-day workshop, March 5th and 6th, "Facilitating Risk-Based Decision Making", he said, Let's get Joe on the show and end 2025 with a great interview with him.

[7:38] Joseph says the course is, in many ways, the pinnacle of risk management as a discipline. If we think about the domains and components of the RIMS-CRMP, the fifth domain within the CRMP is about supporting risk-based decision-making.

[8:06] This is a two-day seminar that takes a deep dive into that space. Joseph says it's the most fun, advanced, and interactive. It's the task that requires the best blend between the technical and the so-called soft skills. It's really exciting. Joseph is looking forward to it.

[8:28] Joseph hopes a lot of the audience listening to this podcast will take enough of an interest to spend the 14 or 15 hours — it seems like a lot, but it goes fast! There are breaks.

[8:52] When Joseph leads a course, he takes questions live. His approach is dynamic and flexible in terms of making sure that people get what they expect from the seminar.

[9:05] Joseph says crunching numbers is super important. The assumption for this seminar is that these are advanced practitioners who can do number crunching or hire somebody to do it. The number crunching is important because it sets the foundation for control limits.

[9:23] Number crunching sets the foundation for being able to answer questions about risk philosophy.

[9:34] Core philosophy is risk philosophy. Risk philosophy comes from definitions of risk appetite and risk tolerance, and being able to operationalize those definitions in simple statements, in plain language, tied to the control limits that come from the number crunching.

[10:00] With a good amount of work, within any organization, a risk professional and a team of people dedicated to risk and ERM should be able to put those definitions into action.

[10:31] In the context of an advanced risk management or ERM seminar, when we talk about risk, it's always also about opportunity.

[10:46] The simplest definition of acceptable risk is that which fits within the risk philosophy of the organization, within risk appetite and risk tolerance, and supports the organization in terms of its pursuit of objectives.

[11:04] It's almost always about higher profitability, more money in for-profit companies. Non-profit companies describe it differently. Maybe it's focusing on providing more service, which is a proxy for getting more money.

[11:19] It's about remaining a going concern and achieving goals. That's the simple definition: fitting within risk appetite and risk tolerance.

[11:52] Joseph says it's constantly about finding balance. It's not just about the most influential senior leader, the risk leader, or the ERM leader.

[12:05] It's also about the risk owners within the organization and how they fit into the strategic direction of the organization: growth vs. stability. Maybe it's an organization in distress and is focusing on retrenchment and building up a balance sheet to be able to redirect itself.

[12:27] It's in that space that a lot of times, there is an unintentional lack of organizational risk competency. That can contribute to not just conflict, but also misunderstandings about what's acceptable, in terms of taking on risk in pursuit of objectives.

[12:49] Communication is something we focus on in the seminar "Facilitating Risk-Based Decision Making" quite a bit.

[12:58] It is in the soft space of actively listening and identifying triggers in terms of perception of risk that have a huge impact on the decisions that an organization takes in risk and opportunity. It is challenging and time-consuming, but done correctly, it's super worthwhile!

[13:27] 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!

[13:49] 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.

[14:04] Let's Return to Our Interview with Joseph Milan!

[14:14] Joseph Milan will be hosting a workshop, "Facilitating Risk-Based Decision Making", on March 4th and 5th. Registration closes March 3rd. Justin says there is nobody better than Joseph to host this RIMS workshop. Joseph has a wide range of experience.

[15:14] A risk practitioner may focus more on the traditional space, insurance. Joseph says ERM will not supersede traditional risk management.

[16:06] A common mistake is that risk practitioners tend to get distracted by what they think are big numbers, but which pale in comparison to the big picture on the balance sheet.

[16:36] A good solution to that mistake is to find influential people in the organization who are plugged into financial planning, analysis, and budgeting, with a long connection to the organization, to help put things in perspective and answer questions about acceptable risk.

[17:09] Does it fit within the organization's risk appetite and tolerance? Answering those questions quantitatively can be fairly easy in terms of doing analysis and providing conclusions about expected total losses, frequency, and severity.

[17:33] The more important question is, is that acceptable, and does it fit within what executive leadership expects in terms of the stability of the financial performance of the company?

[17:44] The mistake is in overemphasizing or overestimating the importance of certain quantitative components of a risk program that oftentimes might not be that important. Conversely, there might be something much less visible that needs more attention.

[18:12] You have to know your audience, and you need to know what their emotions are, what motivates them, and what might trigger them. It's a bad idea to follow your gut, but it happens all the time. One of the main reasons it happens is because of emotion.

[18:44] If you see weird, irrational things happening, often, it ties back to a personal experience that the President, CEO, or CFO had many years ago. You might have an operator who went through Hurricane Katrina and is super sensitive to that type of hazard risk.

[19:11] Justin shares the impact Hurricane Sandy had on his home and on his parents' home, which was destroyed. The flooding gutted the area. Looking back, Justin will always have NatCat insurance. Justin is still traumatized by it.

[19:53] Joseph emphasizes communication and knowing your audience. An organization may want to do ERM or take its insurance program to the next level. Some spaces trigger reactions and emotions.

[20:31] It takes time to figure out an unwritten organizational culture.

[21:18] Strategy impacts the perception of risk, what's acceptable in terms of risk, and what the upper and lower control limits are. Where does strategy come from? Joseph says strategy comes from vision, mission, and execution.

[21:42] Strategy comes from various places. It could be external market forces. It could be the result of a merger or an acquisition, or a series of mergers and acquisitions. The executive leadership team may have to look around and ask themselves, Who are we? What are we doing?

[22:08] The first company that hired Justin, in 20 years, has been acquired twice, and people who had been lifers are being shown the door.

[22:46] Joseph says, In M&A, there is a huge impact on morale. Without a clear communication plan, backed up by action, things can get inefficient and expensive very quickly.

[23:17] 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.

[23:36] Spencer awards undergraduate, graduate, Ph.D., and Pre-Instructor of Practice Scholarships to students enrolled at an accredited college or university in the U.S. and Canada, and physically studying in either location. No remote coursework eligibility from other locations.

[23:53] Including part-time, graduate scholarships to risk management and insurance professionals continuing their education.

[23:58] Since 1980, Spencer has invested more than $11.1 million in the scholarship program with awards to over 1,700 students. More than 85% of Spencer's scholarship recipients remain in the industry to this day.

[24:15] They've got undergraduate scholarships, full-time Master's scholarships, part-time Master's scholarships, pre-dissertation Ph.D. candidates, doctoral candidates, and pre-instructor of practice scholarships all open now. The application deadline is January 31st, 2026.

[24:36] Visit SpencerEd.org/scholarships. You'll find the different application buttons. See the link in this episode's show notes for more information, giving you some extra homework to do over the holiday break, if you are taking a holiday break!.

[24:53] Let's Return to the Conclusion of My Interview with Joseph Milan!

[25:01] Justin had Jim Swanke as a guest on International Podcast Day, from the University of Wisconsin, Madison's Wisconsin School of Business. He mentioned he has a real passion for being an educator for risk management students.

[25:25] Jim Swanke encourages students to lean into technology and AI as a proofreader and a time-saving tool, to help go through contracts, claims, and things like that. That was on the captive insurance side.

[25:50] Justin asks Joseph for his take on AI. Joseph encourages students to go all in on it. It's the future. It is not going away.

[26:04] Joseph's clients are asking him about AI because they're looking for opportunities to increase efficiency. Is there a way we can reduce the time it takes to do "fill in the blank"?

[26:17] When you look at the top risk management information systems, the first and second place, Origami and Riskonnect, are spending a lot of time and money looking for any opportunity to leverage AI to make the broader risk management process more efficient.

[26:42] Joseph gives the example of analytics. It takes a couple of seconds to do a multiple linear regression analysis. The hard part is collecting the data to support the analysis. If you can leverage AI to collect, clean, and organize data, that is something you should do, with caution.

[27:09] We know that large language models tend to occasionally hallucinate. To have a non-sentient black box to have a hallucination as it's cleaning your data for analysis is a little bit of a scary thing. Fortunately, we humans are still around to check these machines.

[27:33] Joseph says the shortest answer is that AI is not going away. It needs to be embraced carefully. The process fundamentals that we have been thinking about, doing, and teaching about for years are the same. They will not change.

[28:03] Joseph will be leading the "Facilitating Risk-Based Decision Making" virtual workshop for RIMS on March 4th and 5th. It's a two-day course with six or more hours each day.

[28:32] Joseph says it's a seminar that focuses on the advanced implementation of risk solutions. We will not be doing calculations, analytics, or analysis.

[28:50] We're assuming that everyone is showing up with a deep and broad understanding of not only definitions of potential risk and opportunity, but also a solid foundation in the analytical space.

[29:02] This is more about thinking about how bias influences individual, group, and social perceptions and recommendations, in terms of risk.

[29:17] Participants should bring an open mind and an understanding of the importance of soft skills in the space of supporting risk-based decisions.

[29:31] Some of the listeners may already have read this book, but Joseph recommends it again, Thinking, Fast and Slow, by Daniel Kahneman. It is the foundation for the seminar.

[29:43] Joseph says, the book takes a deep dive into the "caveman" forces that influence intuitive, gut-reaction decisions, and how gut reactions can be a very unhelpful approach for the systematic, slower decisions that need to be made regarding complex risk.

[30:09] Joseph recommends reading the book. He says it will provide you with a much better foundation for the seminar, and it's a book you will keep going back to throughout your career.

[30:23] Justin says, It's been such a pleasure to see you again. I've got links to the RIMS-CRMP Insights Series that you did for us. There is plenty of Joseph Milan content here on RIMS.org.

[30:50] Joseph's last words for listeners: The first message is to be committed to the hard work that goes into cleaning, organizing, and setting the stage. It's part of being a good risk manager.

[31:52] Beyond that, a lot of what we talk about in the ERM space has to do with leveraging existing resources and breaking down silos. Find influential, knowledgeable people in your organization who can help with different cultural components and a lot of the tactical things.

[32:14] They might be able to help you find shortcuts as you take on different implementations and initiatives within the risk space within your company.

[32:30] Justin says, I look forward to seeing you again, in 2026, virtually, and/or in person. Thank you so much for all your time and for being so generous with your knowledge.

[32:46] Special thanks again to Joseph Milan for joining us here on RIMScast. His virtual workshop is "Facilitating Risk-Based Decision Making". Enrollment closes on March 3rd for the two-day course, which will be held on March 4th and 5th. A link is in this episode's show notes.

[33:07] Joseph will also lead the Pre-RISKWORLD two-day workshop, "Captives as an Alternate Risk Financing Technique," on-site in Philadelphia on May 2nd and 3rd, 2026. We will provide a registration link when it's available. Mark your calendar and learn from one of the best!

[33:28] 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.

[33:56] 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.

[34:13] 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.

[34:30] 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.

[34:46] 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.

[35:00] 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.

[35:11] Practice good risk management, stay safe, and thank you again for your continuous support!

Links:

"Facilitating Risk-Based Decision Making" | Virtual Workshop | March 4‒5, 2026

RIMS-CRO Certificate Program in Advanced Enterprise Risk Management | Jan‒March 2026 Cohort | Led by James Lam

RIMS-Certified Risk Management Professional (RIMS-CRMP) | Insights Series Featuring Joe Milan!

RISKWORLD 2026 Registration — Open for exhibitors, members, and non-members!

Reserve your booth at RISKWORLD 2026!

The Strategic and Enterprise Risk Center

RIMS Diversity Equity Inclusion Council

RIMS Risk Management magazine | Contribute

RIMS Now

Spencer Educational Foundation Scholarships | Submission Deadline Jan. 31, 2026