Sustainability Research

Fox experts in sustainability and risk earn appointments with Willis Research Network

Fox School of Business Clinical Professor James Hutchin is one of 10 U.S.-based senior academics recently appointed to the Willis Research Network (WRN), which will fund a continuation of Hutchin’s internationally recognized research on sustainability issues and their effect on risk and the insurance and reinsurance industries. Fox researcher Matthew Shea was also named a WRN research fellow.

The WRN, the world’s largest collaboration between academia and the insurance industry, has added the new U.S. partners to augment the 30 science institutions already in the global network. The WRN is an integral part of Willis Re, the reinsurance arm of Willis Group Holdings, the global insurance broker.

Hutchin’s three-year appointment comes with a significant grant to support his research, which will be conducted in collaboration with Shea. In a unique partnership, the funding also will support six projects in the Enterprise Management Consulting Practice (EMC), a required capstone consulting experience in which Fox School MBA students act as consultants to industry clients.

The EMC’s Sustainability Strategies Initiative is a leader among business schools across the world in applied business research on sustainability issues that organizations are seeking to manage. “Lively students working on live projects, delivering professional-grade results” is how Hutchin described the program.

“It’s a really wonderful story about Willis Re looking to sponsor research in that rarified space where financial products and sustainability initiatives converge,” said Hutchin, who commended Willis Re CEO Peter Hearn and WRN Chairman Rowan Douglas for their foresight and leadership. “And, believe it or not, that’s a huge area of interest for the insurance industry. When sustainability issues are not managed well, often the insurance industry ends up paying.”

Hutchin and the other academic partners bring additional expertise to confront the industry challenges of managing extremes and supporting sustainability through research in natural catastrophes, building vulnerability, life reinsurance, capital modeling, workers’ compensation and other fields. The new partners join four existing American WRN members at Princeton University, the National Center for Atmospheric Research, Scripps Research Institute and the University of Colorado.

“The WRN is delivering remarkable improvements in the breadth and quality of science and modeling that will not only aid our clients in their risk management and reinsurance decision-making, but also assist society at large in its efforts to protect exposed populations and property,” said Jim Bradshaw, CEO of Willis Re North America. “We are delighted to support such a broad spectrum of leading U.S. institutions and bring their work and expertise to help our clients and the industry to achieve new levels of understanding and capability.”

Through their appointments, Hutchin and Shea plan to expand research they and an EMC team spearheaded in 2008, when the Fox School led the creation of a global survey – sponsored by the United Nations Environment Programme Finance Initiative – that shed new light on the insurance industry’s approach to sustainability and climate risks.

Hutchin and Shea’s first project through the WRN will be to research Fortune 2000 companies in the U.S. and measure the extent to which “sustainability pays” in enhanced value creation.

“If you are more sensitive to sustainability issues, and if you manage them better, that may well result in an improvement of operational and financial performance,” Hutchin said. “That’s the hypothesis we want to test.”

Using the rich data sources in the insurance industry, Hutchin said their goal is to determine if there is competitive advantage arising from superior risk management of sustainability issues, which include environmental, social and governance factors. Hutchin said the findings he will be working with Shea to produce will eventually be submitted to academic and trade journals, among other publications.

“This is a longstanding interest of mine, and I really think sustainability is all about two things from a business perspective: avoided loss and seized opportunity,” Hutchin said. “So you really need to understand risk before you can deal with sustainability issues, and you have to embed it in business structures around the world if you want to go to scale.”

 – Brandon Lausch