Lloyd's of London CEO Encourages B-school Students, Managers to Take Risks

While speaking recently at the University of Michigan's Ross School of Business, Richard Ward, CEO of the insurance specialist Lloyd's of London, encouraged students to be risk takers.

Ward visited Ross as part of the Leaders in Thought and Action speakers series. Before joining Lloyd's, which is well known for insuring celebrity body parts and other unusual items, Ward worked at BP and served as COO of the International Petroleum Exchange (IPE). His training for these prestigious business jobs? A PhD in physical chemistry.

Proving the payoff of risk taking, Ward shared his story about approaching BP and convincing them that his science training could be applied to business. BP not only took him on, but had faith that he could succeed in oil derivatives trading, despite his lack of training in financial markets.

Using BP as an example, Ward said, "My plea to all employers today is to give those types of opportunities to their employees when they see it."

Here are some of the takeaways from Wards' experience with risk taking :

• Build a coalition: Ward talked about the resistance he faced when converting the IPE from open-pit trading to electronic trading. He succeeded because he built so-called "small cells of support" from traders and built his case from there.
• Give employees opportunities to prove they are risk worthy: Ward noted that not everyone is cut out for leadership, and seeing a person in action is the only way to tell.
• Take risks wisely: While it can be debated whether or not insuring David Beckham's kneecaps is a smart risk to take, Lloyd's doesn't take unnecessary risks, either. Ward said the company was "unscathed" by last year's financial crisis because most of its money is invested in bonds and cash, with only five percent in stocks.