In the ever-evolving realm of real estate and property management, the stakes are high, and risks lurk around every corner. Jenna Herr, an alumna of the Risk Management and Insurance MBA program at UW Madison, currently serves as the Risk Manager for Equity Residential. Her recent visit to the MBA program shed light on the myriad risks associated with residential property and offered insights into the challenges faced by young professionals.
We began the discussion by considering the sources of risk for an organization focused on real estate. Quickly we realized the number and complexity of those risks. We mentioned fire, flood, mold, asbestos, bedbugs, snow removal, and many more risk sources. A question arose: what is the exposure, the building, or the tenant (consider an apartment building with many tenants)? The answer is “it depends.” It depends on what type of issue we are discussing. Is it about loss to a tenant, or about liability to the property owner? Jenna then shared a number of fascinating examples of large-valued losses with us from action of the tenant.
One important activity of a risk manager is measuring the maximum possible loss (MPL). MPL is used to set insurance limits, make decisions on whether or not to implement loss control techniques, and make other decisions. One of the prominent risks Jenna highlighted during her interaction with students was the seismic activity in California. With a significant number of Equity Residential properties situated in the earthquake-prone state, Jenna stressed the importance of having robust risk mitigation strategies in place. Earthquakes pose not only a threat to the structural integrity of buildings but also bring forth potential liabilities related to tenant safety and property damage. Understanding and preparing for these seismic risks is crucial for any property management company operating in California.
Jenna’s active participation in class on Tuesday, November 28th, showcased her commitment to staying engaged with the program and contributing to the education of future industry professionals. Her presence in the classroom not only provided students with real-world perspectives but also emphasized the practical relevance of risk management in the day-to-day operations of companies like Equity Residential. One aspect of the conversation that stays with me is the notion of setting benchmarks for professional development. When Jenna finished her MBA, she set a timeline for her development before even considering moving to a new position. Now that she has done that, she has a longer-term timeline of next steps and expectations. Having these timelines in mind will help us make decisions about our careers, and is a terrific idea for continuing to feel motivated and enthused for what we are undertaking.
In a world where the only constant is change, Jenna’s visit to the MBA program serves as a reminder that risk management is not just a theoretical concept but an indispensable practice that shapes the success and sustainability of companies in the dynamic real estate sector. As current and future industry leaders, embracing a holistic approach to risk management is key to steering the ship of construction and residential enterprises through uncharted waters.