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It's a rare risk executive who can break out and take the driver's seat as CEO at a major company. But that's just what Paul Karvois did at Jevic Transportation.

Karvois joined Jevic, a motor carrier, in 1992 as director of insurance. Eight years later, he was CEO. Since he joined Jevic, the company's revenues have grown tenfold.

But then, Karvois was not your typical risk manager. He owes much of his experience to the hands-on learning he received on the job, and many of his innovations have come from talking with workers on the front lines. That allowed him to not only reduce claims, but also to market Jevic, a less-than-truckload (LTL) carrier, as a safer, more reliable company.

"The key to any risk management job is getting out with the front line people," the 50-year-old Karvois says.

Risk managers, according to a recent survey, commonly have worked in the insurance industry before becoming risk managers, and once in risk management, they tend to stay put. An April survey of 30 successful risk executives by Marsh & McLennan found that participants worked as risk managers for an average of 16 years, and that 70 percent had worked in the field for more than 21 years.

Karvois, on the other hand, never worked in the insurance industry before becoming a risk manager. In contrast to many of his peers who earn an MBA and then work toward their CRM or ARM designations, he earned a degree in zoology. He went through a broad-based management-training program while with a large LTL motor carrier. He then worked for many years at family-owned LTL motor carriers, where he gained hands-on experience in everything from sales and marketing to operations and finance.

MOVING ON, MOVING UP

At Jevic, he spent about a year in insurance and risk management before moving quickly up the corporate ladder. He became president in 1997, just five years after joining the company. In 2000, he became CEO.

Today, Delanco, N.J.-based Jevic is a $400-million LTL motor carrier, a subsidiary of SCS Transportation, which was spun off from Yellow Corp. But in 1992 when Karvois joined Jevic, the company was family-owned and a relative newcomer in the industry. The company had revenues of just about $40 million. Jevic was so new and small when Karvois joined that it lacked an insurance, risk management and human resources department.

"It became my role to pull all that stuff together," he says. He stepped in as director of insurance and within six months had created a risk management department. In his year in insurance and risk management, he slashed insurance and risk costs by 20 percent to 50 percent--and at a $40 million company, that did not go unnoticed.

"In many jobs, and that included this one, many times there's broad latitude in what you can do if you are willing to step up and grab it," Karvois says. "I was afforded the latitude to manage insurance as broadly as was necessary to benefit the organization."

How did he do it?

Karvois started by assessing the company's situation and then got out of his office to talk with employees and customers about how to make the company safer, improve customer service and avoid claims. The hands-on experience he had gained at smaller companies helped him understand how claims and losses can affect a business.

"On a practical basis, at a small company--the raider $50-million companies--it's very hands on, you see the cash flow impacts, the P&L impacts and so that gave a real hands-on tutorial in what that meant in real dollars, what the impact is on the company and how those costs stop you from making other investments," be says.

CREATING AN EDGE BY REDUCING RISK

Karvois is quick to acknowledge that he did not do it alone and that he depended on a lot of people who pulled together as a team. "A risk manager can't be successful unless the folks in operations are willing to cooperate, unless the folks in maintenance are willing to cooperate," he says.

Talking with employees and customers, he began to see opportunities to improve safety and reduce damage to customers' goods. Those conversations led to some interesting discoveries.

He and his team found that most of the company's slip-and-fall accidents took place when drivers stood behind their tractors on slippery steel in rainy and icy conditions to hook up the controls for their trailers. After a bit of trial and error, he and his team put in aluminum catwalks that have virtually eliminated slips and falls. They also reduced damage to customers' freight by installing a system of tracks inside the trailers to improve cargo stabilization.

"What that allows us to do is deliver our freight intact for our customers, so it increases our reliability and, at the same time, I don't have drivers and dock folks hurting themselves trying to deal with freight that's not loaded properly," Karvois says. "It came up as an opportunity to reduce the exposure we had on cargo damage."

Jevic's ratio of damage to customer goods is three times better than the industry average, in part as a result of that measure. "We became the industry leader as a result of that," he says.

Another Jevic innovation is its heated trailer service. Half of Jevic's fleet is equipped with heaters built into the trailers allowing for the transport of sensitive goods that would be damaged if they froze.

When temperatures are low and there is a danger that the cold could damage the freight, many motor carriers call their customers and inform them that they will not pick up the goods that day.

Installing heaters "reduced our cargo claims and in the end it became a marketing solution for our customers," he says. "It gives us a great advantage in the winter months."

By controlling risk and cutting, insurance costs, Karvois gave Jevic an advantage over the competition and gave customers an edge over their competition as well.

"Our focus is on if we can help make our customers more competitive in the marketplace, then we have added value and at that point, we have some competitive advantage that goes beyond just price," Karvois says. "If you're not helping your customers solve their problems, then you're really not a viable partner," he says.

His experience as a risk manager also gave him the ability as CEO to quickly understand the ramifications of Sept. 11 on Jevic, the company's customers and the trucking industry as a whole.

In addition to Jevic's own security concerns, Karvois quickly realized that customers also had new security worries, especially in the area of tightening plant security. The company took steps to improve security for customers. For instance, the company introduced new driver IDs that allow shippers and receivers to instantly verify the identity of the driver.

The system uses a driver ID badge that includes a digitized photo of the driver, his driver identification number and a barcode. The ID can be scanned or the ID number entered into a security section of the Jevic Web site. A picture of the driver will appear on the screen, verifying that the driver is who he says he is. This eliminates the potential for counterfeiting ID badges, as well as assuring the safety of customers, drivers and their shipments.

As CEO, Karvois says, he finds himself using many of the same principles and skills that he put to use as a risk manager.

"Risk management teaches prioritization because you can't avoid everything and you can't insure everything," Karvois says. "You have to make some hard decisions and live by them, with a backup plan for what you do when it's not perfect. I think that's what risk management teaches us.

"Every CEO does risk management, They just may not call it that."

Marsh Study Outlines Success

Last year, Marsh, in partnership with the Risk and Insurance Management Society, conducted in-depth interviews with 30 of the most successful risk management executives. It was an effort to discover what was behind the success of these top-ranked risk managers.

The study focused on those risk managers who had won the RIMS risk manager of the year award.

Among the findings:

* Many risk managers, like Paul Karvois, came to risk management inadvertently without specific training or experience on-the-job.

* Risk managers said they enjoyed their work and didn't seek promotions to higher positions within the company. Risk managers stuck to their profession: the average on-the-job tenure was 16 years.