Millions of people in North America quench their thirst daily with one of the 50 brands of beverages in the portfolio of the Dr Pepper Snapple Group (DPS). In addition to its flagship Dr Pepper and Snapple brands, the company produces such well-known soft drinks as 7UP, Mott’s, A&W, Sunkist Soda, Hawaiian Punch and Canada Dry.

In May 2008, DPS was formed after Cadbury Schweppes plc spun off its Cadbury Schweppes Americas Beverages subsidiary. “We became an independent, publicly traded company,” says Tom Upchurch, director of risk management. “This has enabled our company to focus all our time and talent on the beverage business.”

DEFINING AN INDEPENDENT COMPANY'S DESTINY

“Now that we’re independent, we also have the opportunity to define our own risk management strategy versus having it defined for us,” says Upchurch. “It’s a fresh start, but in order to manage risk effectively, we needed to fully leverage a sophisticated risk management information system.

“We knew Aon's RiskConsole had powerful data analysis and reporting capabilities and the flexibility to align with our evolving business needs,” Upchurch says. “When we spun off, our main objective was to have accurate data to drive sound business decisions, pinpoint cost drivers and communicate meaningful intelligence to our executive staff, key decision-makers and business unit risk owners.”

According to Marva Barbour, risk manager at DPS, in the eight years the company has used Aon’s RiskConsole, “We’ve gone from basic loss runs and OSHA reports to developing loss triangles for a prior captive.”

In addition, DPS’s risk management group is now responsible for identifying and assessing all property and casualty risks for 24 manufacturing facilities, 200 distribution centers and 20,000 employees across North America. Capturing a company-wide picture of its coverage, claims, loss and exposure data was critical to effectively executing this task.

riskconsole allows DPS to own the data

“In the past, we relied on data we received from our insurance carriers and third-party administrators. We’re now taking greater ownership of this information, by consolidating it within RiskConsole,” Upchurch says.

Previously, DPS obtained data in a piecemeal fashion, contacting each of its insurance carriers and service providers to send required information. Data often arrived in various formats and needed to be manually uploaded into RiskConsole—a labor-intensive process. The company is now working with Aon eSolutions to create electronic interfaces with these entities to automate data transfer on a monthly, quarterly or semi-annual basis.

“The dashboard is very user-friendly. It provides an immediate snapshot of everything that’s going on with our data, including urgent red-flagged items, key reports and time stamps on our data loads,” Barbour says. “RiskConsole also provides an extensive library of reports.” “We can also easily update information,” Upchurch adds. “Data management is much more efficient.”

AFFECTING TOTAL COST OF RISK

“Our main objective is to reduce our total cost of risk [TCOR],” Upchurch says. “As a subsidiary, we did not directly control risk. It was managed from a location outside the U.S., and we were given information on a need-to-know basis.

“Now, our department is responsible for a strategy that includes retention and transfer of risk for DPS to ensure the financial strength of our company.”

The risk management team works to increase the awareness of TCOR beyond insurance spend, including balance sheet reserve for DPS’s self-insured exposures. While retaining a high level of risk for the most lines of coverage, the company pays for a vast majority of its own claims before triggering insurance coverage, according to Upchurch.

“The reserve is a new and significant item on our balance sheet—money that could be used for other initiatives, such as capital improvements,” he says. “The good news is since these risks belong to our company, we can impact reserves more significantly than our insurance spend. Toward this effort, Aon's RiskConsole will become a central tool, providing an enterprise-wide overview of our total cost of risk.”