pricesmart success story - lockton companies · 2018-04-23 · the company has grown tremendously,...

4
PriceSmart Smart risk management means doing the right thing Key program elements Property. Casualty. Employee benefits. Cargo. Directors and officers. Employment practices liability. Fiduciary liability. Crime. First came Hurricane Irma’s 170 mph winds that devastated St. Thomas, US Virgin Islands. Then, less than two weeks later, Hurricane Maria’s torrential rains lashed the island. While other retailers lost their roofs and remained closed for months, PriceSmart’s warehouse club on St. Thomas reopened within five days. The roof remained secure even as the winds tipped over storage trailers and sheared off lampposts. PriceSmart’s ability to reopen promptly to help with the recovery was not the result of good luck. It was the result of “doing the right thing” on risk management. For PriceSmart and senior vice president Atul Patel, doing the right thing means understanding their risks and controlling risks as much as possible. PRICESMART: IN THE RING OF FIRE PriceSmart is a warehouse club retailer founded by industry legends Sol and Robert Price. PriceSmart has built and operates more than three dozen clubs in the Caribbean, Central America and South America where hurricanes, volcanoes and earthquakes are part of their complex business environment, what Patel calls “the ring of fire.”

Upload: others

Post on 26-Jul-2020

1 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: PriceSmart Success Story - Lockton Companies · 2018-04-23 · The company has grown tremendously, from $97 million in revenue in 1998 to $3 billion in sales in 2017. That growth

PriceSmartSmart risk management means doing the right thing

Key program elements

Property.

Casualty.

Employee benefi ts.

Cargo.

Directors and offi cers.

Employment practices liability.

Fiduciary liability.

Crime.

First came Hurricane Irma’s 170 mph winds that devastated St. Thomas, US Virgin Islands. Then, less than two weeks later, Hurricane Maria’s torrential rains lashed the island. While other retailers lost their roofs and remained closed for months, PriceSmart’s warehouse club on St. Thomas reopened within fi ve days.

The roof remained secure even as the winds tipped over storage trailers and sheared off lampposts. PriceSmart’s ability to reopen promptly to help with the recovery was not the result of good luck. It was the result of “doing the right thing” on risk management. For PriceSmart and senior vice president Atul Patel, doing the right thing means understanding their risks and controlling risks as much as possible.

PRICESMART: IN THE RING OF FIREPriceSmart is a warehouse club retailer founded by industry legends Sol and Robert Price. PriceSmart has built and operates more than three dozen clubs in the Caribbean, Central America and South America where hurricanes, volcanoes and earthquakes are part of their complex business environment, what Patel calls “the ring of fi re.”

5

Page 2: PriceSmart Success Story - Lockton Companies · 2018-04-23 · The company has grown tremendously, from $97 million in revenue in 1998 to $3 billion in sales in 2017. That growth

2

He says it is all about

“doing the right thing;

integrity; fairness; and having an

open, transparent relationship with

no hidden agendas; and trying to

seek solutions that make sense for

both parties.”

The company has grown tremendously, from $97 million in revenue in 1998 to $3 billion in sales in 2017. That growth is driven by relentless attention to the customer experience and delivering value for its more than 1.5 million card-holding club members.

“Doing the right thing is important for us because it ensures the long-term success of the business,” says Patel. “Cutting corners or short cuts in any way would only come back to cause us to not be able to have sustainable growth and success.”

That’s why PriceSmart builds its warehouse clubs to withstand hurricane-force winds and maintains its properties to ensure fast recovery when the inevitable natural disaster occurs.

PRICESMART AND LOCKTON:

UNDERSTANDING THE BUSINESS Patel credits the Lockton team with bringing expertise and understanding of PriceSmart’s risks and how to mitigate them. Lockton risk control experts walk the fl oors of the clubs with Patel, climb the roofs to examine fasteners and fl ashing, and review building plans and contracts.

“Lockton took the time to understand our business philosophy, to help us understand our risk, and then crafting insurance programs and risk-mitigating programs that suit our business,” Patel says.

He credits Lockton with sharing a similar business philosophy with PriceSmart.

PriceSmart profilePriceSmart, Inc. (NASDAQ: PSMT)

is the largest operator of membership

warehouse clubs in Central America and

the Caribbean and has recently entered

the South American region with clubs

in Colombia. PriceSmart serves more

than 3 million cardholders at 40 owned

and operated warehouse clubs in 12

countries and one US territory. PriceSmart

was pioneered by Sol and Robert Price,

founders of The Price Club; Robert Price is

chairman of the board.

Page 3: PriceSmart Success Story - Lockton Companies · 2018-04-23 · The company has grown tremendously, from $97 million in revenue in 1998 to $3 billion in sales in 2017. That growth

3

Colombia (7)

Costa Rica (7)

El Salvador (2)

Guatemala (3)

Honduras (3)

Nicaragua (2)

Panama (5)

Aruba (1)

Barbados (1)

Dominican Republic (3)

Jamaica (1)

Trinidad and Tobago (4)

US Virgin Islands (1)

Current PriceSmart locations

PROPERTY PROGRAM:

CHALLENGING THE STATUS QUO Reducing cost so that prices stay low for its members in a competitive retail environment is critical for PriceSmart. Every business decision is seen through the lens of how it will help improve the member experience.

Since property insurance premiums are one of the major costs in the PriceSmart risk management program, the company challenged the Lockton team to shake up the status quo. PriceSmart pushed for cost and coverage improvements in a property program that was already considered industry-leading.

Working with insurance carriers around the globe, the Lockton team structured and negotiated a comprehensive natural catastrophe program. It provides PriceSmart with cost certainty for three years and offers incentives if there are no major claims.

“It indicated how strong our relationships were with the underwriters,” says Patel. “It also demonstrated how nimble, fl exible and creative the Lockton team was in being able to craft such a program.”

The September 2017 hurricanes in the Caribbean tested PriceSmart’s risk management approach, and the company passed with fl ying colors. “It demonstrated that in doing the right thing, we are able to protect our properties and keep our people safe,” says Patel.

2

1

Page 4: PriceSmart Success Story - Lockton Companies · 2018-04-23 · The company has grown tremendously, from $97 million in revenue in 1998 to $3 billion in sales in 2017. That growth

© 2018 Lockton, Inc. All rights reserved. KC: 41959 4

“I believe Lockton shares the underlying philosophy of wanting to do the

right thing and helping us to do the right thing.”

SHARED VALUES PriceSmart and the Lockton team have worked together since 2003 to improve safety, reduce cost, and protect members and company assets. The key to the long-term relationship, Patel says, is that the teams share the same values.

And that helps make PriceSmart’s business better for 1.5 million members.

Atul Patel