Mr. Jim Kasprzyk, CPCU, ARM, is the Director of Corporate Insurance for McDonald's. He has over 30 years in the industry, and is the eighth visiting professional to the UL Risk Management Program under the Risk & Insurance Management Society's Spencer Foundation. He gave a talk to students, faculty, and local professionals at Don's Downtown on Tuesday, and granted a brief interview to

RIMS, the National Risk & Insurance Management Society, offers a program to engage students in insurance & risk management programs, through the Spencer Educational Foundation Program, where schools like UL are supported with a visiting industry professional. UL is one of about 50 schools with a major in IRM, and one of about 65 with a minor, out of 2,200 business schools in North America.

RIMS members may apply to be a part of a university community for two or three days at a time. They are vetted at the national level; candidates need a minimum of 10 years in the industry, they cannot be an alumnus of the school they visit, and they cannot be a resident of the state they visit. So it's truly an immersive experience for the risk manager, and the university.

The object is for risk managers to interact with students for a maximum amount of time. This is UL's 8th risk manager to visit. ll expenses for the campus visit, including the lunch, are covered by a grant from the Spencer Foundation, with any/all remaining monies going to fund an endowed scholarship for future insurance/risk students at UL. It's an opportunity for local people in the industry to get together, including donors, industry professionals, students, and UL faculty members. There were only 10 or 12 risk managers selected this year from the US for this program, and UL got its first choice, Mr Jim Kasprzyk of McDonalds.

Tell us about yourself.

I was born in Chicago, and spent most of my life there. I have a degree from Dominican University in River Forest, an MBA from DePaul University, and I also hold a CPCU [Chartered Property & Casualty Underwriter] and an ARM [Associate in Risk Management] designation.

I have two daughters, one with a Master's from Depaul, she's teaching. The other is at Purdue University in nursing, she's going to graduate later this year.

I've been married for 33 years, my wife is from the small town of Downs, right outside of Bloomington, where Illinois State is located. ISU also has an Insurance & Risk Management Program there in the Katie Business School, just like the one here at UL.

I've been in this field for over 30 years, I just passed 10 years at McDonald's. Before that I worked for Waste Management Corporation which used to be in Oakbrook Illinois, but has since relocated to Houston. Prior to that I worked for Kraft in Glenview, Illinois.

Tell us about risk management at McDonald's.

McDonald's is a global company, so we look at risk on a global basis. There are different cultures, different countries, different time zones. I believe we're now in 119 countries, so it's a challenge to manage risk across the corporation.

How do cultural differences affect the menu?

McDonald's is a decentralized company. In each country, there is a core menu, and then local products for the people there.

In India, beef is taboo.

There are McDonald's in India, but we don't offer beef hamburgers. I'm not sure what they substitute for the beef.

But in China, for instance, we sell in-bone chicken products, it's a spicy chicken dish they offer.

And in Japan they have a Teriyaki burger. I thought it was excellent. I think people might like it here in the US, but it isn't available.

In Wisconsin, they sell bratwurst at their McDonald's.

Why do you take time to make these academic visits?

I've spoken at three universities now because of this program through RIMS. They provide a full grant for me to come here. I've been to the University of Hartford, Missouri State, and now here at UL.

What I like about it, it's a good way to give back to the industry. The insurance industry has a bit of an image problem, and we would like to attract as many talented young people as possible. I don't think students realize how rewarding this job can be. I tell them about my work and my travels.

A summary of Mr. Kasprzyk's conversation with the group:

I want to talk about why I do this, and about McDonald's.

I really enjoy the interaction with the kids, it's a lot of fun to go to the classes and basically teach a class, give the kids an insight into what it's like to be a risk manager. I think it's a real challenge for kids to decide what they want to do for a living.

In some cases our industry has a bad reputation. There's a lot more to being in insurance than the negative stereotypes. There are a lot of things you can do in the industry that you might never expect.

Working for a company like McDonald's, I get to travel a lot, because it's a big company. For instance, I get to go to Lloyd's of London and purchase insurance, so it's a neat job.

When I started, McDonald's was not doing all that well. We couldn't seem to get out of our own way, our stock had plateaued.

We hired a new CEO, and he wanted to go in a new direction. He wanted to capture other dining experiences that would allow customers to eat something other than a hamburger.

So what he thought was, we're going to buy a pizza company, a Mexican food company, and others, and we did that. But when we took our eye off the business, we went from about $40 per share to about $14 over that period.

So they brought in a new CEO, Jim Cantalupo. He concentrated on doing McDonald's, and doing it better, by getting more sales out of our existing stores. And he did just that.

So we sold off these other concept stores, and we got everyone focusing on McDonald's. We brought in new products, went to extended hours. We added salads, chicken; we sell more chicken now than we do beef. We refurbished, we went back to the original way of making the burgers. From 2003 to 2005, our sales picked up and we had the best sales in the history of the organization.

One of the interesting things about McDonald's is that we actually make more money off stores run by franchisees than we do off of company-owned stores. So now more of our stores are franchises than company-owned.

We've come up with some innovative products, and tripled our dividends. Next year we expect to yield $18B to stockholders.

Right now we're looking at our beverage initiative, offering specialty coffees, frappuccino, bottled water. When we've finished with that, it will add about $3B to our annual sales.

One nice thing for me, anyone who has been there 10 years gets a two month sabbatical, and I have one coming up. During that time I will have absolutely no obligations, no cell phone, no emails.

What about the lawsuit where the woman was burned with hot coffee?

That's a real famous incident, we talked about it in one of the classes. It's been immortalized in Seinfeld.

The way that came to be is, in the McDonald's world, we have owner-operators for over 80% of our US stores. They need to participate in insurance programs that meet our requirements, but they can buy it anywhere. In this case, one of the licensees was an independent owner. The case was badly handled, the lady was ignored, and the corporation didn't hear about it until it hit the courts. She won $2.86M, but the judge reduced it to $640K, before it was settled out of court.  It made all of the papers.

Because of the notoriety, our average insurance policy went up remarkably. We thought, this isn't good, but we thought the costs would come back down. But they didn't.

So now we have a mechanism to handle potential large claims. We have a staff of paralegals and attorneys, who get involved much earlier.

Are there temperature limits now?

There are 72 different safety checks in every store, every day. The temperature, the cups, the lids are tested a million times. In fact, if we are guilty of anything, it's over testing. For instance, over cooked food doesn't taste as good, but we probably err on the side of overcooking, because it makes for a safer product.