Column: Risk Management

Opinion | This Is Why I’m Afraid of Self-Driving Cars

By: | July 30, 2018 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I’m leery of rising in a self-driving car. When I ask myself why, my sense is simply that I fear them. Is it because of the loss of control? Makes little sense as I am often a passenger in a car. Is it the creepy image of watching a steering wheel move from an empty driver seat that unnerves me? That doesn’t make sense either. I truly enjoy many automated devices, like my robot vacuum cleaner.

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Besides, the use of autonomous vehicles is inevitable.

But is this new reality being truly accepted? It appears that “traditional” car manufacturers may be a bit asleep at the wheel. They claim these self-driving cars might claim just 2 to 3 percent of their current market.

Prophecy should be an inherent skill for me and my fellow risk managers. As such, I see lots of unaddressed risk when it comes to this automated space. In 10 to 15 years, my prediction is that only autonomous cars will be available to us.

This should be a good news story. We know that today 94 percent of car accidents are due to driver error. What a wonderful world we will have saving 40,000 lives and avoiding maiming 2.5 million of our fellow humans every year in North America.

That said, over these upcoming years, let us think of all the other industries that will need deep transformation and reinvention, starting with our 500-billion-dollar auto insurance market. And what of our whole legal system that sets the rules on liability exposure? Fifty percent of all court cases now involve an automobile. What is to become of our personal injury lawyers? Their transformation is critical if we plan to eliminate whiplash.

Technology will result in millions of surplus traditional workers. This surplus is coming fast.

Let us not forget that there will be less need for parking lot attendants. Our service-oriented autonomous vehicles, after they drop us off at work, will be sent off to work as Uber or Lyft cars, which will likely become a key component in a new kind of public transit system. Gone will be the days of abundant taxis, street cars and buses.

The most common job in the U.S. is truck driver. Driverless vehicles have the potential to eliminate these jobs in 29 out of 50 states.

Is death to driving a good thing? Are we redesigning ourselves accordingly?

Forty-seven percent of U.S. jobs are threatened in the next 15 years. Technological unemployment is real and caused by “the introduction of labor-saving ‘mechanical-muscle’ machines or more efficient ‘mechanical-mind’ processes.”

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Technology will result in millions of surplus traditional workers. This surplus is coming fast. Are these mechanical minds coming at us too fast maybe? Are we keeping up with this exponential speed of adoption? Or are we frozen in fear?

Should we consider a more risk-disciplined pace allowing us to react and plan for work alternatives before destroying so many livelihoods? Queen Elizabeth in 1589 refused to patent a weaving machine in fear of her subjects losing their livelihoods. She thus delayed patenting of these machines for another 200 years.

Then I remember that only 150 years ago 80 percent of our jobs were in agriculture, yet today agriculture accounts for only 2 percent of jobs. I find this reassuring. Somehow, we survived and in fact thrive.

But what to do today? Put a thoughtful pause on advancement allowing us to catch our breath, or allow things to unfold unabated?   One thing for sure that is in true need of speeding up is the conversation  on this. &

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]