Risk Insider: Dorothy Gjerdrum

ERM’s Language Problem

By: | May 18, 2017 • 3 min read
Dorothy Gjerdrum is senior managing director of Arthur J. Gallagher & Co.’s Public Sector Practice and managing director of its Enterprise Risk Management Practice. She can be reached at [email protected]

ERM has a language problem.

Many of us moved from risk management to enterprise risk management (ERM) without updating our lexicon.  We now focus on taking a broader approach to managing risk while we continue to use terminology that limits our ability to implement that approach.  Two of the most important words that need deeper understanding and better articulation are “risk” and “uncertainty.”

It’s not hard to find writing that equates “risk” with negative outcomes.  Indeed, in a quick perusal of “Risk Insider” columns on ERM, there are numerous examples that describe “risk” as a threat and use the terms “risk” and “uncertainty” interchangeably.

It takes awareness and perseverance to update our language when it comes to risk; without that, we tend to fall back on common usage.  Dictionary definitions don’t help, since they typically rely on historic, common usage and that doesn’t support the evolving approach to managing risk.  Insurance dictionaries define risk as a probability or threat of damage, injury, liability, loss or negative occurrence.  Merriam-Webster offers four options: 1) “possibility of loss,” 2) “someone or something that creates or suggests a hazard,” 3) “the chance of loss” (and a few variations on that) and 4) “the chance that an investment will lose value.”  All of these definitions tie risk to negative outcomes.

ISO 31000 defines risk as the effect of uncertainty on your objectives.  It is not the effect alone, or the uncertainty alone, it is the intersection of those uncertainties with your objectives that creates risk.

Some practitioners try to get around that by adding words.  Examples include “risk and reward” or “risk and opportunity” (the connotation of “risk” is still negative in both) or the clumsy terminology “upside and downside” risk.  (The problem is that “upside and downside” describe potential effects or outcomes, not the risk itself.)  These expressions can be confusing and problematic and they do not help change the narrative.


However, even in common language, there are opportunities to expand our understanding.  To “take a risk” or say that something is “risky” acknowledges that the outcomes are uncertain.  Outcomes can be positive or negative, and are often a mix of both.  That starts to sound more like ERM, doesn’t it?

When we drafted the international standard on risk management, risk experts from around the globe spent an enormous amount of time working to get this right.  We knew that the definition itself would expand our thinking and refine our approach.

ISO 31000 defines risk as the effect of uncertainty on your objectives.  It is not the effect alone, or the uncertainty alone, it is the intersection of those uncertainties with your objectives that creates risk.  It’s an incredibly important distinction from the common usage definitions.  It keeps organizational objectives at the heart of the process and recognizes that not all uncertainties will have an impact upon strategy or objectives.  And the uncertainty that does affect strategy, goals or objectives doesn’t always affect the organization in negative ways; the ISO 31000 definition is neutral about the effects of uncertainty.

As our ERM programs evolve and we consider a broader range of uncertainties and outcomes, it is imperative that we become more exact in our use of language.  That will help us (and our clients) view risk – with clarity and precision – from a broader lens.

More from Risk & Insurance

More from Risk & Insurance

2017 Teddy Awards

The Era of Engagement

The very best workers’ compensation programs are the ones where workers aren’t just the subject of the program, they’re a part of it.
By: | November 1, 2017 • 5 min read

Employee engagement, employee advocacy, employee participation — these are common threads running through the programs we honor this year in the 2017 Theodore Roosevelt Workers’ Compensation and Disability Management Awards, sponsored by PMA Companies.

A panel of judges — including workers’ comp executives who actively engage their own employees — selected this year’s winners on the basis of performance, sustainability, innovation and teamwork. The winners hail from different industries and regions, but all make people part of the solution to unique challenges.


Valley Health System is all-too keenly aware of the risk of violence in health care settings, running the gamut from disruptive patients to grieving, overwrought family members to mentally unstable active shooters.

Valley Health employs a proactive and comprehensive plan to respond to violent scenarios, involving its Code Atlas Team — 50 members of the clinical staff and security departments who undergo specialized training. Valley Health drills regularly, including intense annual active shooter drills that involve participation from local law enforcement.

The drills are unnerving for many, but the program is making a difference — the health system cut its workplace violence injuries in half in the course of just one year.

“We’re looking at patient safety and employee safety like never before,” said Barbara Schultz, director of employee health and wellness.

At Rochester Regional Health’s five hospitals and six long-term care facilities, a key loss driver was slips and falls. The system’s mandatory safety shoe program saw only moderate take-up, but the reason wasn’t clear.

Rather than force managers to write up non-compliant employees, senior manager of workers’ compensation and employee safety Monica Manske got proactive, using a survey as well as one-on-one communication to suss out the obstacles. After making changes based on the feedback, shoe compliance shot up from 35 percent to 85 percent, contributing to a 42 percent reduction in lost-time claims and a 46 percent reduction in injuries.

For the shoe program, as well as every RRH safety initiative, Manske’s team takes the same approach: engaging employees to teach and encourage safe behaviors rather than punishing them for lapses.

For some of this year’s Teddy winners, success was born of the company’s willingness to make dramatic program changes.


Delta Air Lines made two ambitious program changes since 2013. First it adopted an employee advocacy model for its disability and leave of absence programs. After tasting success, the company transitioned all lines including workers’ compensation to an integrated absence management program bundled under a single TPA.

While skeptics assume “employee advocacy” means more claims and higher costs, Delta answers with a reality that’s quite the opposite. A year after the transition, Delta reduced open claims from 3,479 to 1,367, with its total incurred amount decreased by $50.1 million — head and shoulders above its projected goals.

For the Massachusetts Port Authority, change meant ending the era of having a self-administered program and partnering with a TPA. It also meant switching from a guaranteed cost program to a self-insured program for a significant segment of its workforce.

Massport’s results make a great argument for embracing change: The organization saved $21 million over the past six years. Freeing up resources allowed Massport to increase focus on safety as well as medical management and chopped its medical costs per claim in half — even while allowing employees to choose their own health care providers.

Risk & Insurance® congratulates the 2017 Teddy Award winners and holds them in high esteem for their tireless commitment to a safe workforce that’s fully engaged in its own care. &


More coverage of the 2017 Teddy Award Winners and Honorable Mentions:

Advocacy Takes Off: At Delta Air Lines, putting employees first is the right thing to do, for employees and employer alike.


Proactive Approach to Employee SafetyThe Valley Health System shifted its philosophy on workers’ compensation, putting employee and patient safety at the forefront.


Getting It Right: Better coordination of workers’ compensation risk management spelled success for the Massachusetts Port Authority.


Carrots: Not SticksAt Rochester Regional Health, the workers’ comp and safety team champion employee engagement and positive reinforcement.


Fit for Duty: Recognizing parallels between athletes and public safety officials, the city of Denver made tailored fitness training part of its safety plan.


Triage, Transparency and TeamworkWhen the City of Surprise, Ariz. got proactive about reining in its claims, it also took steps to get employees engaged in making things better for everyone.

A Lesson in Leadership: Shared responsibility, data analysis and a commitment to employees are the hallmarks of Benco Dental’s workers’ comp program.


Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]