Risk Insider: Lance Wright

The HR and Risk Management Nexus

By: | March 28, 2017 • 3 min read
Lance Wright is Partner and CEO at Lance Wright & Associates. He has decades of global business experience, with the bulk of his career spent as an international oil and gas executive. He can be reached at [email protected]

Business leaders, CFOs, risk managers and HR professionals should continually review how the organization approaches people-related risk management issues. Today, as part of their critical strategic business processes, successful organizations are constantly looking for ways to better understand the nexus between HR — the human resources of an organization — and effective risk management. Here is a quick review of the key things to consider.

Develop a cross function partnership.

An effective enterprise risk management program invariably focuses at some point on the big chunk of an organization’s financial resources associated with the pension, insurance, savings and other benefits plans that the HR function usually manages and administers. As a result, a partnership is developed in many organizations between HR, the finance organization and the risk management function to make sure that the risks associated with these HR plans and programs are well understood and properly addressed.

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Continually rethink HR-related risks.

This cross function partnership makes sure that advancements in technology and computing power are used to identify, analyze, model and ameliorate not only the HR-related financial risks in the organization but also those that emerge from the behavior of people.  This continual rethinking of the HR and risk management nexus often leads to increased understanding of the events and actions that can impact, or be done by, the people in an organization.  From planning for pandemics to identifying and protecting against physical and information security vulnerabilities, forward-thinking organizations make sure there is a coordinated HR and risk management review process overseen by senior management.

Understand the insider threat.  

Well-run organizations that have been rethinking the HR and risk management nexus understand that the actions of its human resources, whether malicious or inadvertent, can represent one of the greatest potential risks to the bottom line. They understand and guard against the “insider threat,” the employee who may, for example, introduce a virus into an organization’s information system through an infected thumb drive. They know that even if unwittingly done, this sort of action by an employee can bring an enterprise’s operation to its knees.

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Look for hidden HR-related risk issues.

Thoughtful organizations know that despite the progress they have made in rethinking the HR/risk management nexus, there are always seemingly people-related processes that in actuality are really about organization risk.  For example, many organizations think of succession planning and leadership development as solely an HR-related process.  However, progressive organizations that have been rethinking the HR and risk management nexus believe succession planning should be viewed as a process designed to prevent the risks associated with not being able to fill vacancies in critical positions with the right people. They seek out other so-called HR processes that may really deal with risk.

The continual review of the HR and risk management nexus is well underway in top-notch organizations. More organizations should follow suit.

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.

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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.

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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. &

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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]