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Risk Insider: Warren Berey

The Importance of Duty of Care for International Employers

By: | March 6, 2017 • 2 min read
Warren Berey is SVP of Multinational Insurance at Generali Global Corporate & Commercial U.S.A., overseeing the development of international casualty and package insurance solutions for U.S. companies and U.S. subsidiaries of foreign companies. He can be reached at [email protected]

Among the more difficult tasks corporate risk managers face is identifying possible threats to employees that engage in business travel and international assignments.

While most firms ostensibly recognize that they have a moral obligation to ensure the safety of employees working in foreign areas, some do not understand the scope of these responsibilities and are ill prepared to deal with the possible fallout of disaster scenarios.

This may seem like a straightforward issue that any qualified risk management team should be able to handle on its own, but it’s not. Implementing a comprehensive program to ensure appropriate worldwide coverages and services that address potential scenarios is a complicated, detailed process.

Putting together the right solution often requires a tremendous amount of input from risk management experts inclusive of experienced global brokers and insurers that work on behalf of a given company on a case-by-case basis.

Quite simply, there is no one-size-fits-all risk management solution to ensure all duty of care obligations are met around the world. What qualifies as reasonable coverage in one country or for one organization’s needs may be entirely inadequate in another instance.

Therefore, risk managers must go the extra mile to ensure their international workforce is fully protected. If they don’t, the company could face long, drawn-out lawsuits capable of inflicting tremendous financial and reputational damage. While there are obvious risk management protections, lawsuits can arise from a wide range of occurrences – from everyday accidents to complex global threats.

In fact, there are countless instances where organizations failed to implement adequate risk management policies to address their duty of care and keep employees safe with respect to the potential hazards of each location. The fallout of such failures is severe, not only for families who have experienced devastating loss, but also for companies forced to deal with the legal, financial and reputational consequences.

This may seem like a straightforward issue that any qualified risk management team should be able to handle on its own, but it’s not.

Therefore, the importance of comprehensive international risk management policies to address adequate duty of care responsibilities should be abundantly clear. And in order to implement the best solutions, it is essential to partner with the right insurer.

Working with an experienced carrier with a global network that can coordinate local policies around the world ensures flexible, cost-effective solutions that optimize coverage and service. Unfortunately, companies often develop patchwork strategies that rely on fragmented programs put together by unrelated insurance brokers and carriers, which can lead to inefficiencies and dangerous gaps in coverage.

Experienced global insurers utilize a mature network of providers to ensure service, regulatory and legal compliance, risk engineering, and expert claims handling. Further, companies with a seasoned network have local operations that rely on established strategic relationships with thoroughly vetted legal, security, medical and other providers. This in turn allows carriers to offer flexible solutions, optimize the response to damages and threats, keep claim expenses in line and policy costs competitive.

Having the right resources in place can mean the difference between an expensive payout and walking away from a questionable lawsuit or fraudulent claim.

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.

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Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.

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More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”

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Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]