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Risk Insider: Terri Rhodes

Paid Leave Gets More Complicated

By: | September 25, 2017 • 4 min read
Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

Earlier this year, I forecast the five absence and disability management trends for 2017.  One of them was paid family leave. What I didn’t know at the time was how many employers were working on developing and implementing company programs.

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DMEC has hosted several local chapter meetings in 2017, showcasing employers who recently implemented a paid family or parental leave program. At the DMEC Annual Conference, we also devoted a morning to this same topic.

The exciting thing to see was that many of these companies were not Silicon Valley or household-name employers, who typically lead the way in enhanced benefit packages. While some were large companies with well-known brands, the message was not about the size of the organization but rather the reasons for implementing a paid family leave program in their organization. These companies have a desire to do the right thing, to ensure their programs reflect their company culture, to attract new employees and retain existing employees.

According to Pew Research, 85 percent of Americans support paid leave for an employee’s own serious health condition and 82 percent support paid maternity leave, while 69 percent support paid paternity leave. And 67 percent also support paid leave to care for a seriously ill family member.

Without a national law, states, localities, and regulators continue to weigh in with new leave mandates and interpretations on how paid programs must be offered.

Some states have recently legislated paid family leave and there is more to come. Employers are grappling with the difficulties that come with continual changes in paid leave laws and regulations. This was confirmed in the latest DMEC Paid Parental Leave Pulse Survey, conducted with The Standard.

While the vast majority of employers want to implement or expand their paid family leave programs, costs and complexity create barriers. The difficulties and limitations are largely due to the lack of a federal mandate. In a 2014 study conducted by the International Labour Organization, Papua New Guinea and the United States are the only two countries, out of 185, without a national public policy for paid maternity leave. 78 of those 185 countries have a mandated paternity leave.

Without a national law, states, localities, and regulators continue to weigh in with new leave mandates and interpretations on how paid programs must be offered. For example, the EEOC recently sued Estee Lauder because the company does not provide new fathers with the same paid leave as new mothers.

In addition, state and federal FMLA laws have different regulations on who is considered a “covered family member,” and many family units now vary beyond a “one mom, one dad” structure.

All of this makes it important to define the terms as companies look to build their paid leave programs.

Paid Family Care Leave: This is defined as paid leave to care for a family member as defined by policy. This typically refers to immediate family (spouse, domestic partner, child, step relationships and parents), though it may apply to grandparents, grandchildren or in-laws depending on the policy.

Paid Parental Leave: This is defined as paid leave for new mothers, fathers, adoptive parents, primary or contingent caregivers.

Primary Caregiver: A primary caregiver is a parent, family member or guardian who has self-identified as the person who has primary responsibility for a child.

Contingent Caregiver: A contingent caregiver is a parent, family member or guardian who has self-identified as the person who supports or partners with the primary caregiver to care for a child.

Below are some other issues you should discuss if your organization is considering rolling out or upgrading a paid leave program.

Gender Equality: Social attitudes about the relationships among men, women and children continue to change. Rather than “mothers” and “fathers” with distinct roles, many people now think in terms of “parents” with shared and overlapping rights and responsibilities. The increased reality and visibility of same-sex parents has helped to accelerate this trend. As the EEOC case noted above indicates, treating people equally is always a safe route to reduce risk. It’s also increasingly important to attract top talent in a tight labor market.

Extent of Coverage: Will paid leave cover just managers? If it covers everyone, will management and non-management employees receive different types of paid leave? Again, while each organization is different, uniform policies always reduce risk (and administrative costs). They also communicate a less rigid organizational structure, and play an important part in attracting top talent in today’s competitive hiring environment.

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Full or Partial Pay: While more employers provide full paid leave, many still pay a percentage of an employee’s salary. This is almost always an affordability issue. As the labor market tightens, these costs are increasingly weighed against the need to attract and retain desired employees. More generous paid leave programs communicate a commitment to work-life balance. This can sometimes be even more effective than higher base pay in attracting skilled and dedicated workers.

These are just a few of the issues around implementing an effective and compliant paid leave program. Even though external conditions continue to evolve, there are best practices that are working in today’s market. Learning what peers are doing is a good way to reduce risk and maximize the competitive advantages of this increasingly important employee benefit.

More from Risk & Insurance

More from Risk & Insurance

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.

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In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.

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Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”

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How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.

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One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynold[email protected]