Risk Insider: Chris Mandel

Predicting the Unpredictable

By: | May 15, 2017 • 3 min read
Chris Mandel is SVP, strategic solutions for Sedgwick and Director of the Sedgwick Institute. He is a long-term risk management leader and a former president of RIMS. He can be reached at [email protected]
Topics: Risk Insider

One thing that has become commonplace in the last 15 years is the unexpected: 9-11 was unexpected. Hurricane Katrina was unexpected. The rise of ISIS was unexpected. Target Corporation’s point of sale hack, now valued at more than $1 billion total impact, was unexpected. Donald Trump’s 2016 election to president of the United States was unexpected (just ask Hillary Clinton).

Thus the unexpected, or commonly considered “emerging risks,” are now less unexpected. Another way to think about this is that those “black swans” that were at one time unknown to exist, have increasingly been discovered in their hiding places, often too late to prevent and sometimes too late to effectively mitigate their impact.

While most risk practitioners have come around to agreeing that one of the better synonyms for risk is “uncertainty,” there is little agreement about how to better get ahead of the new reality of this increasing uncertainty.

We must become more capable of fulfilling the growing expectation of being reliable, strategic advisors to management and governance in ways that directly and indirectly improve the chances of success through mission accomplishment.

Yet the most common question I used to receive from senior management and boards was “tell me what I don’t know or can’t see or have no idea is coming that could destroy the plan or even the organization itself.”

Perhaps they thought I had a crystal ball? I did not; I do not.

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And so risk leaders are increasingly challenged with the expectation of identifying and addressing those risks that few, if anyone, can see or understand and yet can either be massively destructive or, on the flip side, sizable lost opportunity.

A paucity of information is usually a key hurdle. Reluctant risk ownership is another. Convincing decisionmakers of their relevancy can be the showstopper, especially in our common environments of constrained resources. Yet as risk leaders, we are expected to be strategic and have vision for things others can’t see or even imagine.

Scenario and stress testing may be helpful. Monte Carlo simulations may be less so. This by its very nature is a challenge that I think calls for more qualitative than quantitative solutions, more acceptable in some environs than others — less scientific, more nuanced. Both will be important to the solution.

No matter the magnitude of the challenge, the big win for risk leaders of the future will be the ways in which uncertainty can be lowered by reducing the number and impact of unexpected risk events. While no small task, with emerging tools such as those enabled by artificial intelligence (AI), we can do this.

We must become more capable of fulfilling the growing expectation of being reliable, strategic advisors to management and governance in ways that directly and indirectly improve the chances of success through mission accomplishment.

This does not mean we must have the precisely right answer to every potential risk. It does mean we need to improve management’s understanding and awareness of the possibilities and what can be done about them, moving measurably beyond the probabilities that have normally been undergirded by historical data enabling reliable prediction.

We can do it. We will be expected to do it to earn our keep. We must do it to validate the discipline as the true profession to which it has for so long aspired.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

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