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Risk Data Integration Elevates Healthcare ERM

A truly integrated healthcare risk management platform will improve provider organization efforts to practice effective Enterprise Risk Management (ERM).
By: | April 18, 2017 • 6 min read

Healthcare risk management starts with patient safety. No other industry holds responsibility over people’s quality of life quite like healthcare, where mistakes hold dire consequences for patients, families, providers and organizations.

But there are many more risks to consider beyond this critical area.

Governance and compliance risk, emergency preparedness and business continuity, vendor and supply chain risk and strategic risks don’t exist in isolation. They are all interconnected, and many can impact patient safety.

“Patient safety is the traditional entry point for risk management in healthcare,” said Jay Lechtman, Senior Director, Market Development & Strategy, Riskonnect, “but you also need to look at the whole picture to understand how your risks are connected.”

“Just as healthcare provider organizations adopted lean six sigma from manufacturing, safety checklists from aviation, and high-reliability organizations from nuclear energy and defense, they are now adopting enterprise risk management from other industries — such as financial services — as a best practice.”

But ERM doesn’t necessarily place risks in context, and can still be fragmented. To ensure a more holistic approach, risk managers need to practice it as integrated risk management.

What is Integrated Risk Management?

Senior Director, Market Development & Strategy

Integrated risk management calls for risk managers to see the connections between different areas of risk and find solutions that mitigate the total exposure.

In a primer for member boards and trustees, the American Society of Healthcare Risk Management (ASHRM) explains that organizations can start with an enterprise risk management approach and then make comparisons among its risks to see how they interact with one another and what cumulative impact they have on the organization.

“That elevated view of risk is integrated risk management,” Lechtman said. AHSRM has been making efforts since 2014 to educate healthcare organizations on integrated risk management and provide tools to develop the approach.

And most if not all of these efforts come back to improving patient safety.

Pharmaceutical supply chain risk, for example, has often been involved with potentially dangerous medication errors.

“Medication errors are a commonly reported patient safety event, and drug shortages have frequently been identified as a causal or contributory factor in these errors,” Lechtman said. “It’s not a surprising fact. Clinicians unfamiliar with new drugs and their prescription and administration protocols are more likely to make mistakes.”

Yet, identifying drug shortages as a factor in isolation requires lengthy investigations, root cause analyses and enough data aggregation to see clear trends.  Somewhere there is a disconnect between supply chain risk management and downstream clinical risk management. Fragmented ERM fails to take into account how vendor risks can directly impact patients.

Now, external resources – like the FDA’s Drug Shortages Database – help healthcare providers monitor and manage this issue, but Lechtman argues that effective integrated risk management could have helped the solve the problem internally.

“In integrated risk management, the pharmacy supply chain risk could be identified and mitigated much faster, with protocols put in place to train staff on use of identified alternative medications to reduce unfamiliarity and error,” Lechtman said.

Crisis management and business continuity offer another example. New Conditions of Participation for Medicare that go into effect later this year will require healthcare providers to improve emergency preparedness, which includes having business continuity plans. Patient safety is again a critical factor in planning for transportation and use of backup supplies and facilities in the event of an emergency.

Nearly all hospitals and health systems report trying to implement ERM at some level of their organization. But, even if they want to integrate it, they have lacked the technology to enable the vision.

“Legacy vendors focus on patient safety, claims and risk management specifically designed for healthcare. They don’t support broader risk management, governance and compliance risk that healthcare organizations sorely need,” he said.

Achieving True Integration

Other industries, where patient safety isn’t a consideration, have been working towards an integrated approach for years. The financial services sector, for example, has been implementing Governance Risk and Compliance (GRC) solutions for much longer due to its exposure to regulatory and compliance risk. The healthcare industry’s late arrival to ERM gives it a unique opportunity to learn from others’ mistakes and “leapfrog” over other sectors, Lechtman said.

“Just as much of the developed world skipped building expensive wired communications infrastructure in favor of cell phones, healthcare has the opportunity to leapfrog into true integrated risk management and avoid the pitfalls of a fragmented, siloed ERM approach,” he said.

However, “it’s hard to succeed in integrated risk management when information systems can’t handle it,” Lechtman said.

The ideal integrated risk management solutions for healthcare need to excel at helping provider organizations identify and manage their unique hazard risks — like patient safety — while seamlessly scaling to other insurable and strategic risks types that healthcare shares with other industries. And, of course, they need to be able to secure sensitive healthcare data and support healthcare privacy compliance.

Seeing is Believing

Riskonnect’s Integrated Risk Management Solutions™ check all the boxes. Scalable on a single platform, the system can handle everything from patient safety, patient relations, claims and litigation management, peer review, accreditation and HIPAA compliance, employee safety and health, governance risk, reputation risk, reimbursement risk, vendor and supply chain risk, business continuity management and strategic risk.

“We’ve taken lessons from other industries, and we’ve incorporated that into our healthcare approach so that, instead of providing another limited point solution, we can do everything for healthcare risk and do it well,” Lechtman said.

Riskonnect backs up its technology with a combination of clinical healthcare experience and risk management expertise is that is necessary for risk managers to draw the connections between patient safety and other risk areas.

“If you can make the connection from other risk areas back to patient safety, you can improve that critical risk area faster and more effectively. “Limited and siloed patient safety systems just can’t do that.”

Riskonnect’s Integrated Risk Management Solutions™ can house and allow access to data and workflows connected to all risks. The solutions provide all the functions that a risk manager or claims professional might need, from notifications to determination of compensability through to follow-ups, and everything in between.

The description alone is compelling, but nothing compares to actually experiencing everything the system can do on a day-to-day basis.

“Seeing really is believing,” said Lechtman. “People are blown away when they see what true integrated risk management can accomplish.”

For more information on Riskonnect Healthcare, visit: https://riskonnect.com/integrated-risk-management-solutions/healthcare/

For more information on Riskonnect Integrated Risk Management Solutions, visit: https://riskonnect.com/integrated-risk-management-solutions/

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Riskonnect. The editorial staff of Risk & Insurance had no role in its preparation.




Riskonnect is the only global provider of Integrated Risk Management technology solutions. Built on the world’s leading cloud platform, Riskonnect finally allows you to break down the silos and unite your entire organization.

Black Swan: Cloud Attack

Breaking Clouds

A combination of physical and cyber attacks on multiple data centers for cloud service providers causes economic havoc. Even the most well-prepared companies are thrown into paralyzing coverage confusion.
By: | July 27, 2017 • 10 min read

Scenario

By month 16 of the new presidential administration, the Sunshine Brigade is more than ready to act.

Stoked by their anger over rampant economic inequality, the mostly college-educated group of what might best be called upper-middle-class anarchists — many of them from California, Oregon and Washington State — put in motion the gears of a plan more than two years in the making.

Their logic, to them at least, is unimpeachable. Continued consolidation of economic power into the hands of fewer and fewer corporations is creating a world where the rich increasingly exploit and shut out the poor.

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The rise of the techno giants is accelerating this trend, according to the Sunshine Brigade’s de facto leader Emily Brookes, an All-American rugby player and a graduate of Reed College in Oregon.

With a new presidential administration seemingly bent on increasing the economic advantages of the rich with no end in sight, nothing to do then but break things up; and in so doing break the hold of this technology oligarchy.

As Emily Brookes so forcefully put in her instant messages to the other members of the brigade: Break the Cloud.

With more than 500 members, many of them with ample financial and technical resources, the Sunshine Brigade is very capable of delivering on its plan for a two-pronged attack.

It is also radicalized enough to justify the loss of some human life, even its own countrymen, to “save” — in its collective logic — the tens of millions of global citizens that are living as virtual slaves in this callous, exploitative global economy.

With websites and digitally connected services large and small down for days, irritation turns to fear.

The first wave in the attack is an attempt to infect and shut down the data centers for the top three cloud service providers. It takes months to set up this offensive.

Rather than rely on a phishing scam from outside the firewalls of the service providers, The Sunshine Brigade uses its social and business connections to place three members on each of the cloud provider’s payrolls. An infected link from someone you know, someone in the cubicle right next to you, seems like an unstoppable play.

It only partially works. Only one of the cloud service providers is harmed when an unsuspecting employee clicks on a link from their traitorous co-worker. The released malware manages to cripple a major cloud service provider for 12 hours.

With millions of users affected, the act creates substantial disruption and garners global headlines. Insured losses are around $1.5 billion. But this is just the beginning.

The morning after, the Sunshine Brigade unleashes a far more devastating and far more ruthless Round Two.

Using self-driving trucks, the Sunshine Brigade smashes into five data centers; three on the West Coast, and two in the Midwest. Fourteen employees of those cloud servers are killed and another 23 injured; some of them critically.

This time the Brigade gets what it wanted. The physical damage to the data centers is substantial enough that it significantly affects three of the top four cloud service providers for five days.

With websites and digitally connected services large and small down for days, irritation turns to fear.

Small and mid-sized banks, which host their applications on clouds, are shut down. Small business owners and consumer banking customers immediately feel the brunt. Retailers that depend on clouds to host their inventory and transaction information are also hit hard.

But really, the blow falls everywhere.

In the U.S., transportation, financial, health, government and other crucial services grind to a halt in many cases.

Not everyone is disrupted. Some of the larger corporations are sophisticated enough in their risk management, those that used back-up clouds and had steadfast business resiliency plans suffer minimal disruption.

Many small to mid-size companies, though, cannot operate. Their employees can’t get to work and when they can, they sit idly in front of blank computer screens connected to useless servers.

For the man on the street, this is hell.

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Long lines blossom at the likes of gas stations, banks and grocery stores. A population already on edge from a steady diet of social media provocation becomes even more inflamed.

By nightfall of Day Five, the three major cloud service providers are recovered, and digital “normalcy” begins to creep back. But for many small and medium-sized businesses, the recovery comes way too late.

Economic losses promise to register in the tens of billions. It’s not being too imaginative to think that losses could hit the $100 billion mark.

Two multinational insurers based in the U.S., three Lloyd’s syndicates and a Bermuda insurer signal to regulators that their aggregate cyber-related losses are so great that they will most likely become insolvent.

Emily Brookes and her cohorts were willing to kill more than a dozen people to promote their worldview. In their youthful naiveté, they could not know just how much suffering they would cause.

Observations

For some commercial insurance carriers, the aggregated losses from a prolonged disruption of cloud computing services could be catastrophic, or close to it.

“It’s on a par with any earthquake or hurricane or tornado,” said Scott Stransky, an associate vice president and principal scientist with the modeling firm AIR Worldwide.

AIR modeled the insured losses for the Fortune 1,000 were Amazon’s cloud service to go down for one day. They came up with a figure of $3 billion.

Now consider that most businesses in this country are small businesses, with not nearly the risk management sophistication of the Fortune 1000. Then consider a cloud interruption of five days or more.

Mark Greisiger, president, NetDiligence

“Almost any company you talk about today would rely to some extent on the cloud, either to host their website, to do invoicing, inventory, you name it — the cloud is being used across the board,” Stransky said.

“It’s a significant issue for insurers and one we think about a lot,” said Nick Economidis, an underwriter with specialty carrier Beazley.

“Should a cloud service provider go down, everybody who is working with that cloud service provider is impacted by that,” he said.

“Now, pretty much every software maker is on the cloud,” said Mark Greisiger, president of NetDiligence.

“In the old days, someone would come in and install software on your servers and come in annually for maintenance. That’s all gone bye-bye. Everybody who makes software is forcing you onto their private cloud,” Greisiger said.

The aggregation risk for carriers is complicated by the degree of transparency they have into which insured’s applications are hosted on which cloud provider.

Now here’s the even trickier part. Clouds outsource to other clouds.

“It’s almost becoming a spider’s web of interdependencies on who has access to what in terms of upstream and downstream providers,” Greisiger said.

Determining which of their insureds is hosted on which cloud, and in turn, where that cloud is outsourcing to other clouds can be very difficult for carriers to determine.

Even if a company is careful to diversify the risks they’re taking, they might not realize that a high percentage of insureds are even with the same cloud provider. They could be hit with devastating losses across their entire portfolio of business, said an executive with BDO consulting.

AIR’s Stransky said his company launched a product in April, ARC, which stands for Analytics of Risk from Cyber, which is designed to help carriers gain that much needed transparency.

Among insureds, surviving an event of this magnitude will depend not only on the sophistication of their risk management department, but on the company’s overall ability to negotiate contracts with vendors and suppliers that will indemnify the company in the case of a cloud outage of this duration.

It will also depend on organization’s understanding that there is no off-the-shelf solution that will prevent an event like this or make a company whole after it.

Shiraz Saeed, national practice leader, cyber, Starr Companies

Experts say contracts with cloud service providers, customers and suppliers must be structured so that a company is defended should it lose cloud access for as much as five days or more.

Best practices also include modeling just what your losses would look like in this area, and vetting your full portfolio of insurance policies to understand how each would respond.

One broker said buyers can’t be blamed if the complexities of the coverage issues at stake here are initially hard to grasp.

“It’s becoming a spider’s web of interdependencies on who has access to what.” —Mark Greisiger, president, NetDiligence

“I think it’s the broker’s job to inform the client of this exposure,” said Doug Friel, a vice president with JKJ Commercial Insurance, based in Newtown, Pa.

“You may have business interruption coverage for direct physical damage to your building. But have you ever thought about your business income if your IT structure goes down?” Friel said.

He said many buyers might not realize there is a difference.

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Large businesses should have the resources to demand from their cloud service providers that they be indemnified for the entirety of a cloud failure event. There will be a fee for that, but it will be well worth paying, Friel said.

“You have to push,” Friel said. “They are going to say, ‘Here is our standard contract, sign it.’ ”

Don’t settle for that, he said, although many do in ignorance, he added.

“Where possible, we would look for clients to negotiate their contracts. These business relationships should be mutually beneficial, even if one of these events occur,” said Shiraz Saeed, national practice leader, cyber, for the Starr Companies.

It’s a partnership, he said.

“It shouldn’t be a zero sum game on either side. I think there should be an understanding of what the potential loss might be and then designing a contract around that,” he said.

While cloud service providers are known for having high grade security systems, most average organizations don’t have the means for that. But no matter what a company’s resources, the first step is modeling where your digital assets are, and what you and your customers stand to lose if you lose access to them.

“Most insureds don’t seem to understand the amount of individual loss that you could be subject to,” said Jim Evans, leader of insurance advisory services at BDO Consulting. “Usually this stuff is measured in hours,” he said. “But what if a cloud provider is out for three or four days?” he said.

“Trying to quantify what you did lose in an event is hard enough. Trying to do a modeling exercise about what you could lose? It’s something that just doesn’t get done enough,” he said.

Once you have an understanding of what you own and what you stand to lose, the next step is prioritizing the protection of the assets you have. That means drilling into your contract with your cloud service providers to get the maximum indemnification.

It also means spreading your risk so that if at all possible, not all of your assets or your customers’ assets are housed by one cloud service provider. Cloud platforms can be public, private, or a hybrid of the two.

Understanding where your assets are in that architecture is crucial. Spending the money to insure that they are protected behind a diverse menu of firewalls is highly advisable.

Navigating the different iterations of business interruption coverage in property, cyber and kidnap and ransom policies is also important.

Make sure your broker can provide clarity on the different types of coverages and tailor them to your needs, experts said.

The concept of design thinking is really what’s in play here. Organizations have to work with vendors in every aspect of their operations to design a risk management system that can sustain this kind of hit.

“Build a better mousetrap to protect yourself,” said JKJ’s Friel.

“Depending on your service, you need to have the best and the brightest designing this stuff. Spread the risk.”

“Don’t be afraid to ask for more,” he said.

Postscript

In engineering an attack on the cloud, Emily Brookes and her cohorts accomplished the opposite of what they set out to do.

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Only the largest corporations with the most sophisticated risk management programs were able to survive the attempt to break the cloud with manageable losses.

Small businesses, the true backbone of the U.S. economy, suffered terribly. Entrepreneurs who put their life’s work into their business lost it in many cases.

Those on the lowest part of the economic scale, the working poor, lost their jobs and their ability to cover their rent and grocery bills. They joined the ranks of those subsidized by the government by the millions.  The attempt to break the cloud resulted in an even more polarized society. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]