#MeToo, #TimesUp – these hashtags and the movements they represent were originally focused on the entertainment industry and political figures.
But no longer.
Over the last few months many corporate executives have been outed for their inappropriate or illegal actions toward women in the workplace. And it seems that a new bold-faced name appears in the headlines each week.
These high-profile cases are just the tip of the iceberg. While the big names may grab headlines, no industry or company of any size is immune to the risk of workplace harassment. Increased awareness around the issue is emboldening others to speak up and sexual harassment is now an exposure knocking on the door of every boardroom.
“We’re in the midst of a culture shift where society is paying more attention to equality and safety in the workplace,” said Gregg Glick, Senior Vice President, Private/Not-for-Profit Practice Lead, Private/Healthcare Division, Allied World.
But while the spotlight is new, the issue at hand is not.
“As an insurer, we have long seen allegations of workplace harassment resulting in Employment Practice Liability (EPL) claims, including not just harassment but also hostile work environment and wrongful termination,” Glick said. “Our focus has always been on managing the risk by fostering a safe work environment. It’s not just about an insurance policy, it is about a culture.”
Establishing a corporate culture in which safety and respect are valued and protected is the best way to manage the exposure long term.
To create and continually reinforce this culture, companies need to reevaluate their policies, incident reporting procedures and response plans. To ensure up-to-date, clear and effective policies, they can rely on the risk expertise of insurers with experience in and commitment to the employment practices liability space.
Small companies may have no formal written policies whatsoever. And employers with outdated policies may also be underprepared to address the exposure.
“Policy effectiveness is determined by how contemporary and well-reviewed they are, and by how they are deployed and enforced in the workplace. This is where you’re going to start to build the culture that’s going to foster a safe environment,” Glick said. “Policies that are outdated, unclear, or not well-communicated to employees don’t achieve much.”
Employee handbooks that haven’t been updated in a decade may no longer be comprehensive enough to address that various realms and modes in which workers interact. For example, they likely do not account for the prevalence of smartphones and social media or address cyber bullying.
Employees also need a way to report inappropriate behavior safely. This could mean setting up an anonymous hotline managed by a third party, or a private way to notify human resources. It has to be more robust than simply having employees report incidents to their direct manager.
“What if the manager is the harasser?” Glick said. “Few people would be willing to confront him or her directly and risk threatening their job status. Employees need to know how to share information with someone who’s going to help them. These policies have to be clear, easy to follow, and communicated often.”
Once an employee files a complaint, there also must be clear investigation procedures.
“Given the amount of public attention on sexual harassment in the workplace, companies may be inclined to take immediate action because they don’t want to look like they stood by and did nothing,” Glick said. “Every allegation must be taken seriously, but companies need to be able to conduct thorough investigations.”
Making a reactionary decision like terminating or suspending the accused on the spot could result in a wrongful termination claim if it turns out there was no bad behavior, and damage the company’s reputation.
If an investigation corroborates an employee’s claim and someone is guilty of inappropriate or hostile behavior, a clear response protocol should dictate next steps. A zero-tolerance policy ensures that a company’s response is consistent across the board, regardless of the severity of the claim or the position of those involved.
Every step that would normally be taken to terminate an employee should remain in place, and documented thoroughly. Rushing through an investigation or skipping steps of the process can be a violation of employment law and open a company up to wrongful termination lawsuits.
“Not every incident is preventable. There will always be bad apples, but your culture is defined by how you respond,” Glick said.
Crystal clear procedures make it easier to catch, investigate and respond to incidents, but crafting these policies to be compliant and accessible to employees can be challenging, especially for small and mid-size companies with more limited resources.
Tools are available in the marketplace to help risk managers strengthen their defenses.
Third party risk management consultants and service providers can help companies stay up to date on their state’s employment laws via monthly updates and real-time alerts. Training modules for employees also remind them of the consequences of inappropriate workplace behavior and reinforce company policies. Portals and libraries for human resource managers provide template forms and posters, additional training materials, and regulatory news.
Some also offer handbook-building tools, which allow companies to craft custom policies that are applicable to their workforce while remaining compliant with federal and state law. This can help firms update existing policies or create completely new ones.
Around-the-clock helplines are another critical resource that risk managers would be remiss not to take advantage of. Employment practices attorneys with state-specific expertise are on call to answer insureds’ questions and offer advice, free of charge.
“This is an opportunity to have an experienced attorney walk you through a situation before it turns into a claim. If someone has a complaint, and you’re unsure of the proper protocol, how to launch an investigation, or what is required by law in your state, the answer is only a phone call away,” Glick said.
“We offer a 24/7 helpline, among other services, through our relationship with the workplace HELPLINE, powered by Enquiron®, a risk management consulting firm. Companies that utilize these services proactively position themselves for better claim outcomes.”
Unfortunately, many HR managers and risk professionals are unaware of services, missing opportunities to mitigate their exposure and avoid potential claims. Rather than leave insureds to find these resources on their own, Allied World works with brokers to educate them about their offerings from the time a policy is bound.
Amid a societal shift demanding change, companies can expect employment practices insurance coverages to shift as well. Awareness will likely drive up claim frequency, and settlements for EPL lawsuits are climbing. As a result, rates could trend upward as well.
“Brokers can anticipate some market hardening, rising rates, tighter terms and conditions,” Glick said. “We have always been careful and thoughtful about risk selection, and thus are well positioned to not have to react hastily amid the culture shift and changing market conditions. All insurers in this space should be proactively analyzing their books to ensure they are accepting the right risks.”
Allied World evaluates each risk on its own merits, looking at criteria like industry type, employee size, and region. It carefully evaluates its portfolio on a regular basis to check its aggregate risk and limits. This means they are positioning themselves to stay competitive in the market over the long haul and avoid sudden changes in terms and conditions or rates.
“And that’s what you want in a partnership – no surprises,” Glick said. “We’ve been in the market for 10 years. We understand the needs of mid-size companies, and are committed to meeting those needs consistently.”
Communication with brokers and insureds is key to staying ahead of the risk and positioning every party to be prepared for changes in the exposure itself and the market landscape. Allied World’s senior leaders, each with an average 10 years of experience in the field, undergo continual education around the changing nature of the risk and regulatory landscape. Deployed throughout the country, they are always on-hand and accessible to answer insureds’ questions.
To learn more, visit https://www.alliedworldinsurance.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Allied World. The editorial staff of Risk & Insurance had no role in its preparation.
R&I: Who is your mentor and why?
Ellen Thrower, president (retired), The College of Insurance, introduced me to the importance of insurance as a component of risk management. Further, she encouraged me to explore strategic and operational risk as foundation topics shaping the role of the modern risk manager.
Chris Mandel, former president of RIMS and Risk Manager of the Year, introduced me to the emerging area of enterprise risk management. He helped me recognize the need to align hazard, strategic, operational and financial risk into a single framework. He gave me the perspective of ERM in a high-tech environment, using USAA as a model program that later won an excellence award for innovation.
Bob Morrell, founder and former CEO of Riskonnect, showed me how technology could be applied to solving serious risk management and governance problems. He created a platform that made some of my ideas practical and extended them into a highly-successful enterprise that served risk and governance management needs of major corporations.
R&I: How did you come to work in this industry?
From a background in corporate finance and commercial banking, I accepted the position of provost of The College of Insurance. Recognizing my limited prior knowledge in the field, I became a student of insurance and risk management leading to authorship of books on hazard and financial risk. This led to industry consulting, as well as to the development of graduate-level courses and concentrations in MBA programs.
R&I: What was your first job?
The provost position was the first job I had in the industry, after serving as dean of the Seton Hall University School of Business and founding The Princeton Consulting Group. Earlier positions were in business development with Marine Transport Lines, consulting in commercial banking and college professorships.
R&I: What have you accomplished that you are proudest of?
Creating a risk management concentration in the MBA program at Saint Peter’s, co-founding the Russian Risk Management Society (RUSRISK), and writing “Fundamentals of Enterprise Risk Management” and the “AMA Handbook of Financial Risk Management.”
A few years ago, I expanded into risk management in higher education. From 2017 into 2018, Rowman and Littlefield published my four books that address risks facing colleges and universities, professors, students and parents.
R&I: What is your favorite book or movie?
The Godfather. I see it as a story of managing risk, even as the behavior of its leading characters create risk for others.
R&I: What is your favorite drink?
Jameson’s Irish whiskey. Mixed with a little ice, it is a serious rival for Johnny Walker Gold scotch and Jack Daniel’s Tennessee whiskey.
R&I: What is the most unusual/interesting place you have ever visited?
Mount Etna, Taormina, and Agrigento, Sicily. I actually supervised an MBA program in Siracusa and learned about risk from a new perspective.
R&I: What is the riskiest activity you ever engaged in?
Army Airborne training and jumping out of an airplane. Fortunately, I never had to do it in combat even though I served in Vietnam.
R&I: If the world has a modern hero, who is it and why?
George C. Marshall, one of the most decorated military leaders in American history, architect of the economic recovery program for Europe after World War II, and recipient of the 1953 Nobel Peace Prize. For Marshall, it was not just about winning the war. It was also about winning the peace.
R&I: What about this work do you find the most fulfilling or rewarding?
Sharing lessons with colleagues and students by writing, publishing and teaching. A professor with a knowledge of risk management does not only share lessons. The professor is also a student when MBA candidates talk about the risks they manage every day.
R&I: What is the risk management community doing right?
Sensitizing for-profit, nonprofit and governmental agencies to the exposures and complexities facing their organizations. Sometimes we focus too much on strategies that sound good but do not withstand closer examination. Risk managers help organizations make better decisions.
R&I: What could the risk management community be doing a better job of?
Developing executive training programs to help risk managers assume C-suite positions in organizations. Insurance may be a good place to start but so is an MBA degree. The Risk and Insurance Management Society recognizes the importance of a wide range of risk knowledge. Colleges and universities need to catch up with RIMS.
R&I: What emerging commercial risk most concerns you?
Cyber risk and its impact on hazard, operational and financial strategies. A terrorist can take down a building. A cyber-criminal can take down much more.
R&I: What does your family think you do?
My family members think I’m a professor. They do not seem to be too interested in my views on risk management.