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Business Travel Risk

Risky Territory

As business travel increases, risk managers need intelligence and communication systems to keep employees safe.
By: | October 1, 2014 • 10 min read

In mid-August, Boart Longyear Co., a global mineral exploration company, removed nine employees from Liberia after the Ebola virus broke out in a nearby village.

“Our customer shut down operations, and we’re evacuating,” said Rob Osha, global director of risk management at the company in August.

“There’s a lot of talk about closing borders and not letting air travelers out, so we’re working right now to make sure our crews leave Liberia.”

Video: The Ebola crisis continues to worsen, with a “best case” estimate of 500,000 dead by end of January 2015.

It’s not just deadly diseases that worry risk managers.

“A few years ago,” said Jan Randolph, director of sovereign risk at IHS Country Risk, “I was stuck in Qatar, due to go to Bahrain to visit some banks. This is when Bahrain had quite a lot of demonstrations and rioting going on.

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“We checked our website, and there was a UK travel government advisory that advised all UK nationals not to travel to Bahrain. That means if we went, our insurance cover was potentially not valid.

“In practice, it probably would have been okay, but that advisory made it a no go,” he said.

As economies become more interconnected, businesses expand globally and more employees are sent abroad, scenarios like Osha’s and Randolph’s may become the norm. Yet too many risk managers may be unaware of the risks involved with global travel or take the proper steps to ensure employees’ safety.

Growth of International Travel

According to the Global Business Travel Association, U.S. spending on international travel may jump as much as 6.6 percent, to $289.8 billion in 2014, while total person trip volume is expected to increase 1.7 percent, to 461 million trips for the year.

Charlie LeBlanc, vice president of security services, UnitedHealthcare International

Charlie LeBlanc, vice president of security services, UnitedHealthcare International

“In this world that is smaller and more mobile, emergency evacuations happen more often than they did 10 years ago,” said Charlie LeBlanc, vice president of security services at UnitedHealthcare International (formerly FrontierMEDEX).

“That also has a lot to do with the fact that the world, politically, is much more volatile than in the last 20 or 30 years. We have to be able to react quickly.”

Steve Kellner, global head of intelligence and risk assessment for Verizon International Security Group, said: “I saw a news article recently that said there are only 11 countries not at war. The same article also said roughly only 60 percent of companies monitor their employees’ travel. It’s a big world, and a lot to keep up with.”

Kellner’s team monitors 15,000 to 18,000 employee trips per year.

Many smaller businesses or nonprofit organizations don’t have the budget for a security department that can educate their travelers [about security risks], so they depend on others, Kellner said. Problems can easily arise with “the little things that you don’t plan on.”

“Mining and oil and gas people have this buttoned up pretty tight,” Osha said. “They work in some of the most remote, tricky areas of the world.

“But there are a lot of companies that send a lot of business travelers that don’t necessarily work in the field. Even if you’re just traveling for a business meeting, things can change on a dime,” he said.

Pre-Travel Risk Mitigation

Travel preparation should begin before a flight is even booked.

“For very high risk countries, it’s a no go unless you get approval from the executive committee,” Osha said.

“I would do research on the security environment where they’re going, what I think the relative risk is and what the mitigations might be. Is the trip business-critical? Do we need to put that person at risk? Are there other ways to mitigate or not?”

“The most important asset you can have is information intelligence,” Randolph said.

“You need to know if the risk level is green or yellow or red, or if a developing scenario could reach a flash point.”

Video: The families of expat employees may be more at risk than the employees themselves.

Bob Gill, vice president of global security for Quintiles, a consulting firm for the life sciences industry, said his team develops risk profiles for every country they visit or may visit in the future.

“We cover security and safety, health and medical situations, medical infrastructure, regulatory issues, human rights issues, economic sanctions, bribery and corruption. Those are the key areas,” he said.

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Even when companies give the green light, travelers should receive safety and awareness training tailored to the area they’re visiting.

“We have to look at risk from a variety of angles,” LeBlanc said.

“We look from the perspective of, when do our travelers start to feel uncomfortable? What are their risk tolerances?”

Political stability, crime, and cultural differences should all factor into a risk assessment, he said.

“As companies and economies are growing, their workforces are going to countries they didn’t go to five years ago,” LeBlanc said.

“That means a lot of novice travelers. For some, it may be their first international trip. And it’s not to London; it’s to Bangkok.”

Pre-travel training should cover basic “Safety 101” principles — like moving in groups and not opening the hotel door if no visitors are expected — but it should also include general background information on the destination country.

Travelers should know everything from what weather to expect, to what behaviors are acceptable in different cultures, to what inoculations they may need. Gender-specific training may also be necessary; women face greater risk in certain places, LeBlanc said.

“We have a traveler tracking system that is tied into our corporate reservation system,” Kellner said.

“When employees book travel, my group is alerted two weeks to 30 days ahead of time. We meet with them, whether they’re a naïve traveler or a group that goes constantly.”

At Verizon International Security Group, the company organizes a “meet and greet” program through its local offices to pick up incoming travelers or arrange transportation for them. Boart Longyear coordinates with their customers to see if they can provide transportation.

Traveler Tracking

Some risk management and security departments utilize traveler tracking software to centralize employees’ flight and hotel reservations, so they always know who is in what part of the world.

Being able to locate people anywhere in the world in real time allows risk managers to focus their attention and resources where they’re needed. Ensuring safe travel on the ground requires coordinated efforts and constant communication.

additional photo for webFor example, if 18 out of 20 employees are accounted for in a region hit by an earthquake, more time and energy can be devoted to tracking down the last two, instead of everyone in the group. If no employees are in the area, then attention can be focused elsewhere, to the next evolving crisis.

Travel assistance companies like UnitedHealthcare International (UHI), iJET and Europ Assistance offer software programs that not only track where employees are, but can push out automatic communications notifying them of potential threats in the area — like earthquake or tsunami warnings — or reminding them to check in.

Typically updated at least once per hour, the systems provide real-time data that is so crucial to crisis response.

“In the really risky countries, we establish check calls,” Osha said, “where an employee checks in every few hours to our outsourced security company’s operations team.

“In some places in Africa, they actually hire military to follow their company convoy,” he said, “or we see if they can fly point-to-point to cut out some of the risk of traveling on the ground.”

The advent of advanced cell phone technology has made the job of employee monitoring and communication much easier.

“As little as 10 years ago,” LeBlanc said, “I’d be carrying four or five different cell phones depending on what country I was going to. Now I just need one. That kind of power is extremely beneficial; risk managers need to be able to account for their people in a very short period of time.”

Call centers that operate 24 hours a day — also manned by third party travel assistance providers — help ensure that employees can always reach someone if they run into trouble.

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“Communication is your lifeline in many cases,” Randolph said. “You have to think, as an employee, what would you expect from your company? Who would you want to contact in an emergency?”

Boart Longyear’s crisis hotline, provided by iJET, routes employees’ calls to the appropriate department, whether it’s a medical emergency, security issue or internal problem. More often than not, though, simple text messages or emails suffice to keep everyone connected.

“The best part of working for a telecommunications company,” Kellner of Verizon said, “is that most of our travelers go with a global phone. We can always text or call them to check on them and make sure they’re safe.”

Crisis Response

Sometimes, no amount of intelligence can prevent simmering tensions from bubbling over, and no amount of monitoring can keep employees away from a natural disaster. Travel risk management should include policies and plans for when companies need to pull their people out of harm’s way quickly.

The most common reason for evacuations is a medical issue, rather than violence or political unrest. Travelers, rather than their employers, usually make the call as to whether they will abandon their travel due to a health issue.

“In medical situations, there tends to be a wider circle of hesitance to go,” LeBlanc said. Potential for violence doesn’t seem to stop travel as surely.

The Ebola outbreak in West Africa, for example, posed a relatively small risk to Western travelers but still sparked a worldwide scare. Flying out of the affected countries of Liberia, Nigeria, Ghana and Sierra Leone became more challenging as other countries were unwilling to take on the risk of accepting any visitors from those areas.

Luckily, governments rarely set strict travel restrictions in such situations, so while evacuations can get tricky when a pandemic hits, it is still possible to leave the country.

Nita Madhav, analyst and researcher, AIR Worldwide

Nita Madhav, analyst and researcher, AIR Worldwide

“In today’s world, economies are so interconnected that complete isolation isn’t feasible,” said Nita Madhav, analyst and researcher at catastrophe modeling firm AIR Worldwide.

“The best way for companies to mitigate is to stay aware of the global situation and which countries may be at risk for circulating diseases, and make sure that employees are up to date on vaccines,” she said.

Madhav identified the Middle East and Brazil as up-and-coming markets for air travel, which could make them riskier from a health perspective as business travel picks up.

Political and social tensions also pose an evacuation threat, though those risks are more rare than a medical threat.

Maintaining intelligence and proactively removing employees from potentially dangerous areas allows employers to avoid last-ditch evacuations. Government advisories, data from third party security firms, input from local employees and even social media trends help to paint a picture of emerging threats and areas to watch.

Still, things can change in an instant.

“We had to evacuate our expatriate staff out of Mali when they had a coup,” Osha said. “You do have to watch country elections, because violence and protests could follow.”

“In Libya,” Randolph of IHS Country Risk said, “they’re having a drawn-out civil war, and oil and gas companies have been involved in drawing out their staff, leaving behind only key personnel.

“You have to maintain your asset and your security as well as you can, but otherwise de-operationalize. You have a duty of care,” he said.

The Trickiest Risk

Natural disasters pose the trickiest travel risks to mitigate and often require the immediate, emergency response that risk managers try to avoid. Once tracking systems identify who’s in danger, it’s up to crisis management teams to get them to safety.

“You really need the right people in the room that are experienced with the global operations of their company,” said LeBlanc of UHI.

“They need the authority to make decisions quickly, whether they’re legal, financial, or human resource related. And they have to work well as a team.”

When UHI trains its clients on crisis management, it typically spends half a day on team-building alone, and keeps the core team limited to about 10 people.

Rapidly growing companies will face challenges learning how to manage increased travel to all parts of the world, but the realities of travel risk cannot be ignored. The consequences of shrugging off safe travel preparations are too great.

“Colleagues I work with have a keen sense of how travel has changed since 9/11,” Gill of Quintiles said.

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“That was the issue that brought travel security and safety to the forefront.”

But others say more progress is needed.

“I’ve given travel risk presentations at RIMS for a few years now,” Osha said, “and I’m shocked by the people who approach me after the sessions — large, brand name companies — saying their programs aren’t robust enough.

“It makes me think that there are a lot more companies out there that need to start working on this than you may expect.”

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

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]