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Risk Insider: Zachary Gifford

13 Rules for Risk Management Success

By: | October 15, 2014 • 2 min read
Zachary Gifford is Director, Systemwide Risk Management with the California State University – Office of the Chancellor. He also is active in risk management organizations such as PARMA, PRIMA and RIMS. He can be reached at [email protected]

Over my 24-plus years in the insurance, general liability claims and risk management professions, I have learned that the following practices or attributes are critical for success.

With this opportunity, I would like to share with the  readers of Risk & Insurance® the practices and attributes that lead to success when working in a high energy, heavy work-volume environment in our respective organizations.

“Risk management is about people, not money. Money is why we have risk managers; however people are why we strive for excellence. One needs to be cognizant of the uninsurable costs of risk.”

The modern conventional wisdom is that folks need to “do more with less”. Let’s face it, our organizations are either beholden to stockholders, owners or the tax paying citizens of our great country. More than ever the pressures for producing high quality, high volume and cost-effective work product is expected.

The following are some proverbial words-of-wisdom from someone who is the boots on the ground….

  • Be the “get to yes” folks and not the “little dark rain cloud”. Risk management is in the position to assist stakeholders in making informed and sound decisions. Rarely should risk management provide an absolute “no” and if so, then the successful risk manager assists in providing alternative methods to assist in reaching the goal in question. In other words, provide the organization’s stake-holders information enough for them to make an informed decision.
  • Check your ego at the door when you enter the office. It is not about “you”, it is about “us” and “them”.
  • Risk management is about people, not money. Money is why we have risk managers; however people are why we strive for excellence. One needs to be cognizant of the uninsurable costs of risk.
  • Having a positive mental attitude is critical.
  • What would Woodrow Wilson Do? Woodrow Wilson said essentially; “In times of crises a thousand hasty counsels is worth one cool judgment. The goal is to provide light and not heat.”
  • Change is going to happen, embrace it.
  • Be forthright, honest, respectful of others and diplomatic.
  • Use your internal and external resources. Governmental entities do not have to worry about trade secrets or competition and generally public entity risk professionals like to share in their successes and “lessons learned.”
  • Do not reinvent the wheel. In all likelihood someone with institutional knowledge has “been there and done that.”
  • Communicate with stakeholders. They do not like surprises and do not wait to be asked to provide a report or information. Let stakeholders know of your successes and simultaneously help identify where organization success can be maximized or where failure can be mitigated.
  • Be timely and ready to address issues as they occur without losing focus of the horizon.
  • Communicate and collaborate with organizational personnel in developing and supporting a culture of risk management and safety.
  • Battleships turn slowly and sink fast…do not rest on your laurels.

Though the cynic may conclude much of the above is cliché’, it has been my experience that incorporating the above points into how one conducts their risk management endeavors benefits the organization, fosters a positive work environment and provides the foundation for building and/or maintaining a quality risk management enterprise.

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.

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With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.

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So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.

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Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]