Mitigation is Better Than Litigation: 3 Steps to Dodge Data Privacy Traps

By: | November 27, 2018 • 4 min read
Martin J. Frappolli, CPCU, FIDM, AIC, is Senior Director of Knowledge Resources at The Institutes, and editor of the organization's new “Managing Cyber Risk” textbook. He can be reached at [email protected]

Data privacy concerns aren’t new — but they are growing. Since the Privacy Act of 1974 and HIPAA in 1996, we’ve seen two factors fueling data privacy concerns. First, organizations recognize the growing value of data and seek to exploit customer data for competitive advantage.

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Second, with ease of connection via the internet and the explosion of data sources, more personally identifiable information (PII) is being generated, stored, and analyzed.

Let’s examine three fundamental steps to mitigate data privacy risk — and avoid litigation.

1) Assess your exposures under GDPR, the CLOUD Act and other regulations.

The purpose of the 2018 General Data Protection Regulation (GDPR) is to “give back control to [EU] citizens over their personal data.” Under GDPR, organizations designing a new product or service must ensure that, by default, minimal personal data is collected, used and retained.

American organizations should know how GDPR affects them. If, for example, your company has customers — or employees/contractors — who are EU citizens or at least based in EU countries, you must comply with GDPR. Potential U.S. or EU business partners may shy away from non-compliant companies out of fear of contaminating their GDPR-compliant databases with non-compliant data. If EU citizens visit your website (regardless if a transaction takes place), their GDPR-protected PII is in your database.

Dan Seyer, in Forbes, writes that “instead of figuring out whether you can justify avoiding GDPR, try to justify why you would want to. With a handful of exceptions, the majority of GDPR is little more than a global privacy best practices document. A big portion of GDPR includes things that arguably most American Fortune 1000 companies should have done years ago.”

American organizations should know how GDPR affects them. If, for example, your company has customers — or employees/contractors — who are EU citizens or at least based in EU countries, you must comply with GDPR.

The Clarifying Overseas Use of Data (CLOUD) Act of 2018 permits U.S. law enforcement officials to force technology companies to surrender user data, even if that data is stored in another country with different data privacy laws. It further gives the executive branch power to enter agreements with other nations for cross-nation access to user data, regardless of the host nation’s privacy laws.

This legislation is praised by some and criticized by others; either way, it raises concerns about what kind of customer data an organization might want to collect and how it can be protected.

2) Avoid unnecessary exposures — why collect personal data you aren’t using?

It’s time to re-evaluate all points of customer contact. Think about how you (and your partners) contact customers and collect data from them. What scripts are your call center reps reciting? What kinds of information do you collect from web visitors? Do you need and do you use each data element you collect? If not, stop collecting it.

Do your customers fill out paper or online renewal forms and applications? That form you designed in 1993 may not be right for 2019 and forward. In the wake of HIPAA, most companies stopped collecting social security numbers (and hopefully removed those numbers from customer records). You might want to prepare for a new round of carefully curating the customer data you can actually use.

3) Apply time-tested risk management techniques — minimize the exposure before trying to insure against loss.

Not that long ago, fire was considered an uninsurable exposure due to the frequency and severity of losses. Over time, people and organizations developed good fire hygiene habits like building codes, fire escapes, sprinkler systems and boiler inspections. Today, we perform all of the now-routine good safety habits first, and then we buy fire insurance just in case.

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Cyber risk and data privacy risk are fundamentally like other conventional risks in that we need to first mitigate the risk by good habits before seeking to transfer the risk by insurance. Know the laws and regulations around data privacy; build safe networks; enforce your data privacy standards on your business partners; train employees; collect only the data you need. Do all of those things and then seek out the proper cyber risk coverage for first-party and third-party exposures.

Large organizations have risk managers to handle these emerging risks as smoothly as they handle conventional exposures like fire. Medium and smaller organizations might seek out good cyber risk management advice from their insurance agents and brokers. Mitigate up front, and you won’t need to litigate later. &

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]