Column: Risk Management

Apples to Oranges

By: | October 15, 2016 • 2 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I was recently sandwiched in a middle seat on a long haul flight. Impossible not to strike up a conversation with both seat mates. On my left was the head of human resources, responsible for the health and safety of 10,000 employees.

On my right, was the CFO of that same company charged with all things finance, but also responsible for IT. Inevitably they asked me what I did – all things risk management – and as usual they wanted to talk of risks they face.

From the left, I heard HR concerns about the next virus or disease that could make employees sick. From the right, I heard fears of hacking.

How does one compare two different risks and assess priority?

To provoke, I asked, Which risk is bigger? More important? If you had only $500,000 for a solution, which risk would you choose to mitigate?

Life safety is always the priority, the left proclaimed. But a nasty breach could paralyze the company leaving us potentially bankrupt, the right argued. Frustrated they proclaimed: “You can not compare them. It is like comparing an apple to an orange.”

It is not the first time I heard that statement. In the risk management proficiency reviews, it is a common concern. How does one compare two different risks and assess priority?

Answer? Set context for risk assessments before starting a risk evaluation. This is an essential step. Set context by answering questions like this:

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Which corporate performance objectives could the risk event compromise? Are all objectives equally important to achieve? If not, which are the most important? What timeframe bounds the risk assessment? Will the risk events happen within the next quarter, year or over five or 10 years?

Does the organization have a common scale that can inform the organization as to what is considered a high impact? In other words, a compromise of one or more objectives?

For example, if an objective for safety performance is “to ensure less than five lost time employee injuries annually,” or if an IT security objective states that “less than three IT systems penetrations shall be allowed annually,” what is considered to be a high compromise of those objectives? Twenty or 100 lost time injuries, or system penetrations?

Conversely, what is considered a low compromise of those objectives? What score will we give a high or low compromising risk event? Will the scores reflect how a risk event can compromise multiple objectives? What do we do if a risk scenario impacts none of our corporate objectives?

By answering these questions, you build a “risk ruler” system.

Risk rulers assure that you have pre-negotiated tools and context around your pending risk assessment. It sets the ground rules for what the risk assessment will tell you, and how the risk events will be prioritized.

Most importantly, risk rulers allow you to establish common criteria that link performance objectives to risk events. If an “apple” can cause more damage to objectives than an “orange,” keep an eye on that apple.

More from Risk & Insurance

More from Risk & Insurance

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]