Why Brexit Is Turning Out to Be a Risk Management Nightmare

By: | January 24, 2019 • 3 min read

John (Jack) Hampton is a Professor of Business at St. Peter’s University, a core faculty member at the International School of Management (Paris), and a Risk Insider at Risk and Insurance magazine where he was named a 2018 All Star. He was Executive Director of the Risk and Insurance Management Society (RIMS), dean of the schools of business at Seton Hall and Connecticut State universities, and provost of the College of Insurance and SUNY Maritime College in New York City.

In times of stress, the Brits could always count on Winston Churchill. In 1939, he famously said, “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest.”

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If Churchill were alive today, he might modify the quote. The statement precisely defines the current status of risk management with respect to Great Britain’s vote to leave the European Union. Is Brexit really a riddle? Is it aligned with British national interest?

Does anybody think the British voters had a clue about the consequences of departure, not to mention the horror of a no-deal Brexit?

Consider something as simple as the size of markets for British products. The population of the United Kingdom (England, Scotland, Wales and Northern Ireland) is 66 million. The rest of the European Union, 27 countries with 446 million people, is seven times larger. Withdrawal removes unfettered access to 85 percent of the UK’s economically “domestic” market.

How about the impact on supply lines and exports? In a global economic system, goods and services cross borders with impunity. Consider automobiles made in Great Britain. For some models, more than half the components come from continental Europe, which is also the market for half of the vehicles manufactured in the UK.

A sobering message comes from the recent words of Airbus CEO Tom Enders: “The UK’s aerospace sector now stands at the precipice … If there is a no-deal Brexit, we … will have to make potentially very harmful decisions for the UK … Make no mistake, there are plenty of countries out there who would love to build the wings for Airbus aircraft.”

The withdrawal will have an equal impact on the world of finance. In 2017, the district known as the “City of London” ranked first among the world’s financial markets. Given aggressive EU competitors, including Frankfort, Zurich, Geneva and Luxembourg, Great Britain can expect serious negative consequences from massive dislocation of financial transactions.

Consider something as simple as the size of markets for British products. The population of the United Kingdom (England, Scotland, Wales and Northern Ireland) is 66 million. The rest of the European Union, 27 countries with 446 million people, is seven times larger. Withdrawal removes unfettered access to 85 percent of the UK’s economically “domestic” market.

On another front, the UK has a “tail wagging the dog” problem. Tiny Northern Ireland, with two million residents, shares a “guaranteed” open border with the European Union’s Republic of Ireland. The history of sectarian violence in Northern Ireland foreshadows a catastrophic situation here if the dividing line between the regions becomes a political hot spot.

These are the risks. Where are the risk managers? It appears they are drowned out in the din of modern technology.

Accusations and battle cries dominate discussions of risk as they pour out in a torrent of unreliable and often dishonest communications. Brexit is not so hard to understand in terms of emotional fears of refugees overwhelming resident populations, a declining standard of living arising from changing patterns of work and consumption, and “scare” factors that are often the first strategy of divisive politics.

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Brexit is the British version of two angry “mobs.” One group is shouting citizens who have assets and privileges and want to protect them. The other seeks upward mobility and is discovering they are blocked from achieving it by factors outside their control.

What does the risk manager do? A simple – perhaps too simple – answer is to remember part of Churchill’s quote. Is Brexit or a no-deal Brexit an action consistent with the British national interest?

A no-deal Brexit is not totally a riddle wrapped in a mystery inside an enigma. It’s a harmful decision that reflects anger, frustration and difficulties of managing risk in a complex world. It does not solve the emotional problems of immigration and job loss. It is likely to make things worse in terms of economics and politics.

The risk management solution may be to change the discussion. Where is Winston Churchill when we really need him? &

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]