Column: Risk Management

Know Your Weakest Links

By: | July 27, 2017 • 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 worked in the oil and gas pipeline industry as a chief engineer. Prior to placing any pipeline system into the ground, we hydrostatically tested the pipe for 24 hours at increased pressures. We would fill the pipe system with water, hike up the pressure and watch for leaks or weaknesses in the pipe, joints or welds. This was an assurance test.

Advertisement




It warranted that the system, once operational, could take unexpected pressure. It highlighted in advance what weaknesses to expect so we could prepare to take appropriate action.

Fast forward to my days now in risk management. I again find myself conducting similar stress tests with financial institutions.

Instead of using water, we pressure up the organization using risk scenarios and test the effect on business processes and strategies and see if there exists adequate capital to support unexpected perils. We look to see where the organization springs leaks and we plug them.

For non-financial organizations, I think of airlines. Great benefits are derived from stress testing crew scheduling procedures for example.

What happens if you don’t get to stress test in time and your critical system functions and strategic controls come under severe or unexpected pressure?

We can simulate severe weather events and examine the effect on the potential cancellation or delay of thousands of flights.

Individual weather events don’t need to be overly extreme to cripple a crew-scheduling system. It’s good practice to model concurrent and multiple weather events to highlight more probable level of stress on, say, a staffing system.

Important questions to ask to start a stress test are:

  • What are our key business processes that support our strategy?
  • Do we have any new organizational norms or values?
  • What key strategy controls do we have in place?
  • How strong are these controls?

But what happens if you don’t get to stress test in time and your critical system functions and strategic controls come under severe or unexpected pressure?

As of late, one very large organization whose systems seem to be feeling such strategic pressures appears to be the U.S. government. The U.S. Constitution’s checks and balances act as democracy controls intended to tyrant-proof the whole operation.

But have these controls been stress tested knowing that the founding norms and beliefs are changing?

Advertisement




As such, are the Justice Department, law enforcement and regulatory systems still appropriate safeguards? Is the system abuse-proof? Is the system poised to spring a leak?

I am not a political scientist. I am a pipeline engineer who now does risk management. But the rules of good management and stress testing still apply.

Operating in an environment where systems and processes are under risky pressure can be perilous.  When the system starts sprouting leaks, is the plan to simply to put a finger in every hole? And what happens when we run out of fingers?

Risk lives in our weakest links and no matter what organization, it is best to be better prepared. &

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.

Advertisement




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.

Advertisement




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]