Risk Insider: Nir Kossovsky

A Reputation Non-Event

By: | October 1, 2014 • 2 min read
Nir Kossovsky is the Chief Executive Officer of Steel City Re. He has been developing solutions for measuring, managing, monetizing, and transferring risks to intangible assets since 1997. He is also a published author, and can be reached at [email protected]

It’s a sign of the times when a bank known for being at the center of controversy is robbed of 83 million records by cyber-thieves — and nothing happens. No accusations of board incompetence from disappointed investors. No declarations of regulatory opprobrium from shocked regulators, although a few State Attorneys General are probing, looking for some political points. No hand wringing in the blogosphere from any other aggrieved stakeholder group.

No one seems the least bit surprised. According to an analysis published by Consensiv, the reputation controls company, based on reputation value metrics we use at Steel City Re, JPMorgan Chase’s reputation premium, a measure of additional value arising from favorable stakeholder expectations, is up slightly to the 91st percentile within its peer group since the breach was first disclosed in July.

It is as if cyber theft has become as shocking as dog-bites-man, a headline that aptly characterized the absence of any reputational value changes when Home Depot announced their data loss last month.

What is the behavioral economics explanation for this lack of reaction and nascent reputation crisis compared to, say, the board-led bloodletting at Target less than a year ago for the same alleged offense?

It’s a sign of the times when a bank known for being at the center of controversy is robbed of 83 million records by cyber-thieves — and nothing happens.

The most unlikely explanation for the lack of interest is that focus has shifted from JPMorgan Chase to what the thieves were after. Think Pulp Fiction.

A Chicago security expert with Vasco Data Security told USA Today, “This is a truly remarkable attack, but not just in its scope — hackers successfully penetrated one of the most secure organizations on this planet and they stole absolutely nothing of value — no money, no Social Security numbers, no passwords.”

It is an intrusion taken directly from the screenplay for the television program, The Blacklist.

A more likely explanation is lack of culpability on the part of JPMorgan Chase. Like their other risk management programs, JPMorgan is known to have a good security program in which they invest heavily. (Hence “one of the most secure organizations on this planet.”) Stakeholders are concluding that the fundamental nature of security is broken and are giving the company the benefit of any doubt.

A second contributing factor is that a cyber theft event is no longer a “let down.” The Washington Post diagnoses data breach fatigue. According to a survey released last week by PricewaterhouseCoopers, the number of cyber security incidents has increased 48 percent this year, to 42.8 million, or the equivalent of 177,339 incoming attackers per day.

The end result is that stakeholders are viewing JPMorgan Chase as a crime victim rather than crime villain, so kudos to the company’s enterprise risk managers and their reputation risk strategy for earning that win for the company. And kudos for providing an object lesson benefiting the greater risk management community: practice risk management as if you really mean it, and make sure the company’s leadership receive credit for planetary excellence.

Reputation value volatility, or lack thereof, is an indicator of excellence in reputation management. But nothing speaks reputation risk management success like having a boring crisis.

Read all of Nir Kossovsky’s Risk Insider contributions.

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]