RIMS 2016

Looking to Bridge the Gap

Many risk managers use a retrospective approach to risks, when they should be analyzing where the next risks are coming from.
By: | April 11, 2016 • 3 min read
Topics: ERM | RIMS | Risk Management

There is a “growing gap” between the way risk managers and C-suite executives view risk management, according to Brian Elowe, managing director, U.S. client executive practice leader at Marsh.

Elowe co-authored the “Excellence in Risk Management” survey along with Carol Fox, of RIMS. The report was released on April 11 during the annual RIMS convention, held this year in San Diego.

Brian Elowe, managing director, U.S. client executive practice leader, Marsh

Brian Elowe, managing director, U.S. client executive practice leader, Marsh

“We expect risk managers to manage the known risks but what we really want to know is what is coming around the corner,” said Elowe.

“What organizations struggle with is how to deal with the here and now, and do they have the bandwidth to look down the road?” he said.

Cyber attacks, at 61 percent, was cited as the “next critical” risk faced by organizations, followed by regulations, at 58 percent. Talent availability was third, at 40 percent.

Six in 10 (60 percent) of the 700 risk executive survey respondents said they use claims-based reviews as one of the primary means to assess emerging risks, compared to 38 percent who said they use predictive analytics.

“There is absolutely a rising demand for more and more analytics,” he said, so that organizations can move from a retrospective approach to risk to a more predictive approach.

Nearly half of survey respondents (48 percent) said that forecasting critical business risks will be more difficult three years from now; with another 26 percent saying it would be the same.

Elowe said it would be “very hard, quite frankly,” for organizations to switch to a more forward-looking way of viewing risk.

A predictive analytics approach requires harnessing a depth of knowledge that transcends just one organization’s experience, he said.

“They need a giant database of information to help them understand what is happening in their own sectors,” he said.

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In addition, there are often cultural or institutional barriers – such as a lack of collaboration across the organization – that prevent a full understanding of the risk landscape.

About half of risk executives are not members of their organization’s risk committee, he said. “They have input but they could do more to help risk committees.”

One way to help would be to add “emerging risks” to committee discussions. About two-thirds of those committees do not have “emerging risks” on their agendas, he said.

“We think that’s a big opportunity to increase discussions about broader threats, at least on a periodic basis in their risk committees, to be more effective going forward.”

He said it’s helpful to view risks in three buckets: those that are present “here and now;” those around the corner in one to three years; and those on the horizon, about five years out.

Still, he said, the role of risk management is growing in organizations. Five years ago, cyber security would probably only involve the chief technology officer.

These days, in most companies, the risk manager, chief technology officer and others are part of an interdisciplinary committee “and the risk management approach is being applied to how the organization is responding.”

“I see a growing trend where the expectation of risk management is definitely higher and the risk manager is rising to the occasion, not to say there isn’t the opportunity for continued growth,” he said. “I think they are definitely aware of that gap [with the C-suite’s expectations] and are trying to meet that gap.”

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]

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]