Column: Workers' Comp

Risk Complexity Breeds Stress

Risk managers are straining under a workload beset by increasingly complex exposures and limited resources to ensure they are adequately addressing them.

“There is this absolute grind of increasing complexity,” the treasurer overseeing risk management at a nationwide retailer agreed when I mentioned the growing stress placed on risk managers.

He can no longer afford the time to take calls from service providers vying for his business, he added. In years past, added the retailer’s risk management director, meeting with new providers gave him the opportunity to learn about risk-management trends and service options.

It’s easy to understand why risk managers have had to make such adjustments.

Current corporate profitability levels are placing risk management department expenses under pressure.

The complexity of traditional risks, like workers’ compensation, has grown substantially, demanding more time to manage. No longer does mitigating that risk just require reducing accident frequency and establishing a relatively straightforward return-to-work program for injuries that do occur.

There are now more regulatory considerations, like how the RTW efforts mesh with Americans with Disabilities Act mandates, for example.

Additionally, workers’ health conditions coupled with the rising cost of emerging drugs and medical treatments require more specialized expertise and services to manage their appropriate use. The rise of predictive analytics, case management and drug-utilization monitoring come to mind.

So while the workers’ comp manager and risk manager have more service providers touching their workers’ comp claims, they have less time to converse with competing service vendors to help ensure they are tapping the best options.

Then there are the new, emerging risks.

Corporate boards have taken a direct interest in their companies’ preparations for cyber exposures. So the risk manager must respond, taking his attention away from those growing workers’ comp challenges to devote additional resources to evaluate cyber risk preparations.

Yet according to Aon’s “Global Risk Management Survey 2015,” risk management department staffing levels have held constant since 2009. That is the year the “Great Recession” ended.

Current corporate profitability levels are placing risk management department expenses under pressure. So it’s growing common for companies to cut risk management program expenses — that might produce short-term savings, but result in additional long-term costs, several sources told me.

Risk managers who know better can’t feel good about making such decisions.

“I am seeing stress,” said Mark Noonan, managing principal, casualty at broker Integro USA Inc.

“You have to cut here to cover there. It’s the stress of, ‘Did I do enough with what I have? Am I making the best financial decisions that result in the coverage I need to let my company continue to grow and prosper?’ And that is very stressful.”

It would be less stressful if risk managers and workers’ comp managers were the kind of people who didn’t make their work responsibilities a high priority.

But the risk managers I have met over the years are smart, hard-working individuals interested in being the best at what they do. They care about their responsibilities and want to contribute to their organizations’ success.

But facing more regulations,more risks and an “absolute grind of increasing complexity,” they could use more support. &