Risk Insider: Beaumont Vance

Risk Management Kills

By: | July 1, 2015 • 3 min read

Beaumont Vance is an executive risk manager. He has managed strategic risk for Fortune 100 firms for the past 15 years. His multidisciplinary approach weaves together such disparate fields as quant modeling, statistics, behavioral economics, biology and game theory into practical solutions and insights.

Topics: Risk Insider

It seems a noble goal of risk management to not only help an organization to survive large losses, but also to save lives. Unfortunately, human beings are not always good at judging risk, especially where death is involved. Risk management can kill you.

Of course, death by risk management is not a catchy headline.

Shark attack, however, is a great headline.

This summer the press picked up the story of two shark attacks in the same day in North Carolina. The risk managers of the world leapt into action. One news story covered one agency that is patrolling the beaches of the Carolinas with drones.

So what could possibly be wrong with pouring resources into the prevention of shark attacks?

Christopher Ingraham of the Washington Post published an excellent blog, “The animals that are most likely to kill you this summer.” In it he showed the statistics from the Centers for Disease Control on death by several animals.

It turns out that, on average, one person per year is killed by a shark. Twenty people per year are killed by cows, and 52 are killed by deer (excluding car accidents!)

Unfortunately, human beings are not always good at judging risk, especially where death is involved. Risk management can kill you.

I looked, but could not find any governmental agency monitoring murderous deer via drone. In fact, it is hard to imagine someone shouting “DEER!” and hordes of people running from the park screaming and dragging their children to safety like a scene from the movie Jaws.

The truly interesting thing about Mr.Ingraham’s article was how readers reacted. Most felt that he had twisted the facts and was “lying with statistics.” He was not.

The reason readers felt that his statistics had to be false was because of something called cognitive bias. A cognitive bias is like a bug in a computer program, only it affects how our brain processes probabilities around outcomes where risk and reward are involved.

The specific cognitive bias involved here (there are over 200 of them) is called availability bias.

Here is how it works: If a person is asked to judge which is more likely to occur — death by shark attack or death by deer attack — their brain starts searching for memories of these events. Whichever event can be called up first is deemed as being more likely. In this case, it is almost impossible to image a murderous deer pouncing on its unexpected victim. So the brain decides quickly and subconsciously that shark attack must be the more likely event.

After the 9/11 attacks, people were bombarded with images of the planes smashing into the Twin Towers. As a result, the most available risk in their minds was a plane crash.

In order to avoid the risk of death by plane crash, many people chose to drive instead of fly. As a result, auto deaths increased by well over 3,000.

In the end, the seemingly prudent choice to drive instead of fly killed more people than the 9/11 attacks.

In other words, risk avoidance killed more people than the terrorists.

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]