RIMS 2015

Risk Managers Rank Global Risks

The risk to brand or reputational damage was seen as the top concern of risk managers, who also ranked cyber risk as a top 10 global risk for the first time.
By: | April 23, 2015 • 3 min read
Topics: Cyber Risks | ERM | Reputation | RIMS

Damage to brand and reputation is the No. 1 risk facing companies today, according to Aon’s 2015 Global Risk Management Survey.

“There’s a lot behind that which is driving that [ranking],” said Theresa Bourdon, group managing director, Aon Global Risk Consulting.

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One of those factors is cyber risk, which for the first time in the survey’s history, since 2007, jumped into the top 10 risks, coming in at No. 9. It had been 18 in the last survey, which is taken every two years.

“If you talk to our clients, that’s no surprise,” she said. “The frequency is very low for these cyber events but it is obviously increasing.”

And, just as obviously, there is a correlation between cyber events and brand. Just look at Target, which is still struggling to regain its footing after the personal information of about 110 million of its customers was stolen in 2013.

According to U.S. Reputation Leaders Network, Target’s reputation saw its biggest drop after the cyber attack – and it was the largest drop of any U.S. company from 2013 to 2014, according to an article in “The Street.”

The remaining top 10 risks are: economic slowdown/slow recovery; regulatory/legislative changes; increasing competition; failure to attract or retain key talent; failure to innovate/meet customer needs; business interruption; third party liability; and property damage.

Other key movement in the rankings were the inclusion of property damage, which moved up to No. 10, from 17 in 2013; and third party liability, which had been 13 but moved up to 8.

One risk that dropped off as a top 10 risk was commodity price risk. It had been 8 in 2013, and moved down to 11 in the 2015 survey.

Bourdon said that one risk that remains top of mind for risk managers is regulatory and legislative issues. “It’s consistently a top 3 risk,” she said, noting that it was projected to remain so when risk managers were asked to project their top risks three years from now.

“Organizations are really challenged to respond to the pace at which regulations are coming,” she said. “There is a strong need for governance and a compliance framework.”

That risk, also, she said, relates to the reputational and brand damage that a company can suffer.

As for cyber, one surprising finding of the study — which surveyed 1,400 risk decision-makers in 28 industry sectors in 60 countries — was that 82 percent of the respondents said their companies were ready for a cyber attack, Bourdon said.

At the same time, 58 percent of the respondents said their companies have not done an internal assessment of their cyber risk exposure.

“Realistically speaking, this is relatively new territory that everybody is trying to get their arms around, organizations, insurance companies and those of us who are risk advisers,” she said.

“The goal for the industry as you look at these risks today and in the future is, how are we going to innovate and support these risks.”

Cyber, in particular, needs solutions, she said. “There is not enough insurance out there for the demand.”

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Risk managers understand they need more data and analytics to “help them navigate this world” of increasingly complex risks, she said.

More risk managers, Bourdon said, are looking at their organizations holistically and not just focusing on insurance purchasing.

“It’s a much bigger and challenging role than it ever used to be and if you are using the same tools and techniques you were using 10 years ago, then you are not leading your organization down the right path.”

The late Anne Freedman is former managing editor of Risk & Insurance. Comments or questions about this article can be addressed to [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]