Risk Insider: Chris Mandel

Risk Standards Gain Traction

By: | September 3, 2014 • 3 min read

Chris Mandel is SVP, strategic solutions for Sedgwick and Director of the Sedgwick Institute. He is a long-term risk management leader and a former president of RIMS. He can be reached at [email protected]

Topics: ERM | Risk Insider

Having just returned from the G31000 annual conference, I’d like to share my thoughts on current risk standards and where we seem to be headed. Full disclosure, this forum I attended promotes ISO31000 (31K), which grew out of the Australian/New Zealand 4360 standard.

For starters, the statistics generated by an extensive G31000 sponsored survey were nothing short of astounding. Adoption of ISO31000 around the world has reached an all-time high. After getting its DNA from ASZ4360 in the late ‘90s, with very competent shepherding by Kevin Knight, this most flexible risk “standard” represents a comprehensive guide for practitioners to design and implement customized risk strategies, which would then inform and flesh out their resulting frameworks. Your framework of course defines the tactics you would use to “make things happen.”

The survey of more than 1,800 respondents in 111 countries (with 40 percent from the U.S., UK and Australia) by G31000, the organization that has helped evolve and perpetuate global use of this standard, revealed that 60 percent have a clear understanding or some knowledge of 31K while 40 percent use the standard to guide “all” key decision making in their organizations. Interestingly, 74 percent said that they believe their professional associations should strongly endorse or recommend 31K as the best standard in order to achieve organizational success.

Contrasting 31K with other common risk standards, the survey showed that twice as many adhere to 31K over COSO ERM, the auditor/accountant designed standard that emerged at the time of Sarbanes Oxley and that, some say, derailed early efforts to deploy ERM strategies in favor of the more narrow focus on financial reporting accuracy.

The survey … revealed that 60 percent have a clear understanding or some knowledge of 31K while 40 percent use the standard to guide “all” key decision making in their organizations.

While useful in many respects, its control environment focus leaves it less flexible and customizable (notwithstanding the recent issuance of the COSO 2013 update of their Internal Controls framework). Interestingly, 40 percent of respondents claim to have created and use their own “standards,” though I strongly suspect this finding is more likely a reference to risk frameworks since practitioners don’t typically create their own “standards,” however, it is not impossible to do so.

Adoption of risk standard ISO31000 is on the rise globally.

Adoption of risk standard ISO31000 is on the rise globally.

Disappointingly, results for U.S. respondents reflect a 31K take-up rate that lies in stark contrast to the global take-up rate. Only 20 percent of U.S. based respondents claim to use 31K, while 12 percent claim to use COSO ERM.

This latter statistic is the more surprising of the two as the longstanding impression among U.S. ERM experts has been that COSO was much more commonly used. All the better however, since migration away from COSO to 31K would be an advisable strategy for those that prefer less prescriptive risk guidance.

Finally, a surprising 43 percent believe that 31K ought to have certification as a requirement, with only 9 percent supporting it as a mandate. While on its face, organizational certification may seem useful, I believe users will ultimately regret the way it layers costs and time requirements on organizations whose time and resources can be better applied to the management of risks. Encouragingly, 24 percent plan to implement 31K in the future, which will undoubtedly only increase its gravitational pull towards even wider adoption over time.

Read all of Chris Mandel’s Risk Insider contributions.

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]