Column: Risk Management

Storm Clouds Brewing

By: | December 14, 2015 • 3 min read
Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

Every morning I pull my smartphone off its charger. The electricity that charged my battery came from my local power utility — a network of cables, wires, shared resources, inventions and capabilities that exploit economies of scale.


I pay my electricity bill every month. Every month I feel I’ve purchased my power fair and square.

With my charged phone in hand, I check my email, scan the news, listen to music from my internet music provider, and do a quick internet search.

All that information got to my phone through my wireless internet service and a behind-the-scenes “cloud” service — an internet-based computing system that, like a utility, uses shared resources, inventions and capabilities to provide my device with on-demand services and applications.

I pay my internet provider every month, but does that mean I purchased access to all the cloud services and innovations too? Have the inventors and patent holders of the cloud capabilities been fairly compensated behind the scenes?

When company data and services move to the cloud, there are risks we manage. Issues around shared access, as clouds are multi-tenanted all using the same computing resources. Questions arise as to data ownership. Resiliency of the cloud service may come into question when systems fail or become unavailable, and the ever-growing threat of unauthorized cloud access is also a concern.

But do risk managers of organizations that use cloud services assess if they are infringing on cloud patents? Is cloud patent infringement even on their risk radars?

I’ve learned recently that it should be. The cloud is full of complex and often foggy technological definitions, making those organizations using cloud services more vulnerable to hungry patent pirates, sharks and trolls.

“For an enterprise with annual revenues of $10 to $25 million, each patent infringement lawsuit typically represents a financial risk of $3 to $5 million.” — Jess Marinez, president, Tout Virtual Inc.

Patent trolls are not mythical characters from an adventure novel. They are companies that profit from using coercive and extortion-like practices.

Patent troll companies buy broadly worded patents on secondary markets and then assert them against you, demanding overpriced royalties or possibly costly patent litigation. If you choose to fight them, note that litigation that goes to trial can cost upwards of $3 million, and result in damage awards that can exceed tens of millions. Trends show that trolls are getting their way and their bounty is growing.

More and more, patent trolls are turning their attention to the cloud market where intellectual property policy is failing to keep pace with technological developments. Trolls don’t necessarily always go after the big companies; they go after the weak, where legal costs and damages could cripple the organization.


Cloud risk management services and cloud patent litigation insurance should be considered by a lot more organizations, specifically start-ups.

“For an enterprise with annual revenues of $10 to $25 million, each patent infringement lawsuit typically represents a financial risk of $3 to $5 million,” said Jess Marinez, president of Tout Virtual Inc., a company that offers cloud risk management services and patent licenses to their cloud patent portfolio. “60 percent of patent infringement lawsuits are targeted at companies with annual revenues of $100 million or less.”

Proactive risk management is a way to blunt the onslaught of trolls seeking to exploit existing cloud and emergent companies through patent infringement lawsuits.

With stormy clouds like this brewing, ensure you have a good umbrella. Specialty risk mitigation services coupled with cloud patent infringement insurance should help you to not get too soaked.

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.


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.


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]