Column: Risk Management

The Flaw of Averages

By: | September 1, 2013 • 3 min read

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

Is 3.5 inches of rainfall in two hours a lot of rain? Yes, if we consider that the average rainfall is 3 inches in a month. How then to describe a single-day rainfall that is 50 times the average?

That is exactly what meteorologists said happened in Toronto on July 9. The city logged 5 inches of rain, that day, breaking the previous single-day record set back on Oct. 15, 1954.

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A storm targeted Toronto and hovered over the city, dumping buckets of water for hours. Preliminary damage has been reported by insurance experts to likely exceed $600 million.

The rain knocked out power to about 300,000 residents across the Toronto area, which has a population of 2.6 million.

It shut down subways, flooded thousands of basements and cars, forced people to cling to trees and left about 1,400 passengers stranded for hours on a commuter train filled with floodwaters up to the lower windows. And all this happened during the rush hour commute home.

Toronto’s infrastructure struggled to manage the storm runoff. Waist-deep waters accumulated on the streets and highways. Sewer covers vaulted into the air, creating gushing water spouts all around the city.

It was really quite something to experience. I was poised to swim home from work that day.

After the waters finally receded, the finger pointing started. Some argued this was a clear sign of global warming. Others said it was the fault of insufficient and poorly designed city infrastructure.

Some accused city planners of allowing over-urbanization in the city’s core, and some even argued that Toronto was being punished for something by a “higher authority.”

I am not sure who we should pin this flood on, or even if we need to. What I did find interesting, however, were uses of the word average.

It was as though people looked at an average as a comforting certainty with no real potential for deviation.

Take, for example, a group of 50 people on a bus. If I logged each adult’s height in inches, I can almost guarantee that the average height would come to be around 67 inches, or 5-foot-7.

To no one’s surprise, the world essentially designs most things to accommodate 5-foot-7 adults: the size of your car, length of your pants, leg room on a bus and the height of your counters. We needed a design proxy so we expressly chose to use an average.

But does that approach to bus seat measurement, for example, address the fact that 10 basketball players, each well past 6 feet tall, could end up sitting on my bus?

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Of course not. The possibility of variation is more the issue. We need to see and possibly accept the risk in the numbers we routinely count on. We need to accept the variability in our assumptions.

Some have even stated that plans based on averages are frequently wrong.

As such, it is quite possible that designers of critical infrastructure, such as the electrical grid, water treatment plants, sewers and culverts, public transport and roads may need to shift their design standards to accommodate new weather extremes.

All talk about climate change aside, we can’t afford to ignore the very real variations in weather patterns.

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]