Column: Risk Management

The Risk of Lawlessness

By: | April 7, 2017 • 2 min read

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

Laws at their core are intended to protect us, enforce our rights and help resolve disputes.

Laws are usually never invented overnight. Enduring laws can take centuries of precedent, research, philosophy and trials. Laws deter people from behaving in ways that can cause harm.

But every day I read about cuts in U.S. regulatory agency staffing, research, inspections and enforcement, coupled with a mandate to shed two rules for every one that is established. I hear unnerving calls for the “deconstruction of the administrative state.”

Why is this happening? Have laws unfairly oppressed or stifled us? Has innovation been stunted?

More curiously, what do we think will happen if we relax the rules around our rights, air, water, food, drugs, buildings, roads and the marketplace?

My own experience has given me insight, and fortunately solace as well, on the effect of government ceasing the regulation of business. Ironically, this deregulation was the impetus for me entering the risk management world.

Without rules, organizations that don’t self-regulate will eventually fail.

I worked in the oil and gas pipeline industry for 15 years as a chief engineer. Charged with hundreds of construction and refurbishments projects, there wasn’t an area of the industry, regulations and code books with which I was not familiar.


In the mid 1990s, codes started to change. This was around the time pipelines were spontaneously erupting from stress-corrosion cracking.

One thought regulators would tighten the construction rules but instead they went the other way. They wanted to shed the liability for the construction codes in the event anything went wrong.

The codes moved from being “prescriptive” to “performance” based. They now said the company could bury the pipeline as deep as they liked as long as it could be justified with a “risk assessment” — the first time I came face-to-face with the term.

With all the newfound freedom, no rules to follow and no one to say “gotcha,” we could have designed the pipeline to any inexpensive depth, and coupled it with “risk assessment” to support the decision.

Shareholders would be ecstatic, right? It would have been so easy to build to a third of the depth. But, we didn’t. Why?

We knew, call it a tacit assumption, that if we ever did cause harm, it would not be good for business. Running a safe and reliable pipeline supported our reputation.

This precious reputation was our latchkey to the backyards where we intended to run pipe, to farms whose irrigation systems we needed to disrupt and to aboriginal lands where we needed to house our equipment.

Without rules, organizations that don’t self-regulate will eventually fail. To those organizations that plan to “benefit” from the deconstruction of the administration, clearly you are also planning to fail. &

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]