Insuring Feathers, Fur and Football Tradition
Lions, tigers and bears. Oh my!
Not to mention the buffalo, a ram, horses, a falcon, an owl and various dogs. The animals that pump up sports fans at universities across the United States range from a gamecock and an eagle to a bulldog and a bluetick coonhound.
“There are quite a few of them out there,” said Vincent Morris, executive director of the higher education practice at Arthur J. Gallagher & Co.
“It’s the tradition and pageantry of it all. The pounding hooves before a football game, the raptor soaring around the stadium, the tiger growling … .
“Mascots are so different,” he said.
“What one does with a University of Georgia bulldog is different from what one does with a University of Colorado buffalo.”
But they all need to be insured for mortality as well as potential property damage or bodily injury. Plus, the animals need to be cared for, whether it’s ensuring they have proper nutrition and living quarters to making sure they are humanely and adequately restrained from harming fans.
Universities with mascots also must accept that there will be objections by animal rights groups.
“Nothing says ‘Go, team!’ less than an unhappy animal, and with athletes and coaches so prone to raising a ruckus on and off the field, there’s no reason to subject a real animal to the stress of being a mascot,” writes People for the Ethical Treatment of Animals (PETA) on its website.
“There’s a lot of pressure from people who say we shouldn’t have animals living like that,” Morris said. “There’s a kind of movement in the country that is concerned about caged animals … not in their natural habitat.”
He noted that most universities do not have live mascots. Of about 3,500 schools, fewer than 50 use live animals for mascots.
“When you are talking about risk management,” Morris said, “you are talking about loss control, keeping bad things from happening — and knowing how to pay for them when they do. You don’t want to have a buffalo rampaging through the marching band.
“You have to worry about the animal being stolen or escaping,” he said.
“There have been pranks. LSU’s tiger has been released or kidnapped on more than one occasion. Arkansas’ razorbacks have gotten out on more than one occasion and killed other animals.”
“Normally,” said Mitchel Kalmanson of the Lester Kalmanson Agency, which specializes in rare and unusual risks, especially animals, “commercial animal liability is broken down into either domestic or exotic.”
Domestic animal liability would cover, for example, dogs (mascots for Eastern New Mexico University, Texas A&M, University of Georgia, University of Tennessee and Yale), horses (Southern Methodist University, University of Oklahoma and University of Southern California), or goats (Naval Academy).
Exotic coverage would be necessary for a bear (Baylor University), razorback (University of Arkansas), African lion (University of North Alabama), buffalo (University of Colorado, Boulder) or tiger (Louisiana State University).
“I insure [mascot owners] all the time,” Kalmanson said, noting that he also owns 18 “big cats” — tigers, lions and leopards — that are hired to appear at fairs, schools and special events.
“Sometimes mascot animals live with handlers,” Morris said.
“Some live on a farm nearby. Some live with a designated family or sometimes, athletic staff.”
Some like Mike, a Siberian Bengal tiger, lives in a specially built 15,000-square foot habitat with a waterfall, stream and foliage on the campus of Louisiana State University, according to “Hear Me Roar: Should Universities Use Live Animals as Mascots,” a 2011 article by Jessica Baranko for the “Marquette University Sports Law Review.”
Baylor University’s bear mascots, all named “Judge” followed by a surname, also live in a campus facility with a waterfall, pond, cave, rocks and foliage. Students call it “The Pit,” Baranko writes.
Usually, Kalmanson said, the university is not the owner of the mascot animals, but is added “as an additional insured on the owner’s liability policy or commercial animal owners’ liability policy.”
“You want to make sure the owner’s liability policy is exhausted before it goes into the university’s,” Kalmanson said.
Nonetheless, it’s important for universities to have written guidelines and procedures related to the mascots. They should ensure the owner has the proper state, federal and local permits and licenses to own and exhibit the animal, and ensure proper nutrition and medical care is provided.
When animals are transported, the trailer or truck must be properly ventilated, he said. Inside, the animal’s enclosure, for a big cat, for example, should be made of Lexan, a bulletproof polycarbonate, and steel instead of a less secure wire cage. Plexiglas, he noted, will crack and break if used for big cats.
When the animals are taken onto the field, handlers — and back-up handlers for cases of emergency — must be properly trained and make sure the buffalo, for example, is tethered to a safety cable to keep it from jumping into the crowd, Kalmanson said.
Animals should be brought to the fields before actual games so they can become used to the area, lights and noise. There should be an “exit strategy,” in case something goes wrong and the handlers need to move the animal to a secure area, he said. Sedation equipment should also be available.
Policy deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.
Too often, he said, universities do not have set guidelines, and handlers or families “take too many shortcuts” about safety procedures. “There’s nobody looking over their shoulder saying they should follow the guidelines. There should be standard operating procedures available.”
That’s good for the animal as well as the reputational brand of the university, he said.
Kalmanson said liability coverage should be for a minimum of $1 million per occurrence aggregate. Deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.
If properly written, it will include coverage for bodily injuries or property damage caused by the animals. The policy would not, however, be triggered if PETA or some other animal rights group filed a lawsuit alleging mistreatment.
“There’s not much recourse but to defend that on its own merits,” Kalmanson said. “That would not be a covered hazard.”
Going Through the Motions
It was during a session at last year’s National Workers Compensation and Disability Conference® and Expo that Anne-Marie Amiel first heard the term “industrial athletes.”
She was among the presenters at the session highlighting the tactics and philosophies of the 2015 Teddy Award winners. As risk manager for Columbus Consolidated Government in Georgia, Amiel was honored for substantially reducing workers’ compensation claims costs, revamping return-to-work and enhancing safety training.
But when she heard Tamara Ulufanua-Ciraulo of Stater Bros Supermarkets, another winner, talk about how the grocer supports its aging workers by treating them as industrial athletes, it stuck in her mind.
“That triggered a thought,” said Amiel.
Then, as many NWCDC attendees do, she engaged in a corridor conversation with another attendee. He mentioned obstacle courses — and the idea of a “Workplace Athlete Day” was born.
“We wanted to do something for employees and we decided to do something that apparently has not been done anywhere else in the country before,” Amiel said.
VIDEO: The obstacle that drew the most crowd support was the duck walk, which had workers walking like ducks while holding a spoon with a softball and “waggling their tail feathers.” — Anne-Marie Amiel, risk manager, Columbus Consolidated Government, Ga.
“We wanted a day where we put our employees through an obstacle course that tests the motions they do in their jobs,” she said.
“People who take care of themselves,” said Pat Biegler, director of public works in Columbus, “take better care of the city and the citizens and their families – and that’s our goal.”
After consulting with several physical therapy companies, they put together an obstacle course “based on proper motion and safe techniques, not on speed or strength,” Amiel said.
“The physical therapists were awesome,” she said. “We talked about the different motions that are involved in different activities for different work uses. Several of them volunteered to act as judges.”
Eventually, about two dozen obstacles were created – “some hilarious and a lot of fun” – but underlying the laughter was the need “to keep employees flexible and fit throughout their careers so they have fewer injuries and are able to do their jobs until retirement age.”
That not only helps employees stay well, but it has the benefit of keeping workers’ compensation claims down, she said. “Now that we have launched this major initiative, I think we will see a significant reduction in frequency.”
The obstacles included throwing footballs and Frisbees, crawling through pipes, lifting items to several different heights, basketball, pushing wheelbarrows and stepping through a double row of tires.
But the obstacle that drew the most crowd support was the duck walk, which had workers walking like ducks while holding a spoon with a softball and “waggling their tail feathers,” Amiel said.
“It was hilarious but it was testing their ability to move when they had to squat.” And, of course, the observers felt compelled to “quack, quack, quack” at the participants the entire time.
The competition included about 25 teams of six employees, each of whom signed up for the day-long program, which included wellness checks, a healthy lunch, trophies and gifts, such as safety glasses, leather gloves, earplugs and sunscreen.
Next year, Amiel and Biegler plan to open the competition to more of the 450 full-time public works employees.
“Seven of the top 10 dangerous jobs in the country are public works jobs,” Amiel said.
“Workplace Athlete Day” is important, Biegler said, “because prevention is so very, very critical to keeping accidents down and we want a workforce that is healthy, that’s happy and that is not injured so this will allow us to evaluate [potential problems] and allow them to do it in a fun environment.”
“Pat is extremely serious about safety,” Amiel said. “Public works is very nearly always my guinea pig [for safety training and injury prevention]. Pat is very serious about keeping employees fit and productive and is always willing to try anything.”
Both women will be presenting a session at the NWCDC in November on return-to-work strategies.
Working with the physical therapists on the obstacle course also resulted in a new morning routine for public works employees. Supervisors lead them through an exercise session every morning to “warm up their muscles before they start using them in earnest,” Amiel said.
Amiel hopes to expand the obstacle course program to every department in the city. “Several departments have already expressed interest,” she said.
“The morale boost was huge and employees know they are going to be challenged next year even more,” Amiel said. “They had so much fun, but they all came out of it and said they learned so much.”
The Upside of Risk
In 2012, the LEGO Group considered increasing its investment in the fast-growing Chinese market.
A year later, it began weighing whether to build a sales and distribution presence in China. The company had existing sales hubs in Connecticut, London and Singapore. That required the Danish toy company to consider the potential opportunities of such a move as well as the potential risks.
“There is a tendency for people to look on the negative side of risk, but the objective from my point of view is mainly the positive,” said Rico Ferrarese, who was with LEGO Group’s strategic risk management department until recently moving into an operational role.
Hans Læssøe, senior director of strategic risk management at LEGO, created the department in 2007. It focuses on company strategy. It doesn’t handle insurance, safety, claims or other traditional risk management responsibilities.
“Insurance has value but it doesn’t help you develop your business,” he said.
“How do we help management make better decisions — decisions that are better informed about the uncertainties? … To me, that’s much more proactive,” he said.
“I think a lot of risk managers right now are hampered by the fact that they are coming from an auditing or insurance business,” Læssøe said. “They want to make sure everything is covered. They have not been trained or asked to look at opportunities. They have not been asked to support decision quality.”
Focusing on the positive side of risk is unnatural for many risk managers. There’s a reason many executive and operational leaders dub such departments, the “department of no.”
By the same token, it also is uncommon for the C-suite or operational leaders to rely on their risk managers when they are contemplating strategic moves. They often fail to recognize the tools that risk managers can bring to the table to help assess potential opportunities and challenges.
Generally, it is only when a strategy moves forward that the organization informs the risk manager as a prelude to securing insurance protection.
“All too often, risk managers get called in after the decision has been made,” said Elizabeth Carmichael, director of compliance and risk management for Five Colleges Inc., which includes Amherst, Hampshire, Mount Holyoke, Smith College and University of Massachusetts-Amherst.
Risk managers who successfully integrate themselves in C-level discussions often must take the initiative themselves. They ask questions and develop relationships throughout the organization. They make sure they understand the entire business and its operations.
They ask key leaders what would help them do their jobs better, and then follow through with ways to help.
When LEGO considered going into China, it used a scenario process known as “Prepare for Uncertainty.”
“There are a lot of things we don’t know about China and especially China five years from now when we would be up and running,” Læssøe said.
“We have a set of uncertainties.”
Among them: What is the retail distribution structure like? Is it like the United States, with a few very large toy distributors, or like Germany, with “a gazillion and one small stores?” Or is it a combination of the two?
What are the consumers like? Will they want the same products as the American market, or will LEGO need to create different colors, heroes and concepts geared to the Chinese culture?
“How do we help management make better decisions — decisions that are better informed about the uncertainties?” — Hans Læssøe, senior director of strategic risk management, LEGO
Læssøe facilitated a structured discussion with the leadership team responsible for deciding whether to enter the Chinese market. Using Post-it notes, each team member team individually listed their “two most important uncertainties” about the potential move.
It was done that way to prevent group-think.
“We don’t even consider whether things are a risk at this time,” Læssøe said.
For three hours, the team talked through the ideas as they placed the notes two-by-two across on the table.
The leadership team then used the “Park Adapt Prepare Act” (PAPA) model.
“We prioritized them, not based on impact. The impact is inherently high. We look at the likelihood, low or high. Do we believe it will happen or not, the speed it might happen and our agility to respond,” Læssøe said.
If an issue was not likely to happen or offered sufficient time for the company to respond if it did, the uncertainty was “parked” on the side. Eventually, the only issues left on the table were those with a high likelihood and a short amount of time to respond.
All of the items had the potential to be both risks and opportunities, he said. “Now, we look at the issues we need to address.
“We want to make sure our strategy is resilient in a world that probably will change in a different way than we expect,” he said.
“What will give you a competitive advantage in the future world is maneuverability or agility.
“Competitiveness to me is like a penicillin for the flu. It can get you nauseous and uncomfortable but it makes sure you are on your toes and don’t get really, really sick,” he said.
LEGO started building its factory in China a couple of years ago.
“It’s just about finished,” Læssøe said.
On the Cutting Edge
LEGO’s strategic risk management process is “probably the leading edge of best practice,” said Andrew Bent, manager, enterprise risk management, Alberta Energy Regulator, in Calgary, Canada.
Bent, who is chair of the RIMS strategic risk management development council, said that more risk managers are recognizing that they must create as well as protect value for their organizations.
“Risk managers shouldn’t be the ones saying, ‘No, no, no. It’s too risky.’ They should be working — and many now are working — to provide the organization with the information needed to make good decisions,” Bent said.
“Risk managers are now asking, ‘How do we actually create value for the organization? How do we support the business strategy?’ ”
It’s about ensuring decision-makers have solid information about both the upside and downside of a potential strategy, he said. When that happens, the leadership takes accountability for the decision and is able to explain to their shareholders or board the reasons behind decisions and what controls were put in place.
“Over the last few years, we have seen much more emphasis on the C-suite and boards to be actively engaged with risk management, to really understand what is going on,” Bent said.
“Risk managers shouldn’t be the ones saying, ‘No, no, no. It’s too risky.’ ” — Andrew Bent, manager, enterprise risk management, Alberta Energy Regulator
“The implication for the risk manager is that we must be prepared to answer their questions. Most risk managers I talk to see this as the opportunity they have been looking for and waiting for.
“The organizational culture has to be ready to receive and ask for information about risk, and risk managers must be better prepared to not only give the information they are asked for, but also the information the organization needs to hear,” Bent said.
Adding value to the organization takes many forms. It is as individual and specific as each organization’s operations.
When Bent was working in risk management at a law enforcement agency, the city he worked for had the highest murder rate in Canada.
“In addressing this serious community problem, we needed to think beyond the very obvious downside. We had to ask, ‘What is the value that risk managers can add to our organization?’ ”
The downside, or traditional approach, he said, would have been a push to ban knives and increase police patrols.
Instead, the agency focused on the potential opportunities. It began to coordinate activities with social service organizations, such as homeless shelters; employment, training and housing agencies; mental health and addiction centers; and others; to bring more organized support to residents, he said.
“They were doing great things without a lot of coordination,” Bent said.
“Is this our job as a police agency to coordinate? Perhaps not in a traditional model. But we manage the downside of the risk, so we thought it was more useful to manage to upside first so we don’t get to that point.
“It was about bringing together all of those pieces and putting the right people at the table to have those conversations and make sure they are risk informed and understand the good, the bad and the ugly,” Bent said.
In another situation Bent is aware of, a construction company facing a range of safety issues decided to focus on the upside economic advantages of creating a strong safety culture to prevent further injuries.<
Leaders who had higher rates of injuries on their sites were also the ones who tended to have more re-work on their jobs, and the sites used more materials. By addressing the safety culture, those sites became more profitable.
Supervisors and foremen were trained, performance indicators were created, unions were consulted, and if workers refused to transition to the new safety climate, “they were no longer welcome on the company’s worksites,” he said. “It was costing money and hurting people.”
“By addressing the safety culture, the company was able to control downside risk and also improve profitability.”
A New Way of Thinking
It’s challenging for many risk managers to think about the positive side of risk, said Joanna Makomaski, president of Baldwin Global Risk Solutions Inc., and a columnist for Risk & Insurance®.
The Institute of Risk Management in London recently honored Makomaski as Risk Management Professional of the Year for her work on the Toronto 2015 Organizing Committee of the Pan/Parapan American Games.
Too many risk managers equate risk management with the company’s insurance portfolio, Makomaski said.
“When you rely only on insurance, in essence, you are waiting for something negative to happen and you can only mitigate the consequences.
“I am an advocate of identifying what your opportunity risks are, but you also have to look at the possible collateral damage of that risk,” she said.
For example, utility companies have a great opportunity for increased revenue during long, cold winters. At the same time, however, those companies may find that more people can’t pay their bigger bills. That can result in default risk on bill payment and a social responsibility risk.
“When you rely only on insurance, in essence, you are waiting for something negative to happen and you can only mitigate the consequences.” — Joanna Makomaski, president of Baldwin Global Risk Solutions Inc.
“That’s the challenge: Should the utility cut off their heat in the middle of a frigid winter? All of a sudden, even though this really good thing is happening, there are other risks to consider.”
In exploring opportunities, risk managers must consider their organization’s risk appetite, its tolerance for periodic excess risk, and the possibility that the failure to take a risk can have a negative impact. An example would be the way the manufacturers of the BlackBerry phone overlooked the risk posed to it by the iPhone.
“Given that risk is integral to the pursuit of value, strategic-minded enterprises do not strive to eliminate risk or even to minimize it,” according to “Risk Management in Practice” by Deloitte.
“Rather, these enterprises seek to manage risk exposures across all parts of their organizations so that, at any given time, they incur just enough of the right kinds of risk — no more, no less — to effectively pursue strategic goals. This is the ‘sweet spot,’ or optimal risk-taking zone.”
When risk managers understand a company’s potential exposures and the company’s risk tolerance, they can be in a position to tell the organization it can take on even more risk than they think, said Læssøe of LEGO.
Makomaski said she sometimes uses a “global heat map” to illustrate possible risks and returns of potential business strategies.
A heat map plots the likelihood and impact (ranging from very low to very high) of a strategy, including such potential risks, for example, as supply chain disruption, economic downturn, customer preference, new or increased competition, etc.
It’s important to note that such risk assessments are only as good as the data.
“Assessments are vulnerable to the garbage in, garbage out rule,” Makomaski said.
Marti Dickman, vice president, risk management, Advanced Disposal, said her risk management department is designed to “be the instrument that enables senior management to contemplate all of the risk factors and make good sound decisions about how to manage risk on the front end, recognizing we will still have a downside of risk.”
One way her department looks to add value is when the sales and marketing department negotiates with customers.
“They engage us right away and we offer suggestions for [contract] language, coverages that perhaps the customer has missed that we can provide,” she said.
“We can offer recommendations on how a component of the contract could be changed to create a value add and allow us to win the business. It gives us a competitive edge,” Dickman said.
“I work with my team so that my folks are not seen as the ‘no people.’ We want to be the ‘go-to people.’ The direction my team is charged with is to explain the challenges we see and the opportunities to make something even better.
“Instead of looking to avoid risk, we help them understand the risk on the front end so decision-makers can use that to make informed decisions. Ultimately, it will depend on the risk appetite of your company,” she said.
Carmichael, of Five Colleges, said most of her risk management colleagues “are pretty skilled at understanding the upside of risk.”
“We get requests for all kinds of interesting projects within higher education,” she said.
“Our students and faculty are very creative and the administration is often looking to do things that are innovative.
“When asked to do a risk assessment, it may be wise to ask the administrator, ‘Are you looking to say yes or no,’ because that way you have a better sense of what direction they are working toward.
“If they are looking to say no, the task is fairly easy because you can probably come up with many things that can help the school say no,” Carmichael said.
“But don’t leave off the upside of the activity, as other administrators are likely to want to weigh in at some point.”
In one instance, an honors student with a circus project wanted to bring a trapeze event to campus. Participants would have the chance to learn how to swing on and transfer from one trapeze to another.
“The upside of the risk was great. It would be an on-campus activity that would engage a large number of people in the community, both staff and faculty. It would bring the campus together and give people an experience they might not otherwise have in a relatively low-risk environment.
“The obvious downside [to the event] was that someone could have been hurt or there could have been some other snafu, for lack of a better term, with the project,” she said.
“As the risk manager, in collaboration with other administrators, we were able to ensure that our facilities staff and public safety officers were on board.
“We also worked through a very well-reasoned and balanced contract with the trapeze company and used waivers to help spread the risk to the participants. We had an extremely successful event.”
Supporting the Business Plan
“When you invest in something,” said Ferrarese of LEGO, “it must have a positive outcome. You may not be able to put a financial outcome on it, but there is a positive reason we are doing it.”
“The key challenge,” said Dickman of Advanced Disposal, “is to overcome the traditional view that many people have of risk management.”
While that may be slowly changing among senior leadership, the onus is on risk managers to “reach out and take that initiative if the culture sees risk management in that more traditional role. Push forward,” Dickman said.
“Don’t be discouraged. Make inroads so people see you as a resource and benefit so they will want to bring you in at the beginning.”
At the same time, some risk managers need to change their own mindset.
“Instead of being risk averse, we need to understand there is a benefit to taking on more risk — when we do so in a controlled way,” she said.
Carmichael suggested risk managers “look for ways to engage in conversations about getting to ‘yes’ rather than starting at ‘no’ … and getting carried grudgingly along.”
They also need to educate senior leadership. “The more aware your senior officers are about risk and risk management, the more likely risk management will be called in before a decision is made,” she said.
Makomaski said one way to gain traction and engagement is to “dance to the rhythm of the business.”
“I like to attach myself to an agenda or internal system that is working and risk adjust that,” she said.
“Make yourself an enabler to the strategy. My job is to enable the risk to happen within the bounding risk position of the organization.” &