Dan Reynolds

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.

2015 Most Dangerous Emerging Risks

Most Dangerous Emerging Risks: A Look Back

Each year since 2011, Risk & Insurance forecasts the Most Dangerous Emerging Risks — often with uncanny accuracy.
By: | April 8, 2015 • 4 min read
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Each year since 2011, Risk & Insurance® identified and reported on the Most Dangerous Emerging Risks. Here’s how we did on some of them.

2011: Rising Sea Levels
04012015_01_CS_floodsIn 2011, our sources talked about the threat of rising sea levels, combined with land subsidence in major urban areas. Our reporting postulated that investment in infrastructure was not keeping pace with the risk.

Outcome: Elevated sea levels lift a Category One tropical storm, Superstorm Sandy, on Oct. 29, 2012 and enable it to inundate New Jersey and New York, resulting in $25 billion in insured losses and the deaths of 285 people.

2011: Political Revolutionary Risk
In 2011, we described a scenario in which the head of a fictional country, Yberra, nationalized all privately held assets. In the scenario, mining operations and fruit-exporting companies with substantial holdings in Yberra suffered large losses. Risk managers for those companies were sent scurrying to examine their business interruption and political risk coverages.

Outcome: Tunisia, Egypt (twice), Libya, Ukraine and Kyrgyz all saw the removal of their heads of state in the aftermath of the Arab Spring. Ongoing pressure from Islamic militants and national governments threaten to redraw boundaries throughout the Middle East in 2015 and beyond.

2011: Toxic Water
04012015_01_CS_toxicH2OIn 2011, Risk & Insurance® described a fictional Category 2 hurricane, Hurricane Lucy, that dropped so much water on North Carolina that it caused the walls of a massive agricultural manure lagoon to burst. The resulting environmental damage resulted in the closure of hundreds of thousands of acres of commercial fisheries. Cryptosporidium infected hundreds, killing 142.

Outcome: In February 2015, Duke Energy was getting set to agree to a $100 million payment and five years’ probation in response to criminal charges after it spilled 40,000 tons of coal ash riddled with arsenic, lead and selenium into the Dan River in February 2014.

In January 2014, a chemical spill by Freedom Industries resulted in the loss of drinkable water for 300,000 residents near Charleston, W. Va. Schools and businesses where shut down by the event. The Freedom spill was the third chemical spill in that area in the last five years, following spills at Bayer and DuPont facilities.

2011, 2012, 2013 and 2014: Cyber attacks
04012015_01_CS_cyberLeaksOur reporting in 2011 and beyond described a range of cyber events, from the leaking of sensitive information to state-sponsored cyber attacks on our energy infrastructure and cloud-based data storehouses.

Outcome: NSA contractor Edward Snowden released thousands of classified documents to journalists in June 2013. Major hacks that have taken place since 2011 have impacted Target, Home Depot, Sony, the U.S. military, AOL, Adobe, Anthem and eBay with economic damages in the hundreds of millions of dollars.

2013: NFL Concussions
New England linebacker Seau is seen before the start of the NFL's Super Bowl XLII football game in GlendaleThe tragic deaths of beloved NFL stars such as Junior Seau and “Iron” Mike Webster related to degenerative brain disease from repeated blows to the head signaled a wave of liability headed not just at the NFL but at other high-contact professional sports leagues such as the NHL. The long history of the NFL coupled with the number of former players possibly impacted added up to a heavy financial penalty.

Outcome: A final ruling from a federal court judge in Philadelphia is expected to produce a settlement in excess of $1 billion in a case brought by ex-NFL players that alleges that the NFL not only knew about the dangers of the game but hid that knowledge from players.

In February, a group of NHL players including Stanley Cup winners Eddie Westfall and Butch Goring filed a lawsuit against that league, alleging that the NHL failed to offer adequate education and protection against brain injury to players.

2012: Typhoons in Areas of Recently Increased Business Density
04012015_01_CS_typhoonIn 2012, a fictional typhoon, Typhoon Tsuguko, a Category Four, slammed into Taiwan, killing hundreds and wiping out one-third of the world’s semi-conductor manufacturing capacity.

Outcome: The 2013 Pacific typhoon season, responsible for 6,287 deaths, was the deadliest season since 1975. Overall economic damages from Pacific typhoons in 2013 came to some $22.8 billion.
In July 2014, Typhoon Rammasun caused economic damages in excess of $6.5 billion in China, Vietnam and the Philippines.

2012: Protest 2.0; The Use of Social Media in Protests
04012015_01_CS_riotsIn a 2012 scenario, a fictional protester, Joshua Shane, sparked a national reaction when a protest he organized against a local foreclosure went viral, sparking sister protests in a number of cities. The fictional Twitter tag #RiseUp served as fuel for the fire.

Outcome: More than 500,000 Twitter postings following the shooting death of Michael Brown in Ferguson, Mo., ignited protests around the world from August through December 2014. In addition to riots that destroyed businesses and homes in Ferguson and St. Louis, riots sparked with the Twitter tag #HandsUp shut down commerce and traffic in Oakland, Calif., and London, among other locations.

2013: The Antibiotic Void; The Rise of Drug-Resistant Superbugs
04012015_01_CS_superbugsIn 2013, our scenario described an “antibiotic void,” a world in which antibiotic-resistant “superbugs” wreaked havoc in hospitals and in society at large.

Outcome: An antibiotic-resistant strain of Salmonella broke out in the summer and fall of 2013 and hospitalized 278 people in 18 states.

An antibiotic-resistant “superbug” — CRE — spread by an unapproved medical device, sickened some patients and killed others at Los Angeles area hospitals in late 2014 and early 2015. The same superbug is thought to have hit a hospital in Wisconsin in 2013.

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Complete coverage of 2015’s Most Dangerous Emerging Risks:

Corporate Privacy: Nowhere to Hide. Rapid advances in technology are ushering in an era of hyper-transparency.

04012015_04B_implant_devices_150px_mainImplantable Devices: Medical Devices Open to Cyber Threats. The threat of hacking implantable defibrillators and other devices is growing.

04012015_03_concussions_150px_mainAthletic Head Injuries: An Increasing Liability. Liability for brain injury and disease isn’t limited to professional sports organizations.

04012015_04_vaping_150px_mainVaping: Smoking Gun. As e-cigarette usage rises, danger lies in the lack of regulations and unknown long-term health effects.

04012015_05_aquifer_depletion_150px_mainAquifer: Nothing in the Bank. Once we deplete our aquifers, there is nothing helping us get through extended droughts.

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Most Dangerous Emerging Risks: A Look Back. Each year since 2011, we identified and reported on the Most Dangerous Emerging Risks. Here’s how we did on some of them.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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Risk Scenarios Live!

Brains Not Brawn

The co-morbidities of age and weight compound a case involving a stubborn and injured construction foreman.
By: | March 19, 2015 • 11 min read
Topics: Risk Scenarios
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

The Injury

The scenario begins with the brief video below:

 

A Grey Area

For five weeks, Mike lives in a grey area populated by denial and tentative healthcare delivery.  Mike reports his injury to his employer and is referred to an occupational medicine specialist. The specialist prescribes Vicodin, a pain killer and Naproxen, an anti-inflammatory.

Mike also discusses light duty alternatives with his employer. Mike tries light duty, taking a stab at acting as a carpenter’s assistant, essentially, cleaning up and doing menial work like sweeping up sawdust and chucking small pieces of wood into the dumpster.

Mike is plagued by pain, and acting against the advice of the occupational medicine specialist, he starts taking two to three Vicodin a day on the job to manage. Buffered by the Vicodin, Mike ignores the verbal agreement he has with his employer and begins to use his shoulder harder.

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At one point, frustrated with the inaccurate work of an underling, Mike picks up a circular saw and starts making cuts to beams and other hefty pieces of wood.

After six weeks, Mike’s pain hasn’t gotten any better and under pressure from Mike’s employer, Mike’s occupational medicine specialist refers him to an orthopedic specialist.

At the orthopedic surgeon’s office, Mike is sitting on the examination table with the doctor standing before him.

The doctor, a much smaller man than Mike, places his right hand on Mike’s left wrist.

“Okay, try to lift your arm,” the doctor says.

Mike tries to lift his arm with the doctor pushing down against him but is struggling.

“You’re very weak in the shoulder,” the doctor says. “I’m afraid you have a substantial rotator cuff tear but we’ll order an MRI just to be sure,” the doctor says.

“What if it’s torn, what then?” Mike says.

“You’re looking at surgery with a minimum of six months off of work,” the doctor says.

Scenario_BrainsNotBrawn“Six months? Why?” says Mike.

“Rehabilitation from rotator cuff surgery isn’t easy. You could have some setbacks. I’m giving you a conservative estimate,” the orthopedic surgeon says.

“Why operate at all?” says Mike.

“You can’t walk around with a rotator cuff tear in your line of work for any period of time,” the doctor says.

“It’s way too risky for a man your age.”

“I’m only 54, Doc,” Mike says gamely.

“At your age, honestly, you’re going to have to be very diligent in rehab to bring this thing back all the way,” the doctor says, tapping Mike lightly on his injured left shoulder.

The MRI confirms what the doctor felt to be true. Mike has a full thickness tear of his rotator cuff.

“You see that?” the doctor says to Mike as they look at the MRI image together.

“Looks like it’s torn all the way through,” Mike says.

“Yes it is,” the surgeon says. “We need to set a date to operate. And as I said during our last visit, you’re going to have to be diligent in rehab to bring this shoulder back successfully.

Poll Question

Which co-morbidities are having the biggest impact on your claims?

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A New Reality

As a former high school wrestler and carpenter, Mike is accustomed to injury and injury recovery. It seemed like he recovered from a torn meniscus in his right knee during his wrestling days in a matter of weeks.

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In his twenties, he broke a finger in his right hand in a bar fight in Muscatine, Iowa.

In his thirties, he broke the fifth metatarsal bone in his left foot when he rolled his ankle over a log while dove hunting near Lake Okochobee.

Each time he came back fine. Over the years, Mike developed a quiet confidence that his strong body will never fail him.

But one look at Mike as he sits on his living room couch with his left arm in a sling says that this time might be very different. He’s four weeks post surgery and he’s already gained 20 pounds. Post surgery, his doctor gave him a generous prescription of Oxycontin, 80 pills. Mike still has 50 of those pills, a fact he is keeping from his wife and his doctor.

“Really honey?” his wife says as she stands in the living room doorway watching Mike open another beer as he watches a Florida State football game.

There are three finished beers on the coffee table in front of Mike.  “What?” Mike says as he takes a sip of beer.

“You know what,” his wife says. “You’ve been drinking a lot more beer since you’ve been off work.”

“Not really,” Mike says.

His wife walks closer to Mike and peers into a pizza box.

“You ate that entire pizza?”

“Thin crust,” Mike says by way of a joke.

His wife pauses, not enjoying the joke.

“Are you still taking painkillers? Because you know you shouldn’t be drinking and taking that prescription.”

“Nah, I dumped ‘em in the garbage. I don’t need ‘em anymore.” Mike says.

“Hummmph,” his wife says, not pleased with the whole picture and seeming to doubt Mike’s word.

“What about your physical therapy exercises that you’re supposed to be doing at home?”

“I’m doin’ ‘em,” Mike says.

“When?” his wife asks him.

Mike glares at his wife and she reacts.

“I know what you’re thinking,” she says, crossing her arms.

Scenario_BrainsNotBrawn“You think I’m being a nag. Well I’ve got news for you Mike Manning. Just because I care enough to ask after your health doesn’t make me a nag!”

As soon as she leaves the room, Mike fishes in his pocket and brings out a vial of pills.

With practiced dexterity, Mike uses his slinged left hand to hold the pill bottle while he wrests the top off with his right. Mike pops a pill in his mouth and washes it down with a slug of beer.

Mike had initially taken the painkillers according to the instructions on the bottle. But two months into his recovery, he’s now ingesting twice that amount on a daily basis.

***

Back at his doctor’s office, six weeks post-op, Mike’s shirt is off while the doctor checks his range of motion and his strength.

“Okay, stand up and raise your arm as high as you can,” the doctor says.

Mike gamely raises his arm, but he can’t raise his hand above chest height.

“Keep working hard in therapy,” the doctor says. “How’s your pain?”

Mike gives a pain rating of eight over ten. Excess pain behavior.

“Eh, it still hurts, especially when I’m trying to sleep,” he says.

“Okay, we started you on Oxycontin but I’m going to see if you can get by on Vicodin,” the doctor says.

“Sounds good,” Mike says, avoiding eye contact with the doctor.  Mike still has a renewal on his Oxycontin and he’s happily envisioning doubling up with Oxycontin and Vicodin even before the doctor has put pen to paper to write him a new prescription.

Mike flexes his knee.

“My right knee has started to hurt too,” Mike says. “Don’t know what’s up with that.”

The doctor looks at Mike as Mike flexes the knee.

“It looks like you’ve picked up a considerable amount of weight since you’ve been off Mike. That could be affecting your knee.”

“Yeah, probably so,” Mike said, patting his gut affectionately.

“How’s rehab going?” the doctor says. “You doing the home exercises they’re giving you?”

“Eh…sure,” Mike says.

From the doctor’s expression, he’s not too convinced.

Six months post-injury, Margorie Kessel, a claims supervisor for Mike’s employer’s workers’ compensation carrier, has a look at Mike’s file and does not like what she sees.

“His opioid use is like a runaway train,” Margorie says to herself.

“I’m going to put a nurse on this case.”

Poll Question

In your experience, what percentage of injured workers adhere to their physical therapy regimen?

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Off the Rails

Nine months post-injury, Mike is at physical therapy, lying on his back while a therapist works on his shoulder.

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The physical therapist is holding Mike’s left arm and trying to gain more range of motion by steadily pushing Mike’s shoulder past where it wants to go.

The therapist is straining, and from the expression on his face, even nine months past injury, Mike is experiencing serious pain in the shoulder.

“Wow,” the therapist says.

“You’re as tight now as you were three months ago.”

“I know,” Mike says without much conviction.

The therapist sheds her sweatshirt.

“You’re giving me a workout,” she says. She picks up Mike’s arm again and resumes work.

Just then, another patient shouts out to Mary.

“Hey Mary, can you come over here? I’m not sure what to do on this exercise ball,” the other patient says.

“Sure, just a sec, Mary says.

“Here Mike,” so some work with this hand weight and I’ll be right back.”

The therapist leaves Mike and he continues on with the hand weight.

The therapist comes back.

“Sorry about that. Where were we?” But instead of picking up Mike’s left arm she picks up his right arm.

“It’s the left arm,” Mike says impatiently.

“Oh, right, sorry about that,” the therapist says.

“Okay, let’s see here,” she says, picking up Mike’s left arm.

She strains again, trying to get some motion out of the stiff joint.

She pauses, tuckered out.

“Are you sure you’re doing those home exercises I’ve been giving you?” she says.  How many times is he doing it? How many times are you doing it?  He can’t remember.

“You’re just not making the progress I’d hoped you would at this point.”

“I’m doin’ ‘em,” Mike says, again, somewhat unconvincingly.

Just then, another patient calls out for help from the overworked therapist.

“Hey Mary, am I doing this leg extension correctly?”

“Um, let me see,” Mary says, as Mike rolls his eyes impatiently.

“Hold on a sec, sorry,” Mary says as she puts Mike’s arm down again.

Mike lies on the table for another couple of minutes as the therapist gets caught up in the other patient’s questions.

Mike looks over to the therapist, working on the other patient.

“That’s it,” he says. “I’m out of here.”

Despite his weight and his gimpy knee, Mike slides off of the table and leaves, limping as he goes.

“Mike! Mike! Where are you going?” Mary says.

“Out! I’m going out of here! I’ve had it!” Mike says.

Three months later, Margorie Kessel is taking another look at Mike’s file.

“So now we’ve got a frozen shoulder.  Probably looking at a six-figure settlement for permanent disability. And he’s still at the drugstore,” she says.

“What the heck happened to this claim?”

Poll Question

What percentage of claims receiving opioid therapy involved specific communication/interaction with the prescriber to discuss the patient's medication regimen?

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The Session

This scenario was originally presented at the 2014 National Workers’ Compensation and Disability Conference in Las Vegas.

As part of the discussion, panelists discussed key aspects presented in the scenario.

Panelists included Dr. Robert Goldberg, chief medical officer, Healthesystems; and Dr. Kurt Hegmann, Associate Professor, The Rocky Mountain Center for Occupational & Environmental Health. The session was moderated by Tracey Davanport, director, National Managed Care, Argonaut Insurance.

Insights from their discussion are highlighted below:

 

 

 




Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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Opportunities in Cuba

Greenberg on Cuba

The easing of travel restrictions to Cuba is bound to open up opportunities.
By: | March 12, 2015 • 3 min read
Havana

On a visit to Moscow in 1964, Hank Greenberg noticed a picture of a Havana office building on the desk of an official with the Soviet insurance company Ingosstrakh.

“That looks like the building where my company housed its insurance operations,” Greenberg — who was in Moscow seeking a travel risk reinsurance deal — told the official.

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The C.V. Starr Companies had an office in Havana – pictured above – between 1943 and 1958.

“That may be,” the Soviet official replied. “Now it is the building where Ingosstrakh houses the Soviet Union’s Cuban operations,” he added.

“Please take care of that building,” Greenberg told the official. “We will get it back … soon.”

More than 50 years after Greenberg made that bold statement, as recounted in his 2013 book “The AIG Story,” the day that Starr Companies takes possession of its former property in Havana is not yet here.

“Change must come about, but how fast? I can’t answer that.” – Hank Greenberg, CEO and Chairman of the Starr Companies.

With the recent easing of travel restrictions to Cuba by the U.S. government, however, Starr Companies’ executives are checking on the condition and ownership of the building just the same.

Untangling the history of that Havana building is just one of the opportunities that are on the minds of business people in the United States since travel restrictions to Cuba were eased in January.

Greenberg expresses the hope that his company can one day re-open an insurance operation in Havana. At the same time, Greenberg said that there is much work yet to be done, on the part of both the public and the private sector, before anything like that can happen.

“Both governments have got to agree on the speed by which normalization would come into being,” Greenberg said.

Hank Greenberg CEO and Chairman Starr Companies

Hank Greenberg
CEO and Chairman
Starr Companies

Since the restrictions were eased, Greenberg reports that the Starr Companies’ travel services subsidiary Assist-Card International Holdings, which it acquired in 2011, is already seeing an uptick in inquiries from businesspeople interested in its travel protection services in Cuba.

“From what we can discern, there is a great deal of interest and a pent-up need to travel,” Greenberg said.

The hotel and restaurant business, agriculture and travel-related industries like cruise shipping and aviation are just a few of the industries that will see opportunities in nearby Cuba as relationships between that country and the United States open up.

There will also be an intense interest, Greenberg said, for people of Cuban descent who are United States citizens eager to visit their origin country.

However, more evolution in government relations must occur before many of those dreams can become a reality.

“Change must come about, but how fast? I can’t answer that,” Greenberg said.

One thing Greenberg is certain of. Free trade is the quickest route to building lasting bonds between the United States and Cuba.

“I think that where trade increases between countries generally you see change in attitudes and building better trust between countries. You learn from each other, it’s a faster way to normalize relations than anything I can think of,” Greenberg said.

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Greenberg stressed that Assist-Card International isn’t the only U.S.-based insurance company or subsidiary in the travel risk business.

The Starr chairman indicated though that he expects his company to be a strong competitor.

“The challenges of doing business in Cuba are substantial,” Greenberg said.

“But Starr is well-positioned and prepared to leverage our relationships and global network to support our clients’ entry into this market.”

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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