Top Risks Ranked by Risk Managers
The global risk landscape is so rich with exposure that it’s not surprising that two recent surveys show divergent worries by risk managers.
In a recent study of 1,400 global CEOs and risk managers by Aon, damage to reputation and brand was the clear-cut No. 1 choice.
“I think it’s a combination of things but when you think about all of the other risks that are there, damage to reputation and brand is really the culmination of the connectivity of all different kinds of risks,” said Baltimore-based Theresa Bourdon, group managing director at Aon Risk Consulting.
“So any one of the other risks, if a company is not prepared for them, is going to affect their reputation and brand,” said Bourdon. “It’s kind of where it all collects right at the top of the brand of the organization.”
The uncertainty and unrest overseas obviously made a major impact on the global respondents of the Clements survey.
“There are many, many companies which are either contemplating or have already engaged in opening operations overseas, and that’s happening across all industries,” said Scott Lockman, Washington, D.C.- based director of commercial insurance at Clements.
More than one-quarter (28 percent) of top managers surveyed by Clements stated that political unrest was their top concern, while 25 percent cited kidnapping and 10 percent cited terrorism.
Twenty-one percent said they delayed plans to expand into new countries due to rising international risks.
Lockman said that when the organization speaks with its clients about civil unrest, it doesn’t necessarily have to be about a physical threat.
“A devaluation of a currency can cripple a business, like what’s happening in Venezuela, for example.” — Scott Lockman, director of commercial insurance, Clements Worldwide
“A devaluation of a currency can cripple a business, like what’s happening in Venezuela, for example,” he said. “Their economy is in turmoil right now.”
“Specifically we have seen spending on political violence insurance go up 20 percent over the past couple of years,” said Washington, D.C.-based Patricia Loria, Clements’ marketing communications manager.
Meanwhile, in this year’s Aon study, political risk dropped out of the Top 10 list.
“It was No. 10 the last time we did the study in 2013 and now it’s down to No. 14,” Bourdon said. “Political risk is one of the risks we don’t think is getting the attention it deserves.”
The global economic slowdown was No. 1 in the 2013 study; it dropped to No. 2 this year, she said.
As for cyber risk, Bourdon said she was surprised to learn that 82 percent of the respondents — who ranked cyber risk in the Top 10 (at No. 9) for the first time after being No. 18 in 2013 — said they were ready for the risk and only 8 percent said they had a loss of income as a result of a cyber attack.
Another surprise for Bourdon was the threat of terrorism. “We were very surprised that it was very low on the list,” she said. “There is sort of an out of sight, out of mind mentality here.”
Also out of mind, she said, was pandemic risk, which ranked at No. 44.
“We haven’t seen regulations decreasing, we’ve only seen them increasing.” — Theresa Bourdon, group managing director, Aon Risk Consulting
One perennial concern, Bourdon said, is regulatory risk, which usually ranks as a Top 5 risk.
“We haven’t seen regulations decreasing, we’ve only seen them increasing,” she said. “You look at the global economic expansion. That’s brought additional regulations.”
Bourdon noted that Aon’s respondents were also very concerned about the impact of catastrophic property damage, such as from a hurricane or large fire.
Property damage and medical expenses represented the largest sources of financial losses among respondents to the Clements survey.
Keeping the Budweiser Moving, Safely
By the time owner Herbert Schilling of LaFayette, La.-based Schilling Distributing Co. called on Tim Kirsch to overhaul the company’s safety and risk management programs, the company faced a warehouse full of longstanding problems on those fronts.
On Jan. 1, 2014, Kirsch was named safety director, reporting directly to Schilling. The most immediate and daunting challenge for Kirsch was to reduce the large number of fleet accidents that had been occurring annually among the company’s 100 vehicles.
“Driver evaluations and observations are something that I created,” Kirsch said.
“Whenever we hire someone in a driving position, they have to be evaluated by myself before we turn them loose to drive a company car,” said Kirsch, who previously had been human resources director.
“Whenever the trucks are on the road, I randomly find someone and follow them and observe their driving, of course without them knowing.”
Between April 2014 and April 2015, fleet accidents declined by 70 percent at the company, which distributes Anheuser-Busch products, along with soft drinks and water.
Another Kirsch initiative has him riding in vehicles with company drivers.
Kirsch also instituted a rigorous policy banning cellphone usage in company vehicles, in warehouses or in customers’ facilities.
Under Kirsch’s leadership, newly rewritten safety and risk management goals were implemented:
- Stick to core values; safety is at the forefront.
- Achieve zero incidents.
- Become an industry leader in safety.
- Continue to be a good steward and partner to the LaFayette community.
- Adopt an “It Starts With Me” attitude.
“It’s all about the employee and being safe. In just about every conversation or meeting that we have, we mention safety,” Kirsch said.
The new multi-faceted plan of action included safety training, safety meetings, new employee orientation, driver evaluation, distracted driving programs and defensive driving training. This was done with help from Schilling’s broker (HUB International) and insurance company (Travelers).
“Whenever the trucks are on the road, I randomly find someone and follow them and observe their driving, of course without them knowing.” — Tim Kirsch, Safety Director, Schilling Distributing Co.
Positive results were felt within a year. In addition to the dramatic drop in fleet accidents, insurance costs decreased by over $500,000. Fuel costs dropped due to taking some vehicles out of action.
Miles driven decreased and workers’ compensation claims were cut by 85 percent.
A new corporate safety mission was rolled out corporate-wide.
“From an actionable items standpoint, all new hires were oriented before starting work,” Kirsch said.
“A formal, standardized and documented orientation is now used.”
When Kirsch took over the safety and risk management functions, access to insurance markets was shrinking.
“The markets that were willing to underwrite were issuing large premium increases and unappealing large deductibles on both occurrence and aggregate levels,” said Harper Johnson, New Orleans-based vice-president and senior risk consultant for HUB International.
But as Schilling’s safety and risk management dramatically improved, so did its insurance condition.
Johnson said Kirsch is extremely hard-working and perseverant, with the ability catch small details while also keeping the big picture in view.
On a Mission to Revitalize
Angeli Mancuso is a vital cog in the management team at the three hospital, one laboratory Cottage Health system based in Santa Barbara, Calif.
As manager of the eight-member employee health and safety department, Mancuso has been involved in many major initiatives for the hospital system, but none more important than being a key member of a group that rode to the rescue of a safe patient handling initiative that had begun to stagnate.
Launched with much fanfare in 2009 to reduce serious injuries to employees — especially nurses — involved in the manual lifting, transferring and handling of acutely ill patients, the hospital system was coming off 41 such injuries in 2008.
In the $6 million program’s first year alone, the 41 injuries were reduced to 28 injuries, and then to 17 in 2010. “In 2010, 2011 and 2012, we were in the teens so we weren’t moving,” said Mancuso, who joined the organization in 2011.
“So in 2013, based on recommendations from employee health, including myself, we went to the board of directors and said, ‘This should be on the radar for an organizational goal,’ ” said Mancuso.
“In 2013, the first year the revitalized program was a top goal of the organization, it was suggested we set our goal at no more than nine preventable injuries, and that year we had only three preventable injuries,” Mancuso said.
So in 2014 the goal was renewed to no more than three preventable injuries. “Unfortunately we had four,” said Mancuso. “This year we’re shooting for no more than four, and we’re at only one so far.”
An important duty for Mancuso is serving as the coordinator of communications throughout the 583-bed organization.
“On a monthly basis I go in front of all of our critical management staff,” said Mancuso. “I give them an update on how we are tracking to our goals, what things we have seen go wrong, what things we have seen going well. I outline where we are struggling with compliance, how we are using equipment or training or things like that.”
“In 2013, the first year the revitalized program was a top goal of the organization, it was suggested we set our goal at no more than nine preventable injuries, and that year we had only three preventable injuries.” — Angeli Mancuso, Manager, Employee Health & Safety, Cottage Health System
Mancuso coordinates all the visits when Prevent, a consulting group that was instrumental in establishing the safe patient handling program, comes to the hospital group on a quarterly basis.
“I set up all the meetings to make sure Prevent gets in front of the right leadership teams to keep this program in the forefront of people’s vision, to say that this is still a significant issue, that we still have work to do,” said Mancuso.
Prior to joining Cottage Health, Mancuso was the staff nurse in the occupational medicine department at Sansum Clinic, a Santa Barbara-based multidisciplinary, non-hospital based group. In all, Mancuso has been in the occupational safety industry for 10 years.
Encino, Calif.-based Karla Hacker, director of claims for Sedgwick Claims Management Services Inc., who works closely with Mancuso, said of her: “I have the opportunity to see the impact Angeli has on the overall Cottage Health program. She took the lead in tackling one of the industry’s most challenging exposures, patient handling injuries. She’s made a profound impact on the quality of life of Cottage Health employees while reducing claims costs.
“While her attention to detail allows her to deliver on day-to-day objectives, she brings a big-picture approach to her role.”
Angeli is also being recognized as a 2015 Responsibility Leader®.
Taking It to the Streets
After a hard week at work making the Cottage Health hospital in Santa Barbara, Calif., safer, Angeli Mancuso takes it to the streets, literally.
As a nurse with the nonprofit Doctors Without Walls, which also goes by the name Santa Barbara Street Medicine, Mancuso visits the public parks in Santa Barbara to offer medical services to the homeless. There are multi-pronged benefits to the work that Mancuso and Doctors Without Walls perform.
One, seeing the disenfranchised in public cuts down on emergency room visits, freeing that service for those who in many cases are in much more urgent need of care.
Doctors Without Walls does manage chronic wounds in the homeless population, but many times the doctors and nurses in the program are needed to just lend a sympathetic ear. Or to refer someone to another service.
“It’s a lot of talking,” Mancuso said.
The group also brings along students who are interested in a career in medicine to work as scribes and on outreach.
Mancuso also serves with Aeromedicos of Santa Barbara, a nonprofit formed in Santa Barbara decades ago that flies professionals to Baja California in Mexico once a month to staff free medical and dental clinics. The hard-working Mancuso made three trips with that group this year.