The Truth About The Keystone Pipeline
Did you know that the Keystone Pipeline is actually in operation?
Most people don’t.
But then again, most people believe that TRIA has actually covered terror events — but that will be a different article.
Maybe we should start with the facts:
- Phase I of the pipeline runs from Hardesty, Alberta, to Steele City, Nebraska (2147 miles), then on to a refinery in Wood River, Illinois. This was finished in 2010.
- Phase II runs 300 miles from Steele City to storage facilities in Oklahoma. This was finished in 2011.
- Phase III is from Oklahoma to Port Arthur, Texas, where it finished in 2014 with a lateral pipeline connected to refineries at Houston, Texas, to be finished in mid-2015.
So what is it that we keep hearing about? Well that would be Phase IV of the pipeline project. This would start in the same place in Canada, go to the same place in Nebraska, but be wider and have a shorter route. It is this phase that has been the focus of all the discussion, for what seems like forever.
Those who are opposed to the pipeline say, “It’s BAD. It’s bad for the climate, for health, for the environment, for the economy … just BAD.” Those who are for the pipeline say it will create 40,000 jobs, albeit temporary. (But aren’t all construction jobs temporary anyway?) It is also built without government financing. It helps our neighbors to the North, who have approved the project, and helps our economy.
In the United States, we have made it a political question. Congress has approved it, the President has vetoed it, but as the great philosopher Yogi Berra said: “It ain’t over ’til it’s over.”
Only in dreams can we live risk free, so we manage the risks to the best of the industry’s ability.
As for the alternatives, nothing really provides a consensus of agreement. For example, move it by rail. This can and has caused problems. In July of 2013, a parked train of crude oil came loose, rolled down a hill and exploded in a ball of fire in the town of Lac-Megantic in Quebec. The inferno claimed 47 people and the town was practically destroyed. Groups opposed to moving crude by rail commonly refer to the trains as “bomb trains.”
How about by water? In March of 2014, a barge carrying 924,000 gallons of crude oil collided with a ship in Galveston Bay, spilling 170,000 gallons along a route heavily travelled by birds during their seasonal migration.
Ok, let’s move it by truck … well, you get the point.
As a nation, we are now energy independent — something we have talked about since 1973. But we need to move the product from where it is, to where it is needed. We need to do it as safely as possible, human life is sacrosanct and our precious environment needs to be protected.
Only in dreams can we live risk free, so we manage the risks to the best of the industry’s ability. We insure them, we regulate them. What we can’t do is to say “no” to everything.
Let’s finish the pipeline.
There are no hard statistics confirming a shortage of safety and health professionals, but there is a lot of circumstantial data.
An October 2011 study prepared for the National Institute for Occupational Safety and Health (NIOSH), for example, concluded that the need for health and safety engineers in 2011 and over the next five years “is substantially higher than the number estimated to be produced from … training programs.”
The U.S. Bureau of Labor Statistics predicts 11 percent growth in the number of health and safety engineers between 2012 and 2022.
In addition, a survey of members by the American Society of Safety Engineers (ASSE) found about 1 percent unemployment, and the 30 or so annual graduates of the University of Michigan Center for Occupational Health and Safety Engineering usually get hired before they graduate.
Some experts, however, say the shortage is not so much a lack of entry-level talent as it is of experienced safety and health professionals. They said that what organizations are missing are competent professionals who are knowledgeable about both the industry in question, and the resources and tools that professionals can offer.
As Skip Smith, senior director of risk management and insurance at HOA Inc. (Hooters of America) said in a recent Risk Insider article, “But these days, if you’re charged with overseeing a corporate risk management department, it is very difficult to fill a safety position. There are a limited number of qualified candidates with the required educational background, experience and unique set of skills.”
It takes time, obviously, to gain the credentials, experience and even the terminology necessary to make an impact on a worksite. But the clock may be ticking on the profession as baby boomers get ready to retire and the influx of professionals is lower than necessary to fill the gap.
One problem is the low visibility of the profession to most young people, said Stuart Batterman, director, University of Michigan Center for Occupational Health and Safety Engineering.
“Typically, they don’t recognize the opportunities that are available in this field,” he said. “It’s also not the kind of field that most people have prior exposure to.”
For some industries, such as construction, manufacturing, and oil and gas, the need may be greater than others. Obviously, that’s because such industries are more hazardous than some, but it’s also because these sectors are more likely to have the increased risk of ramping up or ramping down operations. When that happens, the danger increases.
New employees, round-the-clock operations, different locales — all of them add uncertainty and potential risk to organizations. The continuing increase of Spanish-speaking workers as well as those native in other languages also makes it harder to educate and train employees.
As the difficulty mounts in finding experienced environmental, health and safety (known both as EHS or HSE) professionals, the number of consultants and service providers to fill that void is growing. Insurance companies and brokerages as well provide risk control services to their clients.
But consultants are generally not on the jobsite every day and have less insight into the daily demands of an organization.
The age issue is not one that will go away anytime soon.
“We have got a graying population,” said Carl W. Heinlein, senior safety consultant, American Contractors Insurance Group, a captive owned by 41 contractors around the country. “I can probably think of seven great safety jobs that are currently available right now. They can’t find quality, experienced people to fill them.”
The 2011 NIOSH study, prepared by Westat, projected that about 10 percent of safety professionals would retire within the next year, and estimated that a “large number” of such professionals are over the age of 50.
It forecast that employers would hire more than 25,000 more over the next five years, but that colleges were expected to graduate fewer than 13,000 HSE professionals. And the report noted that enrollment was projected to slightly decline over a five year period.
Leaders in construction, oil and gas, and other industries, Heinlein said, “have been begging for quality safety folks.”
Those industries, in particular, are dangerous ones to be in. According to the Bureau of Labor Statistics, construction fatalities, while down 36 percent since 2006, still account for the highest number of fatal work injuries of any industry sector in 2013, the latest year for which results are available.
It’s more difficult to pin down the fatalities in the oil and gas industry as it is covered by several different BLS categories. Overall, construction and extraction occupations accounted for 818 fatalities in 2013, or 18 percent of all workplace fatal injuries. Transportation fatalities numbered 1,184 or 27 percent of all workplace deaths.
BLS indicates that organizations involved in oil and gas extraction have the highest percentage of EHS employment in the private sector, at nearly 1 percent of all positions. Another six-tenths of 1 percent are employed in petroleum and coal products manufacturing.
To be effective, health and safety professionals need hands-on experience in troubleshooting problems, said Scott Harris, director of EHS advisory services at UL Workplace Health & Safety.
“We really haven’t seen a shortage,” he said.
“When I am out talking to folks, they have never said to us, ‘We can’t find someone.’ I have heard often, ‘It’s hard to find a good one,’ meaning they are looking for certain key skills and the young people just don’t have them.”
The ability to research and “textbook knowledge” are what college graduates can bring to a job, he said, but they often lack industry experience, the ability to solve problems, people skills and presentation skills, so they can command attention during meetings.
It’s also important to understand the value of redesigning a process or engineering out the risk instead of focusing just on training and education, said Matt Kupiec, assistant vice president of construction risk engineering at ACE Group.
And, he noted, it’s not always necessary to re-invent the wheel. There are vendors and service providers that have created products to meet many safety demands.
It takes about two years for an entry-level person to become “well versed as a generalist.” — Brion Callori, senior vice president, engineering and research, FM Global
At FM Global, which focuses a lot of attention on commercial property risk, Brion Callori, senior vice president, engineering and research, noted that it takes time for property risk engineers to become fully proficient.
FM Global hires between 100 and 150 property risk engineers yearly.
There are two levels to proficiency, he said.
“We expect someone out of engineering school to think like an engineer. We have to give them cross-discipline training and have developed a hands-on training approach to expedite the process.”
It takes about two years for an entry-level person to become “well versed as a generalist,” he said, and then the carrier moves the focus to specific natural hazards, such as windstorms, power generation, chemicals, etc.
“It probably takes another three years of that to become top flight and really specialized in something,” Callori said.
One issue with the energy industry in particular, said Jay Doherty, partner, workforce sciences institute, Mercer, is the tremendous number of contractors on major projects, with investment levels ranging from $100 million to several billion dollars.
“You have less control and more variation in the skills, compliance and knowledge of safety [with contractors],” he said.
“The industry has, unfortunately, had incidents, serious incidents, more often with the subcontractors than with the prime contractor or operator.”
BLS statistics bear that out — for all industry sectors.
Fatal injuries of contractors accounted for 17 percent of all workplace deaths in 2013, and half of all contractors who were fatally injured were working in construction and extraction occupations.
The importance of experience when it comes to HSE professionals is not so much on the increasing compliance requirements but on problem-solving and prevention, Doherty said.
The career structure and the time to competence is complex for HSE, he said, because “the discipline is not simply defined by hierarchy or level. Often the best HSE experts don’t begin in that role.” Development requires broad knowledge not only of OSHA and other governmental regulations, but also knowing the protocols of companies and specific industries.
It also depends on the span of control, Doherty said. It takes more than HSE professionals to look after safety. Supervisors often perform a compliance role and when cost pressures reduce spans or there is simply a lack of experience in the workforce, there is greater likelihood of safety incidents, he said.
“Companies need to examine the career paths for their HSE professionals,” he said, “to make sure top talent is rewarded commensurate with other critical skills. That sends a clear signal of the priority placed on safety and the environment.”
But, some companies just don’t value the position enough. When times are tight, occupational health and safety professionals are often near the top of the chopping block, and many organizations continue to look at the profession as an expense instead of a way to improve production and margin.
“This is a margin-making opportunity. It’s an opportunity for a company to look at it more as a business asset than as a cost or expense of the operation.” — James Merendino, vice president and general manager, commercial insurance risk control services, Liberty Mutual
As UL’s Harris noted, the profession has its own gallows humor: It’s always safety first … unless it interferes with production or “gets in the way of something else.”
But, said James Merendino, vice president and general manager, commercial insurance risk control services, Liberty Mutual, effective safety and risk management strategies affect both the top and bottom lines of a company.
“This is a margin-making opportunity,” Merendino said.
“It’s an opportunity for a company to look at it more as a business asset than as a cost or expense of the operation.”
It’s more than ensuring regulations are complied with, he said. It’s making safety a strategic priority of the organization, which may result not only in fewer and less severe injuries, but also in lower insurance premiums, and better terms and conditions.
It also is less disruptive of production deadlines, and more protective of an organization’s brand and an industry’s reputation.
“Safety has to be elevated to the position that production is,” said George Cesarini, vice president of construction risk engineering, ACE.
“Organizations need to elevate safety from, ‘Insurance wants this’ or ‘OSHA wants this’ to elevating it to the same level as production, to making it a core value within the organization.”
Finding the experienced professionals to fill that role, however, may continue to be a problem.
Detention Risks Grow for Traveling Employees
It used to be that most kidnapping events were driven by economic motives. The bad guys kidnapped corporate employees and then demanded a ransom.
These situations are always very dangerous and serious. But the bad guys’ profit motive helps ensure the safety of their hostages in order to collect a ransom.
Recently, an even more dangerous trend has emerged. Governments, insurgents and terrorist organizations are abducting employees not to make money, but to gain notoriety or for political reasons.
Without a ransom demand, an involuntarily confined person is referred to as ‘detained.’ Each detention event requires a specialized approach to try and negotiate the safe return of the hostage, depending on the ideology or motivation of the abductors.
And the risk is not just faced by global corporations but by companies of all sizes.
“The world is changing. We see many more occasions where governments are getting involved in detentions and insurgent/terrorist groups are growing in size and scope. It’s the right time for a discussion about detention risks.”
— Tom Dunlap, Assistant Vice President, Liberty International Underwriters (LIU)
“Practically any company with employees traveling abroad or operations overseas can be a target for a detention risk,” said Tom Dunlap, assistant vice president at Liberty International Underwriters (LIU). “Whether you are setting up a foreign operation, sourcing raw materials or equipment overseas, or trying to establish an overseas sales contract, people are traveling everywhere today for so many reasons.”
Emerging Threats Driven By New Groups Using New Tools
Many of the groups who pose the most dangerous detention threats are well versed in how to use the Internet and social media for PR, recruiting and communication. ISIS, for example, generates worldwide publicity with their gruesome videos that are distributed through multiple electronic channels.
Bad guys leverage their digital skills to identify companies and their employees who conduct business overseas. Corporate websites and personal social media often provide enough information to target employees who are working abroad.
And if executives are too well protected to abduct, these tools can also be used to identify and target family members who may be less well protected.
The explosion of new groups who pose the most dangerous risks are generally classified into three categories:
Insurgents – Detentions by these groups are most often intended to keep a government or humanitarian group from delivering services or aid to certain populations, usually in a specific territory, for political reasons. They also take hostages to make a political statement and, on occasion, will ask for a ransom.
In other cases, insurgent groups detain aid workers in order to provide the aid themselves (to win over locals to their cause). They also attempt prisoner swaps by offering to trade their hostages for prisoners held by the government.
The most dangerous groups include FARC (Colombia), ISIS (Syria and Iraq), Boko Haram (Nigeria), Taliban (Pakistan and Afghanistan) and Al Shabab (Somalia).
Governments – Often use detention as a way to hide illegal or suspect activities. In Iran, an American woman was working with Iranian professors to organize a cultural exchange program for Iranian students. Without notice, she was arrested and accused of subversion to overthrow the government. In a separate incident, a journalist was thrown in jail for not presenting proper credentials when he entered the country.
“Government allegations against detainees vary but in most cases are unfounded or untrue,” said Dunlap. “Often these detentions are attempts to prevent the monitoring of elections or conducting inspections.”
Even local city and town governments present an increased detention risk. In one recent case, a local manager of a foreign company was arrested in order to try and force a favorable settlement in a commercial dispute.
Ideology-driven terrorists – Extremist groups such as Boko Haram and ISIS are grabbing most of today’s headlines with their public displays of ultra-violence and unwillingness to compromise. The threat from these groups is particularly dangerous because their motives are based on pure ideology and, at the same time, they seek media exposure as a recruiting tool.
These groups don’t care who they abduct — journalist, aid worker, student or private employee – they just need hostages.
“The main idea here is to shock people and show how governments and businesses are powerless to protect their citizens and employees,” observed Dunlap.
Mitigating the Risks
Even if no ransom demands are made, an LIU kidnap and ransom policy will deliver benefits to employers and their employees encountering a detention scenario.
For instance, the policy provides a hostage’s family with salary continuation for the duration of their captivity. For a family who’s already dealing with the terror of abduction, ensuring financial stability is an important benefit.
In addition, coverage provides for security for the family if they, too, may be at risk. It also pays for travel and accommodations if the family, employees or consultants need to travel to the detention location. Then there are potential medical and psychological care costs for the employee when they are released as well as litigation defense costs for the company.
LIU coverage also includes expert consultant and response services from red24, a leading global crisis management assistance firm. Even without a ransom negotiation to manage, the services of expert consultants are vital.
“We have witnessed a marked increase in wrongful detentions involving the business traveler. In some regions of the world wrongful detentions are referred to as “business kidnappings.” The victim is often held against their will because of a business dispute. Assisting a client who falls victim to such a scheme requires an experienced crisis management consultant,” said Jack Cloonan, head of special risks for red24.
Without coverage, the fees for experienced consultants can run as high as $3,000 per day.
Given the growing threat, it is more important than ever to be well versed about the country your company is working in. Threats vary by region and country. For example, in some locales safety dictates to always call for a cab instead of hailing one off the street. And in other countries it is never safe to use public transportation.
LIU’s coverage includes thorough pre-travel services, which are free of charge. As part of that effort, LIU makes its crisis consultants available to collaborate with insureds on potential exposures ahead of time.
Every insured employee traveling or working overseas can access vital information from the red24 website. The site contains information on individual countries or regions and what a traveler needs to know in terms of security/safety threats, documents to help avoid detention, and even medical information about risks such as pandemics, etc.
“Anyone who is a risk manager, security director, CFO or an HR leader has to think about the detention issue when they are about to send people abroad or establish operations overseas,” Dunlap said. “The world is changing. We see many more occasions where governments are getting involved in detentions and insurgent/terrorist groups are growing in size and scope. It’s the right time for a discussion about detention risks.”
For more information about the benefits LIU kidnap and ransom policies offer, please visit the website or contact your broker.
Liberty International Underwriters is the marketing name for the broker-distributed specialty lines business operations of Liberty Mutual Insurance. Certain coverage may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. This literature is a summary only and does not include all terms, conditions, or exclusions of the coverage described. Please refer to the actual policy issued for complete details of coverage and exclusions.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty International Underwriters. The editorial staff of Risk & Insurance had no role in its preparation.