Universal Risk Management
Risk management theory and practice fascinates — and can also appear so complex — because it resides in so many different professional realms and takes such different shapes.
Some of this year’s Risk All Stars work for widely known companies with billions in assets. Others work for a nonprofit that cobbled its solutions together with government grants.
In some examples, winners of the award were armies of one, who either through specialization or a unique perspective effected sweeping change. But creativity, passion and perseverance, the traits that we base this award on, are found in every winner.
In the person of Dr. Mike Tomecek, of the Oklahoma Spine & Brain Institute, Risk & Insurance® gives an award for the first time to a neurosurgeon; perhaps it won’t be the last.
Dr. Tomecek uses electrodiagnostic functional assessments to determine whether medical hardware removal surgery is really necessary. His specific knowledge of nerve function, coupled with technology, allows him to determine whether the movements that are actually causing pain or immobility are connected to medical hardware or are coming from some other place.
With his assessments, Dr. Tomecek acts as a patient advocate who is reducing surgeries and recommending site-specific physical therapy, a far less costly and intrusive treatment.
Risk All Stars winners Chris Chathams and Latitia Estrada are working-class heroes. These safety and human resources specialists work for the Timber Products Manufacturers Association.
The association is a trade group for smaller operators in the extremely hazardous timber industry in the Pacific Northwest. Using massive, unforgiving chain saws to bring down big trees, workers in the timber industry get hurt badly when something goes wrong.
The forestry companies that depend on the association as a safety education resource don’t have the resources to offer safety training on their own, even though such training is drastically needed.
Using grants from OSHA, Chathams and Estrada created a safety training program that in a three-year span reduced injuries for some member companies by 75 percent. That’s a lot of workers and their families suffering less trauma.
Richard Pcihoda, the director of risk management for the Pennsylvania Real Estate Investment Trust, moved with speed and effectiveness when Superstorm Sandy struck. One of PREIT’s shopping malls suffered millions in damage when the storm hit.
But Pcihoda had planned ahead, lining up a reconstruction contractor so he didn’t have to wait in line for help after the fact. Pcihoda’s planning, and his great relationships with his adjusters, resulted in the Hudson Mall reopening a mere 17 days after the storm.
Business interruption was lessened and many jobs saved as a result.
Risk management can be a thankless job. It demands hard work and attention to detail that some people would rather not think about.
But we think about it. The 2014 Risk All Stars awards are our way of saying thanks.
Complete coverage of the 2014 Risk All Stars winners begins here.
Leading From the Front
Making your fellow employees safer and creating more risk resiliency in your organization requires much more than simply doing your job.
It means doing the hard work to find a unique and practical solution, and then having the backbone and drive to implement that solution despite whatever obstacles you might face. In effect, doing the right thing over the easy thing.
These eight Responsibility Leaders do that and more. Through their drive and passion, they are the ones creating solutions that benefit not only their organizations but their employees and their communities.
Leslie Lamb works for Cisco Systems, with 75,000 employees and more than $100 billion in assets. You could count the members of her risk management team on one hand.
But Lamb’s Global Risk & Resilience Management team is bold and acts strategically. They dig deeper into the business, to take the time to meet with department heads in the effort to better understand their risks.
Lamb and her team created that most precious of dynamics. They created a dialogue among company leaders that is risk-focused. The award-winning Lamb reports that after a five-year effort, that dialogue is not only ongoing, it is expanding.
Sprague Operating Resource’s David Hershey displayed courage and dedication in standing up for his fellow risk managers. When insurance carriers decided in one fell swoop to stop notifying designated third parties that policies naming them as insureds were cancelled, he stood up to take a leading role.
In demanding that such notification be restored contractually, Hershey was insisting that insurance be what it says it is: a backstop that enables the smooth and productive flow of commerce.
“Commerce is not in business to justify the insurance industry, insurers, agents and brokers,” Hershey said, in one of the most relevant statements that may have ever appeared in this publication.
His status as a Responsibility Leader® stems from the essence of the definition of the award. He made a difference for an entire industry by leading when no one else stepped forward.
Hershey also furthers the profession of risk management by being a frequent speaker and author on risk management topics. He talks to college students about careers in risk management and teaches insurance at the Insurance Library of Boston.
Hershey and the rest of the 2014 Risk All Stars Responsibility Leaders® are not only doing what needs to be done, they are helping others to do it as well.
Here are the 2014 Risk All Stars Responsibility Leaders.
Champion for Change
Workers’ Compensation Manager Patty Hostine created dramatic gains for Cooper Standard Automotive by championing a fundamental change in the way both management and employees perceived the company’s approach to injury treatment and recovery.
That kind of transformation is never an easy sell. But Hostine’s ability to clearly communicate the benefits of the change to people at every level of the organization is the hallmark of a Responsibility Leader®.
“When she came on board we had all kinds of new management — nobody was on board with our thought process,” said Gerry King, who hired Hostine to manage workers’ compensation at Cooper Standard.
“So it was taking them and making them see the business side of workers’ compensation that a lot of people don’t look at,” King said.
Hostine is also committed the members of her team, and to making sure that everyone involved has the tools and knowledge they need to excel.
“Her ethics are above reproach,” said Mick Altherr, coordinator of health, safety and environment, and workers’ compensation at Cooper Standard Automotive, “and that drives her theme of being fair, firm and friendly. … She’s an amazing talent with her drive for knowledge. She shares her thought process to educate the people who work with her.”
Filling a Need for Safety
Saws and heavy lumber make the timber and wood products industry inherently dangerous. But many small companies lack resources to provide adequate safety training to employees.
Enter Latitia Estrada and Chris Chathams of Timber Products Manufacturers Association (TPM). The duo leveraged their nonprofit status to win government grants to create and provide training to member organizations at no cost.
The training programs, consisting of webinars, worksheets, and videos, bring awareness to the highest-risk areas of the industry, all the way from logging in the forest to working a sawmill on the factory floor.
Over the past two years, more than 80 employers and 2,200 employees in seven different states have received training.
The pair estimates they’ve saved participating companies more than $134,000 in training costs alone, not including costs saved by lowering injury rates.
One company was able to slash their injury rates by 50 percent.
Chathams and Estrada have also widened TPM’s involvement within the safety industry.
They’ve worked with different chapters of the American Society of Safety Engineers, the Northern Idaho Safety Fest and the Montana Safety Fest.
Looking to the future, they’ve also helped TPM create a safety scholarship and internship program.
Making a Difference
David Hershey is a prolific speaker and writer on risk management topics. The list of industry awards he has won and industry leadership positions he occupies runs longer than most restaurant menus.
He serves as a board member, president, vice president, and committee member — both now and in the past — for the New Hampshire chapter of the CPCU, the Massachusetts and Delaware Valley chapters of RIMS, the Philadelphia Area Risk Managers Association, the Governor’s Council on Insurance Fraud, and the Association of Certified Fraud Examiners.
He has also volunteered his creativity and passion about risk management by serving on the External Affairs Committee and Standards & Practices Committee of the national RIMS organization.
Sharing his knowledge with others, Hershey taught classes for the Insurance Society of Philadelphia and the Independent Insurance Agents & Brokers of New Hampshire.
In challenging insurance carriers to restore their obligation to inform named insureds when a policy is cancelled — and establishing a process to make sure his company was protected — Hershey made a difference to countless others in the risk management community, not just himself or his company.
“Notification is one of the core concepts of risk management,” he rightly noted.
Taking on a Mighty Challenge
You sign on to share the burden of managing risk for a high-profile $15 billion company. Months down the road, you’re bidding “Happy Retirement” to half of your team and wondering how you’re going to manage it all alone. That scenario could send a chill down the spine of any seasoned risk professional.
But Dan Holden took on the challenge, and he thrived —identifying multiple savings opportunities in the insurance and risk management programs of Daimler Trucks North America.
Holden made a critical assessment of his responsibilities. He carved out the pieces that needed his attention most, and sought alternative means to get the rest accomplished, like relying more heavily on the company’s TPA and on the company’s existing online portal.
He also skillfully leveraged his resources, tapping into the expertise of his brokers, other vendors, and former colleagues to gather the tools he needed to succeed.
Taking on the work of two men, Holden persevered by looking at the big picture and restructuring his priorities.
That freed him up get creative in making adjustments to DTNA’s insurance program, negotiating better policy terms by highlighting the impact of the economic downturn. The determination to rise above every challenge is what makes Holden a Responsibility Leader®.
Worth Her Weight in Gold
The company Leslie Lamb works for has more than 75,000 employees and $100 billion in assets.
Imagine the amount of work involved to break down department silos and gain a better understanding of risk on a department by department basis.
It can’t have been easy to go to company leadership and say that you want to conduct risk meetings with each department, to get a better understanding of not only each department’s risk but how risk straddles the entire company.
But that’s what Leslie Lamb and her risk management team of three did.
Senior leaders who didn’t before are now talking to one another about risk as a result of Lamb’s drive to unify all stakeholders.
The result is a sharing of information about exposures, risk scenarios and how best to mitigate them.
Because of Lamb’s leadership, Cisco can take to its underwriters a story that is far more educated and nuanced. Underwriters like that; they like it very much.
As a Responsibility Leader® and winner of a Risk All Stars Award, Leslie gets a plaque and mention in this magazine. But to the company that employs her, she is worth her weight in gold.
Running to the Fight
Maybe it’s his history in emergency management and current service as a volunteer firefighter that gives Richard Pcihoda the reflexes to run to the fight, because that is what he did as Superstorm Sandy threatened in October of 2012.
Pcihoda, the director of risk management for the Pennsylvania Real Estate Investment Trust, based in Philadelphia, wasn’t the only risk manager whose job got a lot tougher when Sandy hit, but it looks like he outperformed many of his contemporaries.
Not only did Pcihoda conduct the necessary planning and preparation to reduce his own company’s business interruption, he went out of his way to counsel his company’s Jersey City (N.J.) Hudson Mall tenants on coverage and recovery methods after the mall suffered millions in damage.
Pcihoda looked at the whole picture and acted on it. The day after the storm struck, Pcihoda jumped in his truck and drove to Jersey City, getting there before formal travel bans were in place to jump start the recovery process.
He had his contractors in place ahead of the storm to get a jump on reconstruction. He had the adjuster relationships to pull it together seamlessly.
Pcihoda is a Risk All Star because he possesses passion, creativity and perseverance. He’s a Responsibility Leader® because through his actions, he shows others how it’s done.
Creating His Own Solution
When the 16 institutions comprising Wisconsin Technical Colleges faced persistent problems obtaining insurance coverage suited to their unique needs, Steven Stoeger-Moore didn’t just find the solution — he created it.
Stoeger-Moore helped to establish Districts Mutual Insurance (DMI) in 2004 to represent the colleges and provide better insurance and risk management services.
Under his self-implemented “Rule of 16,” he ensures that if any school has a problem, all 16 colleges benefit from DMI’s solution. That dedication led to the development of comprehensive risk management programs — provided to each school at no cost — for electrical and fire safety inspections, emergency response planning, legal consultations, and employee health and safety consultations, among many others.
And when those programs were tested, Stoeger-Moore sprang into action. In the past 10 years, the Wisconsin Technical College System has weathered both a tornado and a major fire. Both times, he was at the scene within 24 hours of the event, providing claims and insurance guidance as well as comfort for shaken colleagues.
Stoeger-Moore has also worked to bolster the industry’s future by encouraging young people to consider a career in risk management. Through DMI, he creates opportunities for young people to learn about the colleges’ unique challenges and the programs created to meet them.
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.