Schooling the NFL in Reputation Management
Back in the dark ages before the Internet, players on the gridiron were expected to play brutally hard for fans who sat through sometimes equally brutal weather.
Advertisers targeted the demographic with beer and pickup trucks, and paid enough for the privilege to enrich television networks, team owners and the tax-exempt league organization.
Football was entertainment for many, and a religion for many more. Winning was everything — a cultural obsession that over time sustained a range of abusive practices.
In 2009, Eric Olson, senior vice president at BSR, a social responsibility consultancy, warned that “hyper-transparency” enabled by the Internet would change the boundaries used to assess a company’s scope of control, and its degree of accountability and responsibility.
Football’s first major media sensation along these lines was the 2011 Penn State football coach child sex abuse scandal. It was a warning shot for the professional league. In rapid succession, stakeholders have made it clear to the NFL that the intangibles of quality, safety, and ethics on and off the field must now be intrinsic to the sport.
Two years ago, after labor issues simmered all summer between the league and its referees, a Monday night game between Seattle and Green Bay was marred by a disputed touchdown call by substitute referees.
Fans were livid. Vikings punter Chris Kluwe wrote that the NFL’s reputation “is tarnishing faster than a sailor’s virtue in a two-dollar whorehouse.”
“These refs are not fit to stand in for the men you’ve locked out for what is increasingly looking like nothing more than simple greed—attempting to squeeze blood from a stone simply because you can,” Kluwe wrote to NFL Commissioner Roger Goodell in an open letter.
In rapid succession, stakeholders have made it clear to the NFL that the intangibles of quality, safety, and ethics on and off the field must now be intrinsic to the sport.
Last year, the NFL agreed to pay $765 million to settle hundreds of cases accusing it of hiding information about the dangers of concussions, naively hoping that fans would refocus on the players and the games that make the sport a national obsession.
But to the NFL’s stakeholders, the game no longer exists in a vacuum.
The current reputation scandal centers on domestic violence. Stories and videos of beatings are illustrating graphically the meaning of hyper-transparency. Hannah Storm, anchor of ESPN’s SportsCenter, closed her review of the weekend NFL games in September by questioning if the league she enjoys actually cares about female fans, families, or the issue of domestic violence.
“What exactly does the NFL stand for?” she asked rhetorically at the end of the Monday morning program.
Storm could have been channeling The Walt Disney Company, which owns ESPN. In the age of hyper-transparency, stakeholder expectations have never been higher, and tolerance for errors has never been lower – disappoint them and they will punish you.
In the entertainment business Disney know so well, managing reputation is a business imperative.
Crisis Management Coordination
Hurricane Sandy hit Jersey City, N.J., hard in 2012, but thanks to four days of intensive advanced planning, PREIT Services LLC’s Director of Risk Management Richard Pcihoda and his team were able to get a reconstruction crew deployed at its Hudson Mall the morning after the storm struck.
“The night before the storm was underway, we had continuous communication with all of our properties in the mall and our service providers,” said Pcihoda. “We also had a command group that stayed here in Philadelphia within the corporate office overnight.”
Once the storm struck, it was important to have someone in a forward position who could relay information back, Pcihoda said.
“I immediately jumped in my truck and ran up to Jersey City and got there early enough in the day that a lot of people were still hunkered down from the night before,” Pcihoda said. “I was there in advance of formal travel bans.”
By the time community panic grew, about 18 hours later, PREIT had a truckload of fuel on-site, and dumpsters, food and sanitation facilities in place, Pcihoda said. Remediation work began within 72 hours.
In the end, the mall suffered millions of dollars of damage, but because of the advance planning and swift set-up, PREIT was able to reopen the Hudson Mall 17 days after Hurricane Sandy made landfall.
An enormous amount of construction was completed in that period, via a trusted vendor with whom PREIT, a real estate investment trust specializing in differentiated shopping malls, had extensive prior dealings.
As a result, the mall and its tenants had a successful holiday season.
Michael Tiagwad, president and COO of Conner Strong and Buckelew, PREIT’s insurance broker, said Pcihoda is “very big on preparedness and anticipating issues and problems, and having a game plan and how to deal with a variety of situations.”
“I’d say, in general, Richard is a consummate risk manager. He has experience with all sorts of risks and exposures.
“He also has a very deep background in safety and claims,” Tiagwad added. “So he really is diverse in terms of his skills. He’s a good quarterback and he is a very engaged person, very proactive.”
PREIT’s insurance claim proceeded swiftly and smoothly, with Pcihoda coordinating with the national flood insurance program as well as PREIT’s property carrier, Fireman’s Fund.
Fireman’s provided a senior adjuster with whom Pcihoda had worked with in the past, and the 10-year relationship paid off nicely.
There was also a public adjuster to help catalog the damages, and handle a massive documentation effort, which freed Pcihoda and his team to focus on recovery.
Pamela Hans, managing shareholder in the Philadelphia office of Anderson Kill P.C., and PREIT’s insurance coverage counsel, said the business income loss at the mall was much smaller than anticipated.
The large upfront investment in reconstruction, facilitated by prompt advances from the insurance company, paid off for all parties in the form of a smaller long-term loss and claim, Hans said.
The claim was completed and paid in full by May 2014, a tight timeframe for a claim of that scale, she said.
Richard is also being recognized as a 2014 Responsibility Leader.
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.
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, 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.
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.
Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, perseverance and/or passion.
Responsibility Leaders overcome obstacles by doing the right thing over the easy thing to find practical solutions that benefit their co-workers and community.
A New Dawn in Civil Construction Underwriting
Pennsylvania school children know the tunnels on the Pennsylvania Turnpike by name — Blue Mountain, Kittatinny, Tuscarora, and Allegheny.
San Francisco owes much of its allure to the Golden Gate Bridge. The Delaware Memorial Bridge commemorates our fallen soldiers.
Our public sector infrastructure is much more than its function as a path for trucks and automobiles. It is part of our national and regional identity.
Yet it’s widely known that much of our infrastructure is inadequate. Given the number of structures designated as substandard, the task ahead is substantial.
The Civil Construction projects that can meet these challenges, however, carry a unique set of risks compared to other forms of construction.
“The bottom line is that there is always risk in a Civil Construction project. If the parties involved don’t understand what risk they carry, then the chances are there are going to be some problems, and the insurers would ideally like to understand the potential for these problems in advance.”
– Paul Hampshire, Vice President – Civil Construction, LIU
The good news is that recent developments in construction standards and risk management techniques provide a solid foundation for the type and risk allocation of Civil Construction projects they are underwriting. Carriers need to be able to adequately assess the client and design and construction teams that are involved.
For Builder’s Risk Programs, a successful approach prioritizes a focus on four key factors. These factors are looked at not only during the underwriting phase of the project but also in the all-important site construction phase, under the umbrella of a Risk Management Program, or RMP.
Four key factors
Four key factors that LIU focuses on in underwriting and providing risk management services on a Civil Construction project include:
1. Resource knowledge and experience: When creating a coverage plan, carriers work to understand who is delivering the project and how well suited key staff members are to addressing the project’s technical and management challenges. Research has shown that the knowledge and experience of those key players, combined with their ability to communicate effectively, is a big factor in the project’s success.
“We look to understand who is delivering a project, their expertise and experience in delivering projects of similar technical complexity in similar working conditions, even down to looking at the resumés of people in key positions,” said Paul Hampshire, Houston-based Vice President with Liberty International Underwriters.
2. Ground conditions and water: Soil and rock composition, the influence of ground and surface water, and foundation stability are key additional considerations in the construction of bridges, tunnels, and transit systems. If a suitable level of relevant ground (geotechnical) investigation and study has not been undertaken, or the results of such work not clearly interpreted, then it’s a red flag to underwriters, who would then question whether the project risk profile has been adequately evaluated and risks clearly and transparently allocated via suitable contract conditions.
“As we all know, ground is very rarely a homogenous element within Civil Construction projects,” LIU’s Hampshire said.
“It tends to vary from any proposed geotechnical baseline specification with the consequential potential for changes in behavior during construction. We need to understand who has assessed the condition of the ground, its behavior and design parameters when compared with a particular method of construction, and all importantly, who has been allocated the ground risk in a project and the upfront mechanisms for contractual ground risk sharing, if applicable,” he said.
Knowing how much water is associated with the in-situ ground conditions as well as the intensity, distribution and adequate accommodation (both in the temporary as well as in the permanent project configurations) of rainfall for a site location and topography are also key. Tunneling projects, for example, can be hampered by the presence of too much or unforeseen quantities of groundwater.
“In major tunneling infrastructure projects, the influence of in-situ groundwater pressures and /or water inflows is a major factor when considering the choice of excavation method and sequence as well as tunnel lining design requirements,” LIU’s Hampshire said.
According to a recent article in Risk & Insurance, tunneling under a body of water is one of the most challenging risk engineering feats. Adequate drainage layouts and their installation sequence for highway projects and, in particular, the protection of sub-grade works are also important. “But under all circumstances, we need to understand how the water conditions have been evaluated,” Hampshire said.
3. Technical Challenges: This risk factor encompasses the assessment of the technical novelty or prototypical nature of the project (or more often, specific elements of it) and how well the previously demonstrated experience of both the design and construction teams aligns with the project’s technical requirements and the form of contract determined for the project. The client can choose the team, but savvy underwriters will conduct their own assessment to see how well-suited the team is to technical demands of the project.
4. Evaluation of Time and Cost: With limited information generally provided, we need to be able to verify as best as possible the adequacy of both the time and cost elements of the project. Our belief is simply that projects that are insufficient in either one or both of these elements potentially pose an increased risk, as the construction consortium tries to compensate for these deficiencies during construction.
Small diameter Tunnel Boring Machine designed for mixed ground conditions and water pressures in excess of 2.5 bar.
In the 1990s and early years of this millennium, a series of high-profile tunnel failures across the globe resulted in major losses for Civil Construction underwriters and their insureds.
In the early 2000s, both the tunnel and insurance industries worked together to create new standards for high-risk tunneling projects.
A Code of Practice for the Risk Management of Tunnel Works (TCoP) is increasingly relied on by project managers and underwriters to define the best practices in tunnel construction projects. This process ideally starts at project inception (conceptual design stage or equivalent) and continues to the hand-over of the completed project.
LIU’s Hampshire said alongside TCoP, the project-specific Geotechnical Baseline Report and its interpretation and reference within the project contract conditions gives the underwriter greater clarity as to who recognizes and carries the ground risk and how it’s allocated.
“The bottom line is that there is always risk in a Civil Construction project,” Hampshire said. “Is the risk transparently allocated or is it buried? If the parties involved don’t understand what risk they carry, then the chances are there are going to be some problems, and the insurers would ideally like to understand the potential for these problems in advance,” Hampshire said.
Paul Hampshire can be reached at Paul.Hampshire@libertyiu.com.
To learn more about how Liberty International Underwriters can help you conduct a Civil Construction risk assessment before your next project, contact your broker.
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.