Education Risk Management

Insuring Feathers, Fur and Football Tradition

Using live animals as sports mascots requires a focus on risk mitigation.
By: | July 18, 2016 • 5 min read
football fan

Lions, tigers and bears. Oh my! Not to mention the buffalo, ram, horses, falcon, owl and dogs. The animals that pump up sports fans at universities across the United States range from a gamecock and eagle to a bulldog and a bluetick
coonhound.

Vincent Morris, executive director, higher education practice, Arthur J. Gallagher & Co

Vincent Morris, executive director, higher education practice, Arthur J. Gallagher & Co

“There are quite a few of them out there,” said Vincent Morris, executive director of the higher education practice at Arthur J. Gallagher & Co. “It’s the tradition and pageantry of it all. The pounding hooves before a football game, the raptor soaring around the stadium, the tiger growling … .

“Mascots are so different,” he said. “What one does with a University of Georgia bulldog is different from what one does with a University of Colorado buffalo.”

But they all need to be insured for mortality as well as potential property damage or bodily injury. Plus, the animals need to be cared for, whether it’s ensuring they have proper nutrition and living quarters to making sure they are humanely and adequately restrained from harming fans.

Universities with mascots also must accept that there will be objections by animal rights groups.

“Nothing says ‘Go, team!’ less than an unhappy animal, and with athletes and coaches so prone to raising a ruckus on and off the field, there’s no reason to subject a real animal to the stress of being a mascot,” writes People for the Ethical Treatment of Animals (PETA) on its website.

“There’s a lot of pressure from people who say we shouldn’t have animals living like that,” Morris said. “There’s a kind of movement in the country that is concerned about caged animals … not in their natural habitat.”

He noted that most universities do not have live mascots. Of about 3,500 schools, fewer than 50 use live animals for mascots.

“When you are talking about risk management,” Morris said, “you are talking about loss control, keeping bad things from happening  — and knowing how to pay for them when they do. You don’t want to have a buffalo rampaging through the marching band.

“You have to worry about the animal being stolen or escaping,” he said. “There have been pranks. LSU’s tiger has been released or kidnapped on more than one occasion. Arkansas’ razorbacks have gotten out on more than one occasion and killed other animals.”

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“Normally,” said Mitchel Kalmanson of the Lester Kalmanson Agency, which specializes in rare and unusual risks, especially animals, “commercial animal liability is broken down into either domestic or exotic.”

Domestic animal liability would cover, for example, dogs (mascots for Eastern New Mexico University, Texas A&M, University of Georgia, University of Tennessee and Yale), horses (Southern Methodist University, University of Oklahoma and University of Southern California),  or goats (Naval Academy).

Exotic coverage would be necessary for a bear (Baylor University), razorback (University of Arkansas), African lion (University of North Alabama), buffalo (University of Colorado, Boulder) or tiger (Louisiana State University).

“I insure [mascot owners] all the time,” Kalmanson said, noting that he also owns 18 “big cats” — tigers, lions and leopards — that are hired to appear at fairs, schools and special events.

“Sometimes mascot animals live with handlers,” Morris said. “Some live on a farm nearby. Some live with a designated family or sometimes, athletic staff.”

Some like Mike, a Siberian Bengal tiger, lives in a specially built 15,000-square foot habitat with a waterfall, stream and foliage on the campus of Louisiana State University, according to “Hear Me Roar: Should Universities Use Live Animals as Mascots,” a 2011 article by Jessica Baranko for the “Marquette University Sports Law Review.”

Baylor University’s bear mascots, all named “Judge” followed by a surname, also live in a campus facility with a waterfall, pond, cave, rocks and foliage. Students call it “The Pit,” Baranko writes.

Usually, Kalmanson said, the university is not the owner of the mascot animals, but is added “as an additional insured on the owner’s liability policy or commercial animal owners’ liability policy.”

Mitchel Kalmanson, principal, Lester Kalmanson Agency

Mitchel Kalmanson, principal, Lester Kalmanson Agency

“You want to make sure the owner’s liability policy is exhausted before it goes into the university’s,” Kalmanson said.

Nonetheless, it’s important for universities to have written guidelines and procedures related to the mascots. They should ensure the owner has the proper state, federal and local permits and licenses to own and exhibit the animal, and ensure proper nutrition and medical care is provided.

When animals are transported, the trailer or truck must be properly ventilated, he said. Inside, the animal’s enclosure, for a big cat, for example, should be made of Lexan, a bulletproof polycarbonate, and steel instead of a less secure wire cage. Plexiglas, he noted, will crack and break if used for big cats.

When the animals are taken onto the field, handlers — and back-up handlers for cases of emergency — must be properly trained and make sure the buffalo, for example, is tethered to a safety cable to keep it from jumping into the crowd, Kalmanson said.

Animals should be brought to the fields before actual games so they can become used to the area, lights and noise. There should be an “exit strategy,” in case something goes wrong and the handlers need to move the animal to a secure area, he said. Sedation equipment should also be available.

Policy deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.

Too often, he said, universities do not have set guidelines, and handlers or families “take too many shortcuts” about safety procedures. “There’s nobody looking over their shoulder saying they should follow the guidelines. There should be standard operating procedures available.”

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That’s good for the animal as well as the reputational brand of the university, he said.

Kalmanson said liability coverage should be for a minimum of $1 million per occurrence aggregate. Deductibles can range from $2,500 to $10,000 or more per claim, depending on the “exotic nature of the animal” and whether it is exhibited or whether it is galloped, for example, down the field.

If properly written, it will include coverage for bodily injuries or property damage caused by the animals. The policy would not, however, be triggered if PETA or some other animal rights group filed a lawsuit alleging mistreatment.

“There’s not much recourse but to defend that on its own merits,” Kalmanson said. “That would not be a covered hazard.”

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]
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Risk Insider: Elizabeth Carmichael

Putting Your Organizational Values Where Your Risks Are

By: | July 8, 2016 • 3 min read
Elizabeth Carmichael is the director of compliance and risk management for Five Colleges Inc., which includes Amherst, Hampshire, Mount Holyoke, and Smith College. She can be reached at [email protected]

I think that many risk managers (myself included) struggle with guiding their organizations to choose what risks to prioritize for management.

Even when we work for an organization that has a highly functional ERM process, and senior leaders are actively engaged in the identification, management and mitigation of risks, can and/or should compliance and risk officers be leaders in helping them set their priorities?

If the answer to that question is “yes,” how can we be better leaders? We can do it by identifying and aligning risk management as a cornerstone of institutional values.

One of the things that has always bothered me about “reputational risk” is that it measures how the outside world will view the institution (by measuring lost revenue, increased costs, or reduced shareholder value) if it fails to address a particular issue.

This has become a shorthand of sorts for measuring the ethical aspects of failure to address some kinds of risks. The problem is, it doesn’t address the actual values of the organization. Reports have been published on the atmosphere at Penn State where alumni and other donations actually increased in support of the university after the news of the Sandusky sex scandal broke.

Other schools, like Dartmouth University, may have seen a drop in applications from women because of sexual assaults and harassment, but given the strength of the school, it probably hasn’t impacted the bottom line. The outcomes of bad press are impossible to predict.

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There is no discussion, no scoring, in the enterprise risk management process of “How antithetical to our institution and our values would it be if something happened because we failed to address this risk?”

Or, “What are our institutional values and how does this risk conflict with our values?”

We should ask ourselves how risks might be scored if these questions replaced, “What is the reputational risk?”

Assuming — and admittedly it may be a big assumption — that organizations want to align their operations with their stated and implied values, the ERM process can and should be used to support this objective.

Even when we work for an organization that has a highly functional ERM process, and senior leaders are actively engaged in the identification, management and mitigation of risks, can and/or should compliance and risk officers be leaders in helping them set their priorities?

Now, if your company’s sole value and objective is to sell products more cheaply than any other company, ethics and values will not be likely to have any traction with company leadership on risk matters.

But if your company or organization has a mission, vision and/or values statement, you will have a place to start.

Reputation, on its most basic level, is a measure of trust — how well does the organization deliver the products and services, the values, which it promises?

This applies to both the organization’s customers and employees.

Do employees know what the organization’s values are? Are policies, procedures and risk mitigation efforts aligned with its values?

Compliance officers and risk managers may find that, when faced with opposition on a risk mitigation effort or prioritization, that helping mangers understand how the mitigation helps the organization’s actions align with its values will break down the resistance.

I’ve seen it work; try it!

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Sponsored Content by Chubb

Electronic Waste Risks Piling Up

As new electronic devices replace older ones, electronic waste is piling up. Proper e-waste disposal poses complex environmental, regulatory and reputational challenges for risk managers.
By: | July 5, 2016 • 4 min read
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The latest electronic devices today may be obsolete by tomorrow. Outdated electronics pose a rapidly growing problem for risk managers. Telecommunications equipment, computers, printers, copiers, mobile devices and other electronics often contain toxic metals such as mercury and lead. Improper disposal of this electronic waste not only harms the environment, it can lead to heavy fines and reputation-damaging publicity.

Federal and state regulators are increasingly concerned about e-waste. Settlements in improper disposal cases have reached into the millions of dollars. Fines aren’t the only risk. Sensitive data inadvertently left on discarded equipment can lead to data breaches.

To avoid potentially serious claims and legal action, risk managers need to understand the risks of e-waste and to develop a strategy for recycling and disposal that complies with local, state and federal regulations.

The Risks Are Rising

E-waste has been piling up at a rate that’s two to three times faster than any other waste stream, according to U.S Environmental Protection Agency estimates. Any product that contains electronic circuitry can eventually become e-waste, and the range of products with embedded electronics grows every day. Because of the toxic materials involved, special care must be taken in disposing of unwanted equipment. Broken devices can leach hazardous materials into the ground and water, creating health risks on the site and neighboring properties.

Despite the environmental dangers, much of our outdated electronics still end up in landfills. Only about 40 percent of consumer electronics were recycled in 2013, according to the EPA. Yet for every million cellphones that are recycled, the EPA estimates that about 35,000 pounds of copper, 772 pounds of silver, 75 pounds of gold and 33 pounds of palladium can be recovered.

While consumers may bring unwanted electronics to local collection sites, corporations must comply with stringent guidelines. The waste must be disposed of properly using vendors with the requisite expertise, certifications and permits. The risk doesn’t end when e-waste is turned over to a disposal vendor. Liabilities for contamination can extend back from the disposal site to the company that discarded the equipment.

Reuse and Recycle

To cut down on e-waste, more companies are seeking to adapt older equipment for reuse. New products feature designs that make it easier to recycle materials and to remove heavy metals for reuse. These strategies conserve valuable resources, reduce the amount of waste and lessen the amount of new equipment that must be purchased.

Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels.

For equipment that cannot be reused, companies should work with a disposal vendor that can make sure that their data is protected and that all the applicable environmental regulations are met. Vendors should present evidence of the required permits and certifications. Companies seeking disposal vendors may want to look for two voluntary certifications: the Responsible Recycling (R2) Standard, and the e-Stewards certification.

The U.S. EPA also provides guidance and technical support for firms seeking to implement best practices for e-waste. Under EPA rules for the disposal of items such as batteries, mercury-containing equipment and lamps, e-waste waste typically falls under the category of “universal waste.”

About half the states have enacted their own e-waste laws, and companies that do business in multiple states may have to comply with varying regulations that cover a wider list of materials. Some materials may require handling as hazardous waste according to federal, state and local requirements. U.S. businesses may also be subject to international treaties.

Developing E-Waste Strategies

Companies of all sizes and in all industries should implement e-waste strategies. Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels. That’s a complex task that requires understanding which laws and treaties apply to a particular type of waste, keeping proper records and meeting permitting requirements. As part of their insurance program, companies may want to work with an insurer that offers auditing, training and other risk management services tailored for e-waste.

Insurance is an essential part of e-waste risk management. Premises pollution liability policies can provide coverage for environmental risks on a particular site, including remediation when necessary, as well as for exposures arising from transportation of e-waste and disposal at third-party sites. Companies may want to consider policies that provide coverage for their entire business operations, whether on their own premises or at third-party locations. Firms involved in e-waste management may want to consider contractor’s pollution liability coverage for environmental risks at project sites owned by other entities.

The growing challenges of managing e-waste are not only financial but also reputational. Companies that operate in a sustainable manner lower the risks of pollution and associated liabilities, avoid negative publicity stemming from missteps, while building reputations as responsible environmental stewards. Effective electronic waste management strategies help to protect the environment and the company.

This article is an annotated version of the new Chubb advisory, “Electronic Waste: Managing the Environmental and Regulatory Challenges.” To learn more about how to manage and prioritize e-waste risks, download the full advisory on the Chubb website.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Chubb. The editorial staff of Risk & Insurance had no role in its preparation.




With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.
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