Global Risk

Top Risks Ranked by Risk Managers

Reputational risk and political unrest are top of mind for risk executives.
By: | September 30, 2015 • 3 min read
Earth grenade

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.

AonTop10RisksA Clements Worldwide survey of risk executives at global organizations and NGOs, on the other hand, cited political risk as their No. 1 concern.

“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.

Theresa Bourdon, group managing director, Aon Risk Consulting

Theresa Bourdon, group managing director, 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.”

ClementsTop10RisksMore than half of the 52 Clements survey respondents (57 percent) reported increased spending on international insurance, while 44 percent reported increased spending on risk management overall.

“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.

Steve Yahn is a freelance writer based in New York. He has more than 40 years of financial reporting and editing experience. He can be reached at [email protected]
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Defense Contractor Risk

In Danger’s Path

Defense contract job sites can be managed safely, despite hostile environments.
By: | August 3, 2015 • 8 min read

Defense contractors in the Middle East work in some of the most dangerous and inhospitable conditions on the planet. Workers are drawn there by high pay rates, but face a long list of exposures.


Defense Base Act (DBA) insurance provides the sole workers’ compensation remedy for these employees, although some employers supplement that cover with employer liability coverage, in case of legal action from injured workers or third parties.

Provided through the Department of Labor, DBA coverage is congressionally mandated for civilian employees working outside the United States on military bases or under a contract with the government for public works or for national defense unless their employer obtains a waiver.

DBA carriers qualify for full reimbursement from the government for injuries caused by a “war-risk hazard” under The War Hazards Compensation Act.

Video: The DOL in 2009 reported that at least 1,688 civilian contractors in Iraq and Afghanistan died and more than 37,000 were injured, according to this Global Report TV broadcast. 

Although conflict is spreading in the Middle East, many areas are not considered “conflict zones” where qualified injuries would be reimbursable by the federal government.

Still, DBA benefits are broad, said Karen Dobson, national client director, Aon Risk Solutions. They don’t officially provide 24-hour coverage, but they apply to many activities, sometimes even those as questionable as bar fights and softball injuries.

AIG has the lion’s share of the statutory DBA business, followed by CNA and ACE.

Neither the Department of Defense nor the Department of Labor releases statistics on the number of workers covered by the DBA, but the Business Benefits Group, a benefits consultant, reports that it covers almost 200,000 prime and subcontractor employees overseas and that it generates annual government-wide premiums of more than $400 million. DBA coverage extends to foreign nationals as well as U.S. citizens.

Contractors accounted for at least 50 percent of U.S. forces in Iraq and Afghanistan over the last decade, and before that, in the Balkans, said Moshe Schwartz, specialist in defense acquisition, before the House of Representatives’ Committee on Armed Services in October 2013.

High Risk and High Rewards

Despite its dangers and discomforts, the Middle East is an attractive place to work for many, said Aon’s Dobson, in large part because the work pays so well. For example, a truck driver who makes $40,000 per year in the United States may make $100,000 per year in the Middle East.

“An attorney will ask, ‘Is the worker’s heart condition or inflamed liver related to drinking bad water in Afghanistan?’ ” — Scott Bloch, a Washington, D.C. attorney who represents injured employees in many DBA cases.

But fundamental safety considerations sometimes get pushed to the back burner by extreme conditions. In challenging environments, such as 120-degree heat, “people just want to get the job done, and they’re not always focusing on safety procedures or taking the time to avoid risk,” said Alan Leibowitz, corporate director, environment, safety, health and security for Exelis Inc., a contractor with a large Middle East footprint.

Those shortcuts can lead to high injury rates. Workers in the Middle East are injured at least 10 times more frequently than their stateside equivalents, said Haleh Khodayari, chief executive officer, Advanced Consulting Inc., a global risk management firm based in California.

The costs in those cases can escalate rapidly due to exorbitant medical, medevac and repatriation expenses, in addition to lost time from work. The list of regional and war zone exposures is long and can be grisly, Khodayari said, ranging from slip-and-fall injuries to environmental exposures to death and injury from detonated roadside bombs and other extreme hazards from strife in the Middle East.

Post-traumatic stress and fatigue disorders occur frequently in Iraq and Afghanistan, sources said. The list of regional exposures includes allergies to foreign plants, such as palm pollen, and traffic accidents as workers try to negotiate unfamiliar or haphazard traffic patterns.


Adding to underwriters’ headaches is that the high compensation rates overseas sometimes motivate applicants to hide disqualifying ailments such as asthma or heart conditions during pre-employment screenings, which could put them at risk. It could also put their colleagues at risk if the safety of one depends on the unimpaired function of the other.

When DBA Applies

The Department of Labor is vigilant in its oversight of the DBA program, said Dobson, to the extent that it is “paternalistic” about looking after workers. In several cases, she said, the insurance company and claimant agreed on a settlement, but the DOL didn’t agree with the terms. It compelled the insurer to pay more, even though the claimants had competent legal representation.

Some disputes arise over whether or not idiopathic ailments, such as cancers and heart conditions, are related to employment, said Scott Bloch, a Washington, D.C. attorney who represents injured employees in many DBA cases.

Terri Rhodes CEO Disability Management Employer Coalition

Terri Rhodes
Disability Management Employer Coalition

“A DBA remedy could kick in if any aspect of the employment hastens or aggravates the conditions,” he said, which pulls the employer into complex legal and medical situations to prove or disprove a claim.

“An attorney will ask, ‘Is the worker’s heart condition or inflamed liver related to drinking bad water in Afghanistan?’ ”

To stave off financial crises in case DBA does not apply or while a case is in review, Bloch said, many employers offer their workers disability insurance over and above the workers’ compensation insurance to cover gaps that DBA may not cover.

Although DBA prevents employers from being hauled into civil lawsuits for its direct employees, employers may still be liable for third-party suits independent of DBA, Bloch said.

For example, if an employee leaves a live electrical cord that electrocutes a subcontractor in the shower, the employer may be subject to liability in civil court for action or inaction taken vis-à-vis the electrocuted subcontractor, who is a third party despite being part of “the team.”

The same pertains to any third party who wanders onto a work site or is struck by a contractor’s car.

Claims Management in Farsi

Language and distance often hobble claims management for injuries in the Middle East, said Terri Rhodes, CEO of the Disability Management Employer Coalition. U.S. doctors and carriers have to read medical reports from non-English-speaking countries to determine the nature and cause of injuries and whether they’re job-related.


They have to be able to read a treatment plan to arrange return-to-work. Even when she hires interpreters, Rhodes said, she never has full confidence that the interpretation is accurate.

“There’s always some variance in language,” Rhodes said.

Extracting, transporting and repatriating injured workers from conflict zones and remote regions to a location with adequate medical facilities can be complicated and expensive, said Eric Dean, senior vice president, ACE Risk Management Global Casualty.

DBA insurance provides coverage for repatriation. But problems multiply when a worker is medically incapacitated and can’t speak, Rhodes said, and it becomes necessary to obtain medical records.

“We have to communicate with hospitals,” she said, “and we run into time zone problems. In an emergency, we have to find out immediately when the injured worker was admitted and what the injury is.”

As elsewhere, incident prevention in the Middle East is the best claims management strategy, to whatever extent that’s possible in an environment where explosives and extreme heat are a fact of life.

Nicholas Gross, chief operating officer, international operations, Michael Baker International

Nicholas Gross, chief operating officer, international operations, Michael Baker International

Michael Baker International, a global engineering, planning and integrated consulting firm, strives for a “zero-incident, zero-accident” workplace at every site around the world, said Nicholas Gross, chief operating officer, international operations. That pays off both in protection of its employees and in its claims experience: Last year, Michael Baker International got “the best DBA rates in history,” Gross said.

“Our safety record has a direct benefit on our bottom line.”

Industry best practices include thorough pre-and post-employment screens, which include medical, dental and psychological exams, followed up with checkups during deployment, even in war zones, Aon’s Dobson said.

Michael Baker keeps a solid, detailed documentation trail about every incident, illness and injury, which ensures that injured employees get swift treatment and also protects the company against future claims.

Like Michael Baker, Exelis spends a lot of resources training its workers, both U.S. and foreign nationals, in safety protocols. It holds workers in the field to the same standard as its U.S. offices and factories.

Safety protocols could include redundant testing for electrical current on a rewiring site — an important precaution where infrastructure is cobbled together and wiring is “not always the safest,” Exelis’ Leibowitz said. It also includes forced hydration breaks, because people don’t notice heat exposure until it’s too late.

Compliance is high, Leibowitz said, because workers appreciate that the protocols are in their best interest. Exelis offers incentives for following safety rules and applies penalties, such as being sent home, for breaking them.

Return-to-work programs for Middle East contract workers can be hard to implement, Advance Consulting’s Khodayari said. A fairly simple injury such as a broken leg can be treated in most regions of the Middle East, but the worker can’t get back to work as quickly as in the U.S. because light duty assignments are not usually available.

The cost of lost wages can be high because the DBA entitles some injured workers to full wage loss for the rest of their lives.

“If a worker can’t return to the original contract, we may conduct a formal Labor Market Survey and help the injured worker look into other jobs with the same employer in a different capacity,” Khodayari said.

Gross attributes much of Michael Baker International’s safety success to its proactive approach — and to its partnership with its broker and DBA insurance provider.

“Our broker took an active role in identifying and managing risk, reducing claims and getting personnel back to work,” he said. “Our partnership with our carrier helped us reduce claims and experience.”


And key to the successful relationship, said ACE Group’s Dean, is working directly with the client, face to face when possible.

“Insurance is a contract of trust. Putting a face to the name helps build that trust,” he said, even with statutory coverage, such as DBA insurance.

“The relationship doesn’t change the coverage, but it facilitates the placement of coverage.”

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]
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Sponsored Content by CorVel

Telehealth: The Wait is Over

Telehealth delivers access to the work comp industry.
By: | November 2, 2015 • 5 min read


From Early Intervention To Immediate Intervention

Reducing medical lag times and initiating early intervention are some of the cornerstones to a successful claims management program. A key element in refining those metrics is improving access to appropriate care.

Telehealth is the use of electronic communications to facilitate interaction between a patient and a physician. With today’s technology and mass presence of mobile devices, injured workers can be connected to providers instantaneously via virtual visits. Early intervention offers time and cost saving benefits, and emerging technology presents the capability for immediate intervention.

Telehealth creates an opportunity to reduce overall claim duration by putting an injured worker in touch with a doctor including a prescription or referral to physical therapy when needed. On demand, secure and cost efficient, telehealth offers significant benefits to both payors and patients.

The Doctor Will See You Now

Major healthcare players like Aetna and Blue Cross Blue Shield are adding telehealth as part of their program standards. This comes as no surprise as multiple studies have found a correlation between improved outcomes and patients taking responsibility for their treatment with communications outside of the doctor’s office. CorVel has launched the new technology within the workers’ compensation industry as part of their service offering.

“Telehealth is an exciting enhancement for the Workers’ Compensation industry and our program. By piloting this new technology with CorVel, we hope to impact our program by streamlining communication and facilitating injured worker care more efficiently,” said one of CorVel’s clients.

SponsoredContent_Corvel“We expect to add convenience for the injured worker while significantly reducing lag times from the injury to initiating treatment. The goal is to continue to merge the ecosystems of providers, injured workers and payors.”

— David Lupinsky, Vice President, Medical Review Services, CorVel Corporation

As with all new solutions, there are some questions about telehealth. Regarding privacy concerns, telehealth is held to the same standards of HIPAA and all similar rules and regulations regarding health information technology and patients’ personal information. Telehealth offers secure, one on one interactions between the doctor and the injured worker, maintaining patient confidentiality.

The integrity of the patient-physician relationship often fuels debates against technology in healthcare. Conversely, telehealth may facilitate the undivided attention patients seek. In office physicians’ actual facetime with patients is continually decreasing, citing an average of eight minutes per patient, according to a 2013 New York Times article. Telehealth may offer an alternative.

Virtual visits last about 10 to 15 minutes, offering more one on one time with physicians than a standard visit. Patients also can physically participate in the physician examination. When consulting with a telehealth physician, the patient can enter their vital signs like heart rate, blood pressure, and temperature and follow physical cues from the doctor to help determine the diagnosis. This gives patients an active role in their treatment.

Additionally, a 2010 BioMed Central Health Services Research Report is helping to dispel any questions regarding telehealth quality of care, stating “91% of health outcomes were as good or better via telehealth.”

Care: On Demand

By leveraging technology, claims professionals can enhance an already proactive claims model. Mobile phones and tablets provide access anywhere an injured worker may be and break previous barriers set by after hours injuries, incidents occurring in rural areas, or being out of a familiar place (i.e. employees in the transportation industry).

With telehealth, CorVel eliminates travel and wait times. The injured worker meets virtually with an in-network physician via his or her computer, smart phone or tablet device.

As most injuries reported in workers’ compensation are musculoskeletal injuries – soft tissue injuries that may not need escalation – the industry can benefit from telehealth since many times the initial physician visit ends with either a pharmacy or physical therapy script.

In CorVel’s model, because all communication is conducted electronically, the physician receives the patient’s information transmitted from the triage nurse via email and/or electronic data feeds. This saves time and eliminates the patient having to sit in a crowded waiting room trying to fill out a form with information they may not know.

Through electronic correspondence, the physician will also be alerted that the injured worker is a workers’ compensation patient with the goal of returning to work, helping to dictate treatment just as it would for an in office doctor.

In the scope of workers’ compensation, active participation in telehealth examinations, accompanied by convenience, is beneficial for payors. As the physician understands return to work goals, they can ensure follow up care like physical therapy is channeled within the network and can also help determine modified duty and other means to assist the patient to return to work quickly.


Convenience Costs Less

Today, convenience can often be synonymous with costly. While it may be believed that an on demand, physician’s visit would cost more than seeing your regular physician; perceptions can be deceiving. One of the goals of telehealth is to provide quality care with convenience and a fair cost.

Telehealth virtual visits cost on average 30% less than brick and mortar doctor’s office visits, according to California state fee schedule. In addition, “health plans and employers see telehealth as a significant cost savings since as many as 10% of virtual visits replace emergency room visits which cost hundreds, if not thousands, of dollars for relatively minor complaints” according to a study by American Well.

“Telehealth is an exciting enhancement for the Workers’ Compensation industry and our program. By piloting this new technology with CorVel, we hope to impact our program by streamlining communication and facilitating injured worker care more efficiently,” said one of CorVel’s clients.

Benefits For All

Substantial evidence supports that better outcomes are produced the sooner an injured worker seeks care. Layered into CorVel’s proactive claims and medical management model, telehealth can upgrade early intervention to immediate intervention and is crucial for program success.

“We expect to add convenience for the injured worker while significantly reducing lag times from the injury to initiating treatment,” said David Lupinsky, Vice President, Medical Review Services.

“The goal is to continue to merge the ecosystems of providers, injured workers and payors.”

With a people first philosophy and an emphasis on immediacy, CorVel’s telehealth services reduce lag time and connect patients to convenient, quality care. It’s a win-win.

This article was produced by CorVel Corporation and not the Risk & Insurance® editorial team.

CorVel is a national provider of risk management solutions for employers, third party administrators, insurance companies and government agencies seeking to control costs and promote positive outcomes.
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