Stay True, Be Kind
Depending on one’s point-of-view, this past election appears to have caused a great amount of anxiety, vitriol and perhaps evidence of an electorate who made their choices (regardless of party) based on their heart and not on reliable nonpartisan evaluations, analytics or fact checking.
“I heard it on talk radio” or “saw it on a blog” are generally not the best sources of dispassionate and accurate information. In this election, that appeared to be the overwhelming source of ‘information’ used by the young, old, male, female, Republican, Democrat, etc.
Enterprise risk management gurus or ISO 31000 disciples must be scratching their heads. Can one imagine assessing a risk management endeavor in the same manner a large percentage of the electorate evaluated one of the ultimate risk assessments?
With the above said, and when there appears to be a period of great change at the federal level, we need to remind ourselves that the Constitution has the built-in ability to “pump the breaks,” most namely through the separation of powers. Our founders built in safety valves to protect us from demagoguery, fascism and oligarchy.
From a risk management perspective we ask the question: “What does this historical election mean to the profession, our organizations and ourselves?”
From a risk management perspective we ask the question: “What does this historical election mean to the profession, our organizations and ourselves?”
As to the profession and our organizations, the answers are likely as plentiful as there are questions.
The risk manager for a mining, petroleum or pharmaceutical operation might be doing handsprings of joy at this moment.
Conversely, many working for governmental entities, especially those providing regulatory oversight or “services,” clean energy or the media, might be ingesting large quantities of antacids this week. Cherry smoothie flavor is my favorite.
One cannot think holistically without considering how such change affects one’s self. Without ranting about personal beliefs, all people should be able to agree that we want a president of the United States (and congress I suspect … ) to be successful, visionary and do well for the country.
Further, we do not have to respect the individual in the position; however, we must respect the position and the democratic values of our country. The ease of the transition of power is a good example of why we are blessed to live in the United State.
So let’s keep our chins up or our celebrations of new-found power humble and realize we are citizens first and then Democrat, Republican or other. Together, common ground can be found, and if not, we all get another bite of the apple in two and then four years hence.
Stay true and be kind to one another.
Selling Peace of Mind in an RM Package
Whether you believe you are in sales or not, most of us spend our days trying to persuade other people to adopt our idea, way of thinking, product, approach, etc.
We are all of us eternally trying to convince someone to buy or buy-in, literally or figuratively.
According to Daniel Pink in his exceptional new book To Sell Is Human, “Dig beneath the sprouts of your own calendar entries and examine their roots, and I suspect that you’ll discover something similar.
Some of you, no doubt, are selling in the literal sense — convincing existing customers and fresh prospects to buy casualty insurance or consulting services or homemade pies at a farmer’s market.
But all of you are likely spending more time than you realize selling in a broader sense — pitching colleagues, persuading funders, cajoling kids. Like it or not, we are all in sales now.”
Let’s face it: there are few things more difficult to sell than the concept of risk management. From a time and resource allotment standpoint, Risk Management and now Enterprise Risk Management have always been a difficult sell to the ADHD world of business.
Convincing a business that they should loop back and check their processes when they’ve already begun to institute a new plan, or spend important hours on the front-end of a launch to make a failure prevention plan, will not make you popular.
When the topic of risk management is introduced, our minds instantly gravitate toward boredom, meetings, micro-management and extra work.
Why is this true? Like beginning a diet or a new workout regime, starting a RM process seems somehow painful. People have a natural aversion to pain and anything negative.
Seem like an over-generalization? Then think about how often the answer is “Fine” to the question “How are you doing?”
Like anything worthwhile in life, the risk management approach is going to take more work on your part.
It often seems easier and perhaps more polite to not get into it with someone, even if they could potentially help. We really do not want to waste time thinking about what is wrong or what could go wrong in our own lives, families or businesses.
But at its core, what is risk management? What is insurance, for that matter?
PEACE OF MIND. We want to feel like things are going to turn out as we intended, and everyone is going to arrive safely at their desired destination.
In any other area of life, how is this peace of mind achieved? By putting in the work. By taking the time and effort to see a plan through to the end, to the point where you are bone-weary and can lay your head on the pillow and say, “I did the best I could do.”
Like anything worthwhile in life, the risk management approach is going to take more work on your part. However, there is nothing more valuable in getting you so much closer to what you really want — PEACE OF MIND.
So, what are we selling? PEACE OF MIND.
How are we selling it? The answer to this question really matters. If you set out to lose twenty pounds, you must first picture a slimmer version of yourself with a big smile on your face.
If you want to run your first marathon for your 40th birthday, you must plan and practice. But even before that you must really like the mental picture of yourself crossing that finish line.
Why do we do these crazy things to ourselves? For the results. We like the picture of ourselves at the end of the work.
And that is how we should sell risk management. We need to spend time creating the pitch.
As Pink says, “The purpose [of the pitch] is to offer something so compelling that it begins a conversation, brings the other person in as a participant, and eventually arrives at an outcome that appeals to both of you.”
If we are not painting a vivid, technicolor picture of the imagined best future, we are never going to get the amount of buy-in we need to make a real difference.
As risk managers, we must help our organizations or clients focus on the results that naturally follow quality advance planning – and particularly on that much-desired PEACE OF MIND.
From Drones to Defects: Planning for Construction’s Top Challenges
The construction industry is firing on all cylinders. New projects spring up every day, but not all go according to plan.
Three out of every four construction projects fail to finish on time. Every party involved – owners, designers, contractors and subcontractors – expects perfection, with the final product delivered on schedule and on budget. Those expectations leave little room for uncertainty, so even a small hiccup can have ripple effects that disrupt a project for everyone.
“There’s often a big disconnect on the front end of project planning,” said Doug Cauti, Senior Vice President, National Insurance, Chief Underwriting Officer, Construction, Liberty Mutual.
Proactive risk mitigation is also important to manage emerging challenges facing the construction industry ‒ drone regulations are evolving, commercial auto losses are rising, and so is uncertainty about which party might be held responsible for a construction defect. Without the proper planning, these issues can easily be overlooked and result in major losses and project disruption.
Liberty Mutual’s Doug Cauti discusses key challenges facing the construction market.
“Key risk management strategies have to be aligned among all parties from the beginning to minimize these uncertainties.”
Before construction begins, there are actions that project owners, designers and contractors can take to address these challenges and better protect their projects and businesses:
Drones can be useful tools on construction sites, providing an extra set of “eyes” for large commercial projects or tall buildings. They provide a real time aerial glimpse of works in progress, giving supervisors an added perspective to spot potential flaws, assess safety hazards, and check on workers. But many challenges remain in the safe — and legal — operation of drones.
Liberty Mutual’s interactive infographic highlights risks related to managing drones at construction sites, and also includes a pre-planning drone use guide and a pre-flight checklist that includes making sure to review the latest drone regulations.
How construction buyers can manage the insurance implications of using drones in their operations.
General contractors and project owners need to stay up to speed on FAA regulations, which changed in August, 2016.
“For one thing, operators need to have the drone in sight at all times,” Cauti said.
“And you need to make sure any operators are appropriately licensed and trained, that the drones are regularly maintained, and that the machines don’t impede on others’ safety and privacy.”
Clear flight paths and work zone boundaries can minimize the risk of a drone striking another property, or worse, a person. Operators should also know how to conduct an emergency landing if the drone suddenly loses power. It’s also important to consider how you are going to manage and use drone footage. Advertising liability can be a concern if third party images are captured and released. Know who is in charge of the data collected, who has access to it, and how you are going to protect it.
“If the contractor owns the drone, it takes on more liability. The contractor should review its insurance policies to make sure the coverage will respond to that risk,” Cauti said.
“As an insurance carrier, we may have a role to play in those proactive discussions. We are uniquely positioned to help project stakeholders see their risks and work to minimize them.”
— Doug Cauti, Senior Vice President, National Insurance, Chief Underwriting Officer, Construction, Liberty Mutual Insurance
Contractors and project owners can protect themselves through enhancements to their commercial general liability policies or through separate aviation policies, he said.
If a general contractor leases a drone through a third party, “they bear the responsibility of making sure the vendor is fully insured,” Cauti said. Vendors should have “non-owned” aviation coverage with limits suitable to handle the size of the risk.
Commercial auto losses challenge many business sectors, and construction is no exception.
More vehicles on the road and more miles driven, combined with fewer experienced commercial drivers, are driving up the frequency of accidents. On construction sites in particular, congestion created by closed roads, piles of materials and roving heavy machinery may lead to work zone accidents. Rising medical costs and repair and replacement costs of high-tech vehicles increase claim severity.
“I don’t see this trend reversing any time soon,” Cauti said.
Mitigating commercial auto losses begins with driver hiring practices.
“Pay attention to who you put behind the wheel,” Cauti said.
“Motor vehicle reports (MVRs) and driving history can alert employers to previous accidents or tickets. But there also needs to be regular communication with the drivers you do hire, and clear protocols in place that define expectations of how the job should be performed,” he added.
Ways construction buyers can manage rising commercial auto loss costs and better protect their fleets and employees.
Those protocols include requiring the use of seat belts, prohibiting cell phone use while behind the wheel, mandating scheduled breaks, outlining maintenance procedures, defining if company vehicles can be used for personal use, and establishing crash report procedures that delineate who to contact and what information to collect in the event of an accident.
Contractors can also monitor fleet performance through telematics systems. These on-board systems can track unsafe driving behaviors like hard braking, sharp turns, and speeding. But the data is only as good as the person analyzing it. Contractors and project owners should partner with an insurer who can use fleet telematics data effectively to pinpoint common causes of accidents and recommend specific risk mitigation strategies.
Liberty Mutual’s Managing Vital Driving Performance is one tool that leverages insureds existing telematics data to identify unsafe driving behaviors and accident patterns.
“Our risk control consultants can drill deeper into the data and interview drivers to identify patterns and find out the root causes of bad driving behaviors in the first place,” Cauti said.
For example, a post-accident interview with a driver could reveal that he had been skipping breaks and spending too many hours on the road, leading to fatigue and inattentive driving.
Identifying those connections enables consultants to make specific risk mitigation recommendations, such as adjusting drivers’ schedules and workloads to reduce overtime, or adjusting dispatch protocols so employers can ensure drivers aren’t working too many shifts in a short period of time.
Another uncertainty project owners, designers and contractors have to face is how insurance coverage will apply should a project end up in a dispute. “The struggle is around the definition of ‘faulty workmanship’ and who is responsible for the defect. Is it in the design or the build?” Cauti said.
“There can be a lot of finger pointing involved. This reinforces the need for contractors to have a systematic quality assurance (QA) program that adheres to best practices, and for every party to have a role in it.”
Elements of a QA program could include testing of construction materials, conducting regular walk-throughs and obtaining approvals from the owner at key phases, and final sign-off by the owner at the project’s completion.
How construction defects and the current legal climate are affecting projects.
Construction defect claims can affect a business’s reputation, profits, and ability to maintain insurance coverage. That’s why it’s so important to be vigilant about avoiding construction defects, whether you’re a designer, developer, owner or general contractor.
Ultimately, though, these risks should be addressed before ground is broken. Discussing these challenges and collaborating on loss prevention strategies up front reduces the likelihood that any “hiccups” will throw off project timelines or increase costs for the various stakeholders.
Pre-planning discussions also offer the opportunity for these parties to take advantage of carrier partners’ risk control services.
“As an insurance carrier, we may have a role to play in those proactive discussions,” Cauti said.
“We are uniquely positioned to help project stakeholders see their risks and work to minimize them.”
To learn more about Liberty Mutual’s solutions for the construction industry, visit https://business.libertymutualgroup.com/business-insurance/industries/construction-insurance-coverage.
 Managing Uncertainty and Expectations in Building Design and Construction SmartMarket Report
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.