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Leslie P. Schultz Professor of Risk Management and Insurance
Wisconsin School of Business
University of Wisconsin
Madison, Wis.

Long before it was popular, Dan Anderson was talking about risk and sustainability.

Professor Dan R. Anderson included a discussion of sustainability and social risk in his risk management courses when most of us still thought that carbon emissions were something you did in chemistry lab and recycling had something to do with riding your bike.

"Right from the get-go, he was always ahead," said Joan Schmitt, who was one of Anderson's undergraduate students 30 years ago when he was a fairly new faculty member and is now a fellow faculty member.

When he was young, Anderson was an environmental nerd before it was fashionable to be a nerd. "I got interested (in the environment) because I was always outdoors camping, canoeing, biking and hiking."

He read whatever books on the environment that he could find and absorbed what they were saying, such as the long-term problems of global warming and the consequences of greenhouse gases, "and the more I could see that it was related to business risk," he said.

At the time, he really wasn't thinking about becoming a professor, but his concerns about the environment naturally paved the way for his 40-year career in researching and writing and teaching risk management students about the critical importance of sustainability and how it relates to business risk.

Despite the common thinking that sustainability means greening your homes and offices, installing solar energy and other types of renewable energy, those are only some examples.

The topic relates to anything we want to sustain through the future. So sustainability certainly is energy, but it's also clean water, clean air, ice caps, any product without harmful substances--the list goes on and on.

That's why social risks and environmental risks can't be ignored, Anderson believes.

"When I got my Ph.D. in 1970, I was interested in environmental and social risk, but there were no courses in that so I incorporated them into my risk management and liability courses," he said.

So the students could study, for example, asbestos risk, the Superfunds and disaster insurance and analyze them all in the context of the environment.

For 30 years, Anderson has focused his efforts on environmental risks and social/business risks and how to avoid them or fix them. He has written literally dozens of papers and has given more than 50 presentations.

Remember the Love Canal at Niagara Falls, that horrible toxic waste dump of the early 1970s that destroyed the lives of thousands of people?

It opened our eyes to chemical companies dumping their trash in waterways near populated areas. Fortunately, it also opened the eyes of the federal government.

In the late 1970s and early 1980s, Anderson became involved in CERCLA, the Comprehensive Environmental Response Compensation Liability Act, otherwise known as the Superfund Act, designed to clean up hazardous waste dumps.

While Anderson's continued to incorporate environmental issues and social risk into his risk management courses over the past 20 years, he said it wasn't until 10 years ago that environmental strategies become more of an issue at other universities and at companies.

He introduced environmental strategy and study of the Superfunds into his general risk management courses, all under the umbrella of social risk.

By 2003, he developed these various social, environmental strategy and sustainability risk management issues into his own courses in the business school, and they became extremely popular and tough to get into. Previously, they had been scattered in other departments, such as social sciences.

"In the business school, I taught how to think about environmental strategy, social risk and sustainability to satisfy student demand," he explained. His latest endeavor is a book called, Corporate Survival: The Critical Importance of Sustainability Risk Management. He believes it's the only book on the topic.

"Environmental and social risks are one of the critical risk areas of the 21st century," he said.

--By Susan Gurevitz

Chief Risk Officer
University of California
Oakland, Calif.

How to get school leadership to invest scarce dollars in safety and prevention, and show a return-on-investment.

Imagine how scary it must have been for Grace Crickette, the chief risk officer at the University of California after she had made the decision to launch her Be Smart About Safety program to approach senior management at the university and ask for money out of the already tight budget to fund a self-insured workers' compensation program supported by loss prevention and loss control programs. You can almost picture that scene from the Wizard of Oz when Dorothy and her friends approached the Wizard with their requests.

"It took a vision to be able to get to the people who controlled the budget," said Cindy Parker, vice president, area operations manager, for Sedgwick.

How Crickette approached this process could easily be a lesson in convincing a reluctant administration and budget officers to part with a little money once they saw the return-on-investment figures presented by the actuaries.

"It's not like there was money sitting around to use on safety," Parker said. It's never easy to convince people to buy into earmarking money for a program they know little about. "That's an amazing thing to do. She had to ask them to agree to take money in the budget and allocate it to doing something to keeping everyone safe, such as a stretching program for the groundskeepers," explained Parker.

"My champions at the campuses and medical centers were the environmental health and safety directors, risk managers and workers' comp managers," Crickette said. "We had to be risk takers and gamble on ourselves."

This is how Be Smart About Safety, or BSAS, works: As explained on the program's Web site, "It's a funding mechanism that allows all the locations (at the University of California) to actually invest in loss prevention and loss control measures to reduce their cost of risk as it relates to employee safety and well being, liability exposures and the assets of the university."

There are 10 U.C. campuses and five medical centers that can all apply for monies to support their loss control programs. Basically, Crickette operates an internal insurance company.

"This was the only way money could be collected and savings generated," she said.

Locations that want to participate, to qualify to receive money to support their loss control or preventative programs, must fill out an application, outlining what their loss prevention program will be.

The money is raised by 10 percent of each location's premium that's "allocated back to ourselves."

During first year of the program, fiscal year 2006-2007, $10 million was made available to invest in loss prevention and control programs, and $15 million was available in both 2007-2008 and 2008-2009.

The university started out with a deficit in the workers' compensation program when Crickette first arrived, but the university pulled out of deficit after a year. Last year, the schools returned $37 million, this year $57 million. She credits better loss control measures for that huge jump.

She and her staff, and many others at the local campuses and medical centers, have initiated many of the departmental loss control programs that have reduced the occurrence of workers' compensation injuries significantly.

The trick, she said, is to build enthusiasm among the workers, weave it into the culture and push it wherever it makes sense.

For example, at UCLA, they launched a $600,000 Bruin (the school's mascot) Safety Program that earned them more than a 60 percent return on investment. Those are the kinds of programs Crickette looks for.

"It's branding," she said. "We need to sell safety like Madison Avenue sells soda."

--By Susan Gurevitz

Executive Vice President
Districts Mutual Insurance
Port Washington, Wis.

Running with the idea of self-insurance.

"Anytime you can bring 16 different entities together within a six-month period I think is an amazing feat," said Linda Joski, area vice president of Arthur J. Gallagher Risk Management Services and a reinsurance broker for the Districts Mutual Insurance in Port Washington, Wis. Joski is talking about Steve Stoeger-Moore, Districts Mutual Insurance's executive vice president who also acts as the chief operating officer, chief administrative officer, claims advocate, and any other job the insurance company needs.

"I participate in the entire process," Stoeger-Moore said, because he's the only full-time employee.

Stoeger-Moore's process started in 2003 when a group of 15 technical colleges in Wisconsin (two-year schools) got together to talk about how to stem their rising insurance costs during the hard insurance market. (The 16th member joined later.) But they're not a small group. Altogether, there are 54 campuses with a payroll of $500 million, 1,200 vehicles and 400,000 students that must be insured.

"Steve was a previous client, and we had introduced him to self-insurance, how you can take control of your own risk," said Joski. "Knowing that was a good start, so he developed a good working relationship with other colleges," she said.

At the time, Stoeger-Moore was the risk manager at the Milwaukee Area Technical College. One of the things he learned, and that he shared with the other schools, was "you don't need to be on a first dollar program."

Finance managers handled the insurance tasks at many of the schools, so they weren't quite prepared for the hard market, and how to set up a beneficial, cost-effective program.

In Wisconsin, the schools are considered government entities and separate districts, and are governed by the state's Office of Commissioner of Insurance. That means, by statute, the schools aren't allowed to set up pools, but they can set up cooperative arrangements such as mutual insurance companies. So the group of presidents asked Stoeger-Moore, who was already knowledgeable about self-insurance, to assist them. "He got quite a few (presidents) really interested in the whole concept," Joski said, "and he got all the presidents to buy in." This was in November 2003. "He's a man of action, so he takes an idea and runs with it, "said Joski.

Under Stoeger-Moore's direction, each of the 16 schools became equal owners and agreed to be the providers of the insurance policies. Stoeger-Moore essentially set up a virtual company--he outsourced claims to two TPAs (United Heartland of Milwaukee that specializes in workers' comp and Midwest Claims Services in Auburn Hills, MI) a defense counsel, and accounting and actuary firms, among others. "We needed the services, not the overhead," he said.

And, according to Joski, he did everything right. Stoeger-Moore made the right contacts with the Office of Commissioner of Insurance, got all the reinsurance arranged by December 2003 and got all the details nailed down, including the OCI approval. That was all completed by the end of June 2004. So Districts Mutual Insurance opened its doors on July 1, 2004. The whole process took about six months. "That was a pretty intense six months," said Joski. "One of the most important things?he needed the commitment to loss control, and he brought everyone into it." Joski brought in the Gallagher loss control unit to set up the baseline, assess the risk and offer solutions to all the risks.

As a result, DMI now has comprehensive coverage along with strategic and targeted services, plus it has saved money along the way. In the first year, costs were maintained at pre-DMI levels. In years two and three, there was no increase in the premium even though the exposure base grew. In this fourth year, DMI lowered its rates along with the rest of the market while achieving full capitalization. So costs dropped $1.1 million.

"The key to getting the buy-ins from the presidents was telling them, 'If you do this we guarantee we'll save costs to the level of what you've experienced in previous years,' " recalled Joski. And so they did.

--By Susan Gurevitz

Associate Treasurer
New Jersey Institute of Technology
Newark, N.J.

Nicholas Tworischuk tackled the immense task of categorizing risk management best practices for the 57 colleges and universities in New Jersey.

Even though New Jersey isn't a very large state geographically, (it's the sixth smallest, just above Hawaii), it boasts countless safety, security, emergency, standards, guidelines and planning organizations, including 275 best practices to protect the state, its citizens and the students who attend its 57 colleges and universities. Not surprisingly, following the catastrophic Sept. 11, 2001, attacks, the New Jersey Council of Presidents, which operates in the shadow of New York City, created a standing committee called the Homeland Security Subcommittee (it just changed the name to Campus Safety and Security Committee) to keep an eye on campus safety as well as security in other business sectors in New Jersey, such as utility companies, chemical and pharmaceutical firms, the telecommunications and healthcare industries. The Council of Presidents, created in 1994, is a 50-member advisory board that oversees many state functions, including new program recommendations and the statewide higher education master plan.

The Homeland Security Subcommittee is the one that developed those 275 best practices, covering seven areas:

--General best practice adoption and implementation

--Emergency response

--Public safety operations and training

--Emergency communications

--Cyber security

--Building and grounds

--Science labs

As the associate treasurer, Tworischuk is the risk manager at the New Jersey Institute of Technology, so after Sept. 11 he was already representing his school in the various state committees evaluating the different economic sectors, such as the oil sector and higher education sector, to make sure the defense and safety protocols were in place.

"There had to be an understanding (about the differences) between the public universities with labs and the private companies," said Tworischuk. After assessing the safety issues, the Campus Safety and Security Committee developed what Tworischuk called "a very broad and inclusive set" of 275 best practices.

So what do you do with 275 best practices? That was when Tworischuk was brought into the process.

For New Jersey schools, this was a whole new way of looking at and assessing risk. "In New Jersey, the 57 schools are very decentralized," said Dr. Henry Ross, chief of staff to the president of NJIT and liaison to the New Jersey President's Council. "From the University of Medicine and Dentistry of New Jersey to the small religious schools, there's a lot of diversity, where all kinds of materials are being handled, chemicals to simple labs," Ross said.

The then New Jersey Governor, Richard Cody, wanted to make sure that all the colleges and universities were staying current with safety measures, so he asked Tworischuk to develop a method for doing that. "I approached this challenge by seeking to organize the individual best practices by some major functional areas," he said.

So he initially broke down the practices into five major general security risks that colleges and universities usually face--facilities access and security, hazardous material security, sporting and entertainment venue security, cyber security and international students/travel abroad programs. Then he essentially gave the Domestic Preparedness Task Force and the Commission on Higher Education a lesson on total risk assessment, and why that enterprise risk approach was necessary as a means for evaluating risk.

For example, he pointed out that this risk approach was to "recognize the unique operations of higher education institutions and address issues that are beyond 'security issues,' such as the operation of instructional and research laboratories." He also pointed out how levels of risk exposure differ from one university to another. So he broke down the best practices list even further into 10 specific categories, from campus risk assessment to laboratory materials and security to building design and maintenance.

From there he developed a check list that formed the basis for a "Peer Review Pilot Study" as a means for measuring the level of compliance among the colleges and provide a way to update a best practice on a periodic basis. "He knew the risk management discipline and he brought the processes in and a way of looking at safety," said Ross. "He made it a more well-rounded type of approach."

--By Susan Gurevitz

Director, Risk Management and Insurance
Cornell University
Ithaca, N.Y.

Fixed on filmmaking to get safety messages through to impressionable students.

University risk managers have a tough enough time just trying to reign in the students who all think they're invincible, let alone getting them to read safety brochures. That's why students still engage in dangerous, hazing activities, rappelling down the school's tallest building, and driving haphazardly on and off campus. Of course, no matter what else they do, they can always be drunk. And too many times, the students die.

"We have to find the best way to communicate with them," said Allen Bova, director, risk management and Insurance at Cornell for 20 years. Probably one of Cornell's most difficult challenges has been the campus's historic gorges.

The Cascadilla Gorge, which borders the campus on the south, and the Fall Creek Gorge, which lies on the northern end of the campus, not only add to the beauty of the campus but also provide a serious risk.

For years the legend flew on and off campus about the administration blocking off the gorge bridges to prevent students from jumping off during midterms and finals. But, unfortunately, the gorges are just that dangerous.

"What we had were a number of students who were not paying attention to safety at the gorges and a number of them drowned," said Bova.

Usually it's students who don't realize just how deep the water is in the gorges and drown, or drunk students just fall in. Ironically, technically Cornell doesn't even own the water (it only owns from the high water line up), but Bova knew the school still had an obligation to prevent the drownings and other gorge-related accidents.

He knew the traditional method of communicating danger to students just wasn't going to cut it. He also had to find a more evocative way to communicate other dangers to the students, such as alcohol risks.

First, last year, the university produced a brochure on the gorges, pointing out their recreational and hiking attractions, but also listing warnings to stay away from the gorges' unguarded cliffs. He knew he should supplement the brochures with some other kind of communication, but how?

The answer, unfortunately, came from the father of a student who had just drowned in a gorge--he asked why the school didn't have some kind of movie to show the students. After all, videos speak the students' language. And, surprisingly, so do their parents.

Indeed, Bova said he found research that indicated the best way to reach incoming students was through their parents. Other research said, "We can educate them, but that won't change their behavior."

But what really hit home was the notion that, if parents sat down with their children and watched a movie about safety issues and discussed those issues, that message was more likely to stick. Cornell held focus groups with incoming freshmen about this approach, and their response was "universally positive," Bova said.

He called it an "institutional approach to risk management."

Bova, who acted as the executive producer, and his team of professionals spent eight months and $55,000 creating the film geared toward incoming students, writing the dialog, hiring two student actors, filming all over campus and editing it into a movie students would watch.

In an appealing, low-key manner, the film talks about a litany of student risks, such as alcohol risk--what many incoming freshmen think as the college right of passage--gorge safety, copyright and illegal downloading, and hazing, as well as just showing students around campus. "We knew a guy in a suit wouldn't have the same effect," Bova said.

Bova is targeting incoming freshmen because they're the most vulnerable when arriving at college for the first time. The university began sending out the DVDs to incoming students and their parents in July, but by mid-August, it was still too soon for a response.

Pat Gallagher, CEO of Arthur J. Gallagher & Co., commended Bova for creating the movie, calling it "innovative," along with the many other risk management programs he's instituted.

"He's so darned smart," Gallagher said. "He always knows how to work with risk."

--By Susan Gurevitz

Allen Bova has spent untold hours creating policies to keep students safe, and in 1995, he got a handle on one traditional drinking-free-for-all when he changed the rules to the university's decades-old annual Slope Day.

This end-of-the-school-year drinking frenzy that hundreds of students attended, no matter their age, typically landed several students in the hospital. Bova's strategy--he fenced in the area and allowed only Cornell students and their guests through the gates via a strict age-screening process.

The university sold beer only to students aged 21 or older and issued bracelets limiting their beer purchases. Food, water and entertainment were free. These new rules have set the precedent that continues today.