By Christina Royer, Director of Risk Management Services
The statement, “the only constant is change”, is true in life and risk management. Increased technology use and ever-changing regulations ranging from OSHA to cyber security are creating new concerns and risks for businesses who are already spread thin, struggling to survive some of the toughest economic times in decades.
According to a recent Associated Press survey, employers will hire more workers this year and the economy will grow faster than envisioned even three months ago. Great news…however, I cannot help but wonder whether companies are prepared for this growth. As demands for goods and services increase, so will an organization’s exposure to risk. Those making risk management practices a priority will be in a much better position as the economy recovers and jobs are added.
As Director of Risk Management Services for Seitlin, I am often asked what risk management efforts are most important to focus on. The answer depends in part on your industry, but the following highlights my Top 10 Risk Management Practices:
Hiring and Employment Practices
According to the Equal Employment Opportunity Commission, charges of disability discrimination rose by about 17 percent to 25,165 claims in 2010. Overall, the agency received nearly 100,000 claims during the year, a seven percent increase and the highest number in its 45-year history.
The number of layoffs in the last few years has contributed to a historic number of employment related claims as well as increases in the number and duration of workers’ compensation claims. As new jobs are created, it is critical to have clear hiring practices to ensure hiring the right person for the position.
Sexual Harassment Policy & Training
Employees have are protected under federal law against workplace sexual harassment. Federal law remedies for workplace discrimination are based on Title VII of the Civil Rights Act of 1964, which applies to employers with fifteen or more employees. In addition, 3 states, CA, CT and ME, have also implemented mandatory sexual harassment training.
Having a written policy and training in place is not only good business practice but vital in defending these types of claims. The policy should clearly communicate to employees that sexual harassment will not be tolerated and provide a process for the company to learn about unacceptable conduct.
Fleet Safety, Including Cell and Texting Policy
Increased focus on reducing roadway injuries and fatalities has led to increased regulations for the use of cell phones and PDA’s. Eight states now have mandatory cell phone use regulations with more expected to follow.
If you do not have a fleet policy or your current policy does not address the use of cell phones and/or PDA’s, you should update your policy to include this language. Remember, this includes employees operating company owned vehicles as well as their own personal vehicles on company business.
Business Continuity & Disaster Plan
Disaster and Business Continuity planning are processes that help organizations prepare for disruptive events. In Florida, we tend to think of disaster plans in connection with hurricanes. However, business continuity could also be impacted by a fire, a pandemic event, or even simply a power outage caused by a backhoe in the parking lot. Statistics show that a business without an all-hazards Business Continuity plan has less than a 10% survival rate after a disaster.
Workplace Safety & Health Program
Workplace Safety is more than compliance with regulations. According to the Department of Labor, each dollar invested by an employer in a health and safety plan can save $4 to $6. An effective safety program not only reduces workers compensation costs, it also reduces the cost of productivity and maximizes valuable resources.
Contract Management
Understanding and managing contract risk is important for companies and senior employees. Managing contracts effectively produces bottom line benefits and gives your business a competitive advantage. Failing to understand and manage risk-related items in a contract can result in lost opportunities and costly disputes.
Cyber Security
If your employees use a computer to conduct business, your company relies on email or the internet to communicate internally or with customers, or you utilize a website to conduct business, you have cyber exposure.
Aside from the costs related to cyber attacks, an organization must consider current and emerging state and federal regulatory requirements. Even if you outsource the IT function, you must have a process and plan in place to protect your business and ensure regulatory compliance.
Social Media Policy
Two-thirds of the world’s internet population visit social networking or blogging sites, accounting for almost 10% of all internet time, according to a new Nielsen report “Global Faces and Networked Places.”
Failure to recognize exposures related to social media can be costly, ranging from trade secret exposures to employment practices liability. Companies can no longer avoid the issue, having a social media policy in place is essential. Companies should have rules about how employees can use social media and implement an appropriate compliance policy.
Employee Fraud Prevention
The 2010 Association of Certified Fraud Examiners (ACFE) report on the state of insider fraud and theft points out that “while stealing company resources (asset fraud) accounted for 90% of last year's cases, financial fraud -- 5% of incidents -- was responsible for far greater losses." The result is that, on average, companies lost 5% of their 2009 revenue to employee fraud of one sort or another.
By implementing strong internal controls, an organization can minimize the opportunity for employee theft, reducing their exposure to these types of losses.
Training, Training and more Training
Having a policy in place only gets you so far. It is important for organizations to implement proactive training programs related to employee’s responsibilities at work and behind the wheel. Online training and webinar technology make training employees easier and more cost efficient than ever.
If you have these Top 10 Risk Management programs in place, great! If you do not, I recommend choosing one or two that represent the greatest exposure for your organization and then working with resources available to you through your agent, broker, insurance carriers, industry specialty groups or legal counsel to get a plan in place.
Seitlin routinely assists clients in managing their risks and implementing risk management and risk reduction strategies. We also provide clients with online tools to support these efforts through Seitlin 360˚ Online, including online tools to assist with certificate of insurance tracking, online training, automated OSHA logs and more. If you need help implementing a Top 10 Management Practice, contact us for help.
For more information, please contact a Seitlin Property & Casualty Insurance Professional.
Sources:
“AP survey: Outlook for 2011 economy is brightening” by JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer – Thu Jan 27,
“Job bias claims set new record on disability surge” 01/11/11 by SAM HANANEL, Associated Press. http://www.dailyfinance.com/article/job-bias-claims-set-new-record-on/1504728/
“Cell Phone and Texting Laws” January 2011 http://www.ghsa.org/html/stateinfo/laws/cellphone_laws.html
“Avoiding Business Closed Your ABCs of Keeping your Business Running During a Disaster” written on August 13, 2009 by Ted Kozenko
“Return on Investment for Employee Safety Programs” By Cadence Michaels, eHow Contributor updated: January 11, 2011
“Social Networking’s New Global Footprint”, March 9, 2009 http://blog.nielsen.com/nielsenwire/global/social-networking-new-global-footprint
