Public Risk January 2010

Published by the Public Risk Management Association

www.primacentral.org

January 2010

Locks or Lunches

The School Security Dilemma The New Gold Standard:

An Overview of ISO 31000:2009 “Will You Still Need Me When I’m Sixty-Four?”

Managing the Risks of an Aging Workforce

The Certified School Risk Manager Designation

A Professional Statement.

The Certified School Risk Managers Program (CSRM) is a career-building, five-part designation program for risk managers and others who specialize in school risks. Taught by the field’s top practitioners and leaders, the five intensive CSRM courses guide participants through the risk management process, emphasizing practice over theory.

To earn the prestigious CSRM designation, participants must successfully complete all five courses and examinations within three years. To maintain the designation, each CSRM updates annually with additional continuing education courses offered by The National Alliance for Insurance Education & Research.

The CSRM designation is a statement of professionalism whereby school risk managers demonstrate that they are dedicated risk management professionals with practical solutions to exposures in the school environment. Learn more about becoming a Certified School Risk Manager at www.TheNationalAlliance.com.

XXX ĉF/BUJPOBM"MMJBODF DPN r

Volume 26, No. 1 | January 2010 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

Executive Director Lisa Lopinsky, CAE

Contents

President Ron Hayes Risk Manager Calcasieu Parish School Board Lake Charles, LA Past President Sarah Perry, ARM-P Risk Manager City of Columbia Columbia, MO

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6 Locks or Lunches:

By Steven E. Haynes, ARM

Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA

12 The New Gold Standard:

John J. Nacht, ARM Risk Management Program Administrator State of Washington, Employment Security Dept.

Olympia, WA

An Overview of ISO 31000:2009

By Dorothy Gjerdrum, ARM-P

Dave Parker, ARM-P Risk Manager Pima County Sheriff’s Department Tucson, AZ

16 “Will You Still Need Me When I’m Sixty-Four?”

Marilyn Rivers, CPCU, ARM, AIC Risk and Safety Manager City of Saratoga Springs Saratoga Springs, NY

Managing the Risks of an Aging Workforce

Editor Jennifer Ackerman Manager of Communications 703.253.1267 • jackerman@primacentral.org

By Eva LaBonte and Vic Nolan

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4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

Directors Dan Hurley, ARM-P, CSP Sr. Director, Risk Management & Safety Norfolk Public Schools Chesapeake, VA Mary Sue Linville, ALCM, ARM-P Director of Risk Management and Operations Washington Schools Risk Mgt. Pool Tukwila, WA

The School Security Dilemma

In Every Issue

President-Elect Laura Peterson, JD, MPA State Risk Manager/Agency General Counsel State of Nebraska Lincoln, NE

Advertising Donna Stigler AHI 888.814.0022 • donna@ahi-services.com

Public Risk (ISSN 0891-7183) is published 10 times per year by the Public Risk Management Association, 500 Montgomery Street, #750, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year.

Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine. Periodical postage paid at Alexandria, VA, and additional mailing offices.

POSTMASTER: Send address changes to PRIMA, 500 Montgomery Street, #750, Alexandria, VA 22314.

Copyright 2010 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

January 2010 | Public Risk

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Public Risk Management Association

Your

Risk Management Journey Begins Here

Are you taking advantage of all that PRIMA has to offer?

Professional Development

Networking

• PRIMA Annual Conference • Online education opportunities including PRIMA’s Webinar Series and the industry’s only Associate in Risk Management and Risk Management for Public Entities online tutorials.

• PRIMA Institute: The industry’s premier risk management four-day training program for professionals new to the field.

• Leadership Opportunities: Get Involved! Join a committee, task force or even become a director on PRIMA’s board and provide input in what PRIMA does and how we do it.

• PRIMA Chapters: Make contacts on your local level, share what you know, and learn from experts and innovators in meetings, workshops, and seminars in your area.

• Online Membership Directory: A members-only resource where you can locate and contact PRIMA members in various risk management fields.

Information Resources • PRIMA Cybrary • PRIMA Job Bank • PRIMAtalk: Member-only listserv that provides access to more than 500 industry specialists.

• RiskWatch: Weekly e-news service for public risk managers

AND MUCH MORE!!!!

For more information on any of PRIMA’s member benefits, visit our Web site: www.primacentral.org.

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Public Risk | January 2010

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Message from PRIMA President Ron Hayes

The Year Ahead

I

would like to wish each of you the very best as 2010 begins. I find myself thinking back to the concern as 2000 approached and Y2K threatened nations around the world. Voices were raised; millions were spent; extensive plans were prepared; and media coverage worldwide focused on the approach of 2000 and the potential for the calamity of Y2K. Today, we are a decade beyond Y2K without having suffered many of the consequences predicted 10 years ago. None of us can accurately predict what the next 10 years will bring, but all of us who are risk managers must plan and prepare for whatever circumstances present themselves during this approaching decade.

Have you developed a plan for future risks coming at your entity? Are you considering the impact of potential changes in employee benefits, group health care, retirement benefits and various categories impacting your employees and their families as the economic environment changes in today’s world?

The risk practitioner of today must be constantly alert to the challenges of the future as well as lessons learned from events in the past. Neglecting new directions being discussed in our profession may leave today’s risk manager unprepared for tomorrow. PRIMA strives to provide its membership with educational opportunities and tools with which they can better plan for their entity’s future course through the minefields of risk that lie ahead.

As the risk manager of a public school district, I am concerned with security issues that may surface on our numerous campuses. In 2005, I was made aware of the U.S. Department of Education Emergency Response and Crisis Management (ERCM) Grant availability to local school districts through the Department of Education’s Office of Safe and Drug-Free Schools; funding was being allocated for worthy applicants interested in improving school security.

After going through the application process, our school district was awarded an ERCM grant in excess of $450,000 beginning October 1, 2005 to September 30, 2007. The grant was extended due to Hurricane Rita impacting our parish.

Upon completion of the grant period, our parish had in place updated aerial photos of all sites, which were distributed to law enforcement. All public and parochial sites had emergency radios compatible with emergency responders throughout the district. A communication service where parents could be notified regarding any emergency within minutes was put in place. All public and parochial sites were provided enhanced medical supplies. Sites updated lists of emergency responders and crisis response teams who reviewed data to determine risk, protective factors and prevention strategies.

Extensive training sessions were conducted featuring topics including terrorism risk assessment; critical incident stress debriefing; grief/trauma training; weapons of mass destruction recognition/assessment training; and first aid and CPR certification training.

More than 1,000 employees received training provided through grant funding. Formal critical incident teams were developed at each site. Improved plans based on best practices, development of protocols for various hazards and improved communication are some of this grant’s significant accomplishments.

The risk practitioner of today must be constantly alert to the challenges of the future as well as lessons learned from events in the past … PRIMA strives to provide its membership with educational opportunities and tools

I would suggest that anyone wishing to pursue grant funding for school security read, “Locks or Lunches: The School Security Dilemma” by Steven Haynes in this edition of Public Risk. Haynes outlines funding opportunities, funding parameters, start up procedures and downsides to receiving grants. This article features relevant information that school risk managers can use when seeking possible funding sources for school security improvement.

with which they can better plan for their entity’s future course through the minefields of risk that lie ahead.

I hope that you find a useful tool in this article to help insure that your entity may indeed have a Happy New Year.

Sincerely,

Ron Hayes 2009–2010 PRIMA President Risk Manager, Calcasieu (LA) Parish School Board

January 2010 | Public Risk

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News Briefs

News

Briefs You Don’t Want to Be Downwind More than eight years after the attacks of Sept. 11, 2001, the House of Representatives has passed a bill to shore up security at this country’s chemical plants, reports the New York Times. The requirements are reasonable, vital and long overdue. If terrorists were to attack a chemical plant near an American city or large town, they could unleash a toxic cloud that could endanger the lives of hundreds of thousands.

While the House was considering the issue, the Clorox Company announced that it was choosing to convert all of its factories that use chlorine gas—a lethal substance—to safer chemical processes. Greenpeace estimates that that will eliminate the risk to the more than 13 million Americans who live in range of Clorox’s facilities. The switch will also greatly reduce the threat to many more Americans who live near the rail lines used to transport the chlorine to Clorox’s plants—another point of high vulnerability to terrorist attack or accident.

Top L.A. County Judge Warns of Consequences of Budget Constraints Los Angeles County Superior Court Presiding Judge Charles “Tim” McCoy is warning of dire things to come should the state’s budget crunch continue to take a toll on the nation’s largest trial court system, reports the Los Angeles Times.

In recent weeks he has met with attorneys and court officials around the county, telling them the once-a-month closures and furloughs that began in July may be just the tip of the iceberg. Over the next four years, he says, as many as 1,800 jobs may be eliminated and up to 180 courtrooms may have to be permanently shuttered. The court’s capacity may be drastically reduced, tripling or quadrupling the pace of some cases moving through the system.

This year, the state’s trial courts have seen their funds slashed by more than $200 million amid Sacramento’s hacking its way to a balanced budget. Los Angeles County, which has a quarter to a third of the state’s trial courts, bore a chunk of the cuts.

If this year’s cuts continue for the next four years, McCoy said he may be forced to cut staff and close courtrooms across family, juvenile, civil and criminal courts to make ends meet. He said he is looking at plans to shut down as many as 14 of the county’s 43 family law courtrooms and 14 of 49 juvenile courtrooms. The cuts may lead to eight courthouses no longer handling family law and two courthouses closing their juvenile operations.

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Public Risk | January 2010

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Insurers Refuse to Pay City of Modesto A gender discrimination lawsuit the city settled more than two years ago is still giving Modesto, CA, legal troubles—and costing taxpayers money, reports the Modesto Bee. The city is suing its insurance carriers because they’ve refused to cover the cost of a $3.25 million settlement the city paid in 2007. The settlement went to three city employees who sued the city in 2005. They claimed they were denied promotions and punished for raising concerns about their pay and work environments.

The city paid the settlement in 2007, and expected insurance carriers to cover part of the costs. The city was responsible for the first $1 million; insurance was supposed to pay for the rest.

America’s Safest Cities Forbes has released its picks for safest cities in the United States. Minneapolis tops its list of America’s safest cities, and not just for its crime rate. In ranking the cities on our list, Forbes looked at workplace fatalities, traffic-related deaths and natural disaster risk; the City of Lakes ranked in the top 10 of all four categories.

It’s also one of America’s best places to live cheaply and offers easy access to some of the most scenic drives in the country. Milwaukee, Portland, (OR), Boston and Seattle rounded out the top five.

January 2010 | Public Risk

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Locks or Lunches: The School Security Dilemma

Locks or Lunches:

The School Security Dilemma

By Steven E. Haynes, ARM Public school and higher education administrators have faced a huge dilemma for years: having to choose between using their limited and ever-decreasing budgets to fund basic educational needs for their student and faculty or using these same funding sources to improve security at their campuses. The threat from both conventional and unconventional sources of violence and crime has dramatically increased over the last 10 years.

Some more progressive school systems have applied for and received Emergency Planning grants from the Department of Education’s (DOE) Office of Safe and Drug-Free Schools.

Unfortunately, this funding source becomes smaller each year and it is typical that less than 25 school districts receive funding through this grant in any one year. Considering there are approximately 14,200 public school districts composed of more than 140,800 individual school facilities plus another approximately 6,540 colleges and universities in the U.S., the number of grants and funding is woefully inadequate to address the existing needs. There are additional specialized federal grants available from the Department of Justice (DOJ) such as COPS grants and special grants to address gang-related crime prevention through both DOJ and DOE. These grants are extremely competitive and few are awarded each year.

There is, however, a source of grants that is available to provide funding to public schools, colleges and universities that is being underutilized and is not well known. This article will identify these grant opportunities and provide the basic information needed to apply for and win these additional sources for funding security improvements for your school district.

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Public Risk | January 2010

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The majority of grants to improve an entity’s emergency response capability will require support and endorsement by other outside partners such as local law enforcement, county or parish management and health care facilities. It is imperative to begin working with these partners well in advance of planning your application submission since the application deadline for certain grants is only several weeks.

Why Haven’t You Heard About These Grants Before?

The U.S. Department of Homeland Security (DHS) is awarded several billion dollars each year by Congress to fund security improvements in our nation’s critical infrastructure and other special interest areas. The 2009 budget to fund Preparedness Grants was approximately $1.8 billion. There has been some confusion at DHS and state level sub-grantees responsible for awarding funding at a local level over whether or not schools, colleges and universities are eligible for this funding. The confusion centered over the definition of an eligible public entity as defined by the Stafford Act, the federal law that addresses emergency response grants and FEMA. Public educational entities are not specifically mentioned as being eligible for this Preparedness Grant funding. After many years, DHS has acknowledged the availability of this funding source for both public school systems and public colleges and universities. There is also a possibility that non-profit private colleges and universities could be awarded funding through this grant program. Public educational entities are eligible for grant awards under three of the DHS Preparedness Programs: the State Homeland Security Grant Program, the Urban Area Security Initiative and the Citizen Corps Program. All three of these grants are funded to each state that applies, usually in July of each fiscal year, and are administered by a designated State Administrative Agency (SAA). The SAA role is generally delegated to the Governor’s Office of Homeland Security and Emergency Management in each state. Each SAA promulgates their own eligibility criteria, application process and controls the sub-grantee awards.

Can I Use These Grants to Improve My Security?

Department of Homeland Security Preparedness Grants may be used for a wide range of security related improvements including physical security equipment, plan development, conducting exercises and training

personnel. These grants can also include the costs of hiring temporary employees or substitute teachers to replace your own employees while they attend training classes. DHS publishes a catalog of equipment and other eligible items, titled Authorized Equipment Listing, which should be used to determine what items may be purchased with the grant money. It is quite extensive and is organized by categories making it easier to use.

Examples of eligible items include: • Closed circuit television systems • Classroom emergency response equipment and kits • Outside trainers and communications equipment It is important to review the DHS Special Area of Interest listed in the grant to determine the focus that is intended for the grants for any given year. The focus area for Fiscal Year 2009 grants was to increase the response of entities to Weapons of Mass Destruction and Improvised Explosive Devices. Though the equipment purchased using the grant is intended to support anti-terrorism efforts, the majority of the equipment will be of dual use, meaning a CCTV system that is purchased to improve surveillance capabilities of a site to prevent terrorism will also capture non-terrorist acts of violence and serve as a deterrent to crime in general.

How Do I Get Started?

All federal grants are accessible by a centralized government-run Web site: Grants.gov. You can view and search for grant opportunities plus apply for grants you are interested in online using the portal. It is highly suggested you use a professional grant writer, either one employed by your entity or an outside source, in order to increase your chances of being awarded a grant. Each of the grants has specific qualification criteria that must be met.

January 2010 | Public Risk

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Locks or Lunches: The School Security Dilemma

Insiders Secrets • Understand local and national threats • Begin background research early • Conduct a security assessment and vulnerability analysis • Review existing emergency planning documents for compliance • Provide staff training in NIMS • Ensure your emergency plan is consistent with state/local emergency plans • Involve multiple disciplines and partners in early stages • Use Authorized Equipment List to develop grant budget • Establish definable and measurable goals and benchmarks for the grant • Plan for post-award grant administration • Choose the right grant for you

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The DHS Preparedness Grants are generally easier to apply for with less paperwork required and extended application deadlines for submission. The specific application requirements and decision process varies from state to state since the local SAA designated by the governor is responsible for administering the funding to eligible sub-grantee’s such as schools and colleges.

The majority of grants to improve an entity’s emergency response capability will require support and endorsement by other outside partners such as local law enforcement, county or parish management and health care facilities.

It is imperative to begin working with these partners well in advance of planning your application submission since the application deadline for certain grants is only several weeks. It will be difficult to attempt to coordinate with these outside partners and obtain their input and endorsement unless this is done in advance.

Insider Secrets to Winning Grant Funding There are a few things you can do to significantly improve your chances of being awarded a federal- or state-level grant to improve your security environment. The first and possibly most important is to conduct a very thorough security assessment and threat and vulnerability analysis. These are designed to determine what you need to protect, against who or what and will identify areas of weakness in facilities, equipment, planning and training. The recommendations that may be generated from the assessment can also be used to establish a need for the security grant and an outline of what should be funded.

For example, if an area of concern identified by the security assessment is uncontrolled visitor access to your campuses, this could serve as a justification for requesting funding for equipment to improve your identification and control of visitors. There is a tremendous amount of new technology available in this area including selfservice electronic kiosks that require a visitor to swipe a

Public Risk | January 2010

driver’s license or state-issued photo identification card, capture the information into a database and then print a temporary photo ID card for the visitor to wear while on campus. Some newer versions of this technology have a feature that causes the temporary visitor badge to void itself after a certain time frame to prevent reuse. This could be an allowable use of grant funding due to its use as anti-terrorism technology, which will enhance the tracking of all persons visiting a campus.

It is highly recommended that you consider using an outside professional security consultant to conduct the assessment and vulnerability analysis. Several states have developed do-it-yourself security assessments for schools and colleges to use that consist of a simple checklist that is usually completed by a school resource officer or a member of the facilities management staff. Unless the person who completes the assessment has received formal training and has significant experience in physical security, anti-terrorism and threat analysis, the value of the data obtained by the assessment is likely limited and could actually increase a school or college’s liability by failing to recognize an unsafe security condition or vulnerability. In fact, prominent legal firms have expressed an opinion that using untrained and uncredentialed individuals to conduct a security assessment could increase your possible legal liability in the unfortunate event of a serious security incident by implying a false sense of security and a failure of management to exercise due diligence. The costs associated with the use of an outside consultant is an allowable expense listed in the DHS Authorized Equipment Listing and is fully reimbursable to the school district or college when awarded a grant. Further, an outside consultant can work with your local grant coordinator to develop the grant proposal by supplying the appropriate anti-terrorism requirements and specialized technical response to the security assessment recommendations that will separate your grant application from dozens of others being submitted.

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It is highly recommended that you consider using an outside professional security consultant to conduct the assessment and vulnerability analysis. Several states have developed do-it-yourself security assessments for schools and colleges to use which consist of a simple checklist that is usually completed by a school resource officer or a member of the facilities management staff.

Another important aspect to consider implementing, prior to applying for a grant, is the development of a National Incident Management System (NIMS)-compliant all-hazards emergency management plan that meets the requirements of the recently implemented National Fire Protection Association (NFPA) 1600 Standard. In fact, several states require the grant seeker to have this document in place to even be eligible to submit an application for a grant. Experience has shown that using this systematic process to do the homework prior to applying for any one of several grants has consistently yielded a 50 to 65 percent award ratio for these security grants.

What’s the Downside?

As with most things in life there is always a downside. There are a few areas that you should be aware of prior to applying for a federal or state level security grant.

The first is the grants are awarded based on a peer review of your application only. He who tells the best story usually wins the grant award. This is, to some extent, a disadvantage since you must clearly communicate a large amount of information about your unique school district, college or university to a group of strangers who know nothing about your specific needs and circumstances. This is one of the reasons it is vitally important to approach the application process as a project that will require research, coordination with outside partners and a thorough knowledge of the local and national threat environment. This is imperative in being able to paint a mental picture that tells your story simply by reading the grant application.

ongoing maintenance or salary costs associated with the items funded. It is also important to carefully choose the grant program you wish to use. The DHS grant criteria allows the award of a single grant type to the same public entity only once and could possibly place you at the end of the line if applying for another different type of program grant. In other words, pick your grant carefully since you may only get one.

Public schools, colleges and universities have been neglected by both federal and state level departments responsible for security for a number of years. Only in recent months have our schools and institutions of higher education been recognized as being eligible to apply for the various DHS Preparedness Grant Programs administered by various SAAs. The value of the various grant funding levels vary but can range from $250,000 to $2.5 million. It’s time you are able spend your money on lunches and let someone else help pay for the locks!

Steven E. Haynes, ARM, is the president and managing director of Southern Specialized Risk Options, LLC.

Grants.gov • Single source for all federal grants • Searchable by agency, grant type or keyword • Used for making application for some grants • Must register to apply for grants • Registration process is onerous and lengthy so plan on it taking a few hours • Only have to register once though • Check site frequently since grant information is updated daily

Second, grants are awarded for a defined period of time, usually from 12 to 36 months. The grant may provide for the cost of purchasing such items as an electronic access control system, video surveillance system, or even the costs to staff a full-time position such as a security coordinator. However, once the grant award period has passed, the school or college will continue to have the

January 2010 | Public Risk

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The New Gold Standard: An Overview of ISO 31000:2009

The New Gold Standard:

An Overview of ISO 31000:2009

By Dorothy Gjerdrum, ARM-P

Published in November of 2009, ISO 31000 is the first international standard on the practice of risk management. The standard applies to any type or size organization in any country.

It is expected that this standard will be widely adopted as the norm for risk management practices. ISO 31000 is not intended to be a compliance standard, therefore its implementation is voluntary. Being a voluntary standard allows for more flexibility in implementation and it relaxes the timeframe for adoption, as well. The US Technical Advisory Group (US TAG), which reviewed and commented on the standard before its final publication, has approved ISO 31000:2009 as the standard for the practice of risk management in the United States.

The basis for ISO 31000 follows this trajectory:  All organizations exist to achieve their objectives;  Many internal and external factors affect those objectives, causing uncertainty about whether the organization will achieve its objectives;  The effect this uncertainty has on an organization’s objectives is “risk.”

The management of risk is therefore central to the livelihood and success of all organizations.

The standard is intended to apply to organizations of all types and sizes. The standard outlines the principles that make risk management effective, the framework in which risk management occurs and the process for managing risk.

The standard outlines a long list of the attributes of effective risk management, which includes improving corporate

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Public Risk | January 2010

governance, financial reporting and stakeholder trust.

When done effectively, the management of risk will raise awareness of the need to identify and treat risk throughout the organization and improve the identification of both opportunities and threats. It will improve controls as well as operational effectiveness and efficiency. The successful implementation of risk management helps organizations comply with relevant legal and regulatory requirements and international norms. The process of risk management establishes a reliable basis for decision making and planning, and will appropriately allocate and use resources for risk treatment. Some of the more traditional attributes of effective risk management are also included in the standard, including enhancing health and safety performance, environmental protection, improving loss prevention and incident management and minimizing losses. And from a wider organizational perspective, effective risk management will improve organizational learning and resilience.

The standard is intended to address a wide range of stakeholders, including those responsible for developing risk management policy (e.g., policy makers), ensuring that risk is effectively managed (as a whole or for a specific project or activity), evaluating whether risk is being managed effectively (such as audit) and developers of standards and codes of practice.

The standard states that it can be used by any public, private or community enterprise, association, group or individual.

It is not intended to be specific to any industry or sector.

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Key Definitions from ISO 31000 Risk is the effect of uncertainty on objectives.

Risk management is defined as the coordinated activities to direct and control an organization with regard to risk.

The risk management framework is the set of components that provide the foundation and organizational structure for designing, implementing, monitoring, reviewing and continually improving risk management throughout the organization.

Risk appetite describes the amount and type of risk that an organization is prepared to pursue, retain or take.

A risk owner is the person (or entity) with the accountability and authority to manage the risk.

A stakeholder is any person or organization that can affect, be affected by or perceive themselves to be affected by a decision or activity.

(Decision makers are also stakeholders.)

Risk assessment is accomplished in three steps: risk identification, risk analysis and risk evaluation.

Risk identification is defined as the process of finding, recognizing and describing risks.

Risk analysis includes describing the nature and level of risk.

Risk evaluation describes the process of comparing the results of risk analysis with risk criteria to determine whether the risk is acceptable or tolerable. Risk evaluation assists in the decision about risk treatment.

Risk treatment is the process to modify risk, such as avoiding risk, removing the risk source, changing the likelihood or consequence, sharing the risk, taking or increasing risk in order to pursue an opportunity or retaining the risk by informed choice.

Residual risk is defined as the risk remaining after risk treatment.

There are more definitions contained in the standard, and the explanatory notes are also helpful. Guide 73 includes additional definitions related to risk management that may be referenced in other ISO standards.

The Framework The standard recommends that organizations develop a framework so that the process for managing risk is fully integrated into the organization. That means that risk management is an active component in governance, strategy and planning, management, reporting processes, policies, values and culture. The framework provides for the integration of risk management, reporting and accountability. It is intended to be adapted to the particular needs and structure of each organization.

The component parts of the framework include establishing the mandate and commitment to risk management, designing the framework for managing risk (which includes understanding the organization’s internal and external context, establishing a risk management policy, integration of risk management into organizational processes, internal and external communication and reporting and allocation of appropriate resources), implementing the risk management process, monitoring and review of the process and continual improvement of the framework.

The Risk Management Process The core of the risk management process will sound familiar to you; it incorporates the five steps in the traditional risk management process: identify, analyze, select the best response, implement and monitor. Those steps are expanded some, but they are still central to the process. In addition

to the core steps of the process, there are two key functions that should happen continually throughout the risk management process:  Communication and Consultation needs to be built into the process and involve both internal and external stakeholders  Monitoring and Review assures that controls are effective, lessons are learned and that risks will be appropriately addressed and the organization will be resilient and ready for change.

Core steps of the risk management process: • Establish the context • Risk assessment: • Risk identification • Risk analysis • Risk evaluation • Risk treatment Establishing the context of the risk management process will vary according to the structure and the needs of the organization. It will include activities like setting goals and objectives for risk management, and defining the responsibilities, scope, depth and breadth of the process. This is a critically important step in the process because it will assure that the risk management approach is appropriate to the organization, its risks and objectives.

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The New Gold Standard: An Overview of ISO 31000:2009

How to Purchase ISO 31000:2009 ISO 31000:2009 was published, along with Guide 73: Definitions, on November 15, 2009. The cost is $110; it is available on line at www.asse.org or www. ansi.org. Another document that is closely related is the standard on the process of risk assessment (ISO 31010), currently being finalized by a separate ISO working group (and not yet published).

Background of ISO 31000 Creation ISO 31000:2009 was created by a working group that included technical advisors from 18 countries. In a series of six meetings over several years, the group revised the Australia/New Zealand risk management standard (AS/NZS 4360:2004). The United States participated in the review and adoption process through a Technical Advisory Group (TAG) that was sponsored by the American Society of Safety Engineers (ASSE), which was authorized by the American National Standards Institute (ANSI) to participate in the international working group. Kathy Peeling, risk management specialist for Anne Arundel Public Schools in Annapolis, MD represents PRIMA on the US TAG. Dorothy Gjerdrum serves as chair of the US TAG.

Risk assessment is the overall process of risk identification, analysis and evaluation. Identifying risk includes understanding the sources of risk, areas of impact, events and their causes and potential consequences. The goal is to create a comprehensive list of risks, including risks that may be associated with missed opportunities and risks out of the direct control of the organization. A comprehensive review allows a full consideration of potential effects of risk upon the organization.

The purpose of analyzing risk is to understand everything possible about risks, including the causes and sources, consequences and likelihood of occurrence. Existing controls and their effectiveness and efficiency are also taken into account.

Risk evaluation is the step that will help determine the need for treatment. Risk tolerance must be taken into consideration, along with legal, regulatory and other requirements.

The evaluation process will help you make the appropriate decision about whether and how to treat risks.

Risk treatment involves selecting one or more options for modifying risks and implementing those options. It is a cyclical process that assesses a risk treatment, determines whether the residual risk is at a tolerable level (and if not, which additional treatments need to be implemented) and assessing the effectiveness of treatments.

Conclusion For traditional risk managers in the U.S., it is important to remember that this new standard is intended to build upon what you already do well and expand your view about risk. For decades, we have been incredibly creative and forward-thinking about risk finance and risk transfer techniques. We have not been as forward-thinking about identifying a broad range of risks (beyond insurable risk, beyond hazard identification, beyond emergency planning or disaster preparedness) or addressing cumulative or crossover risks (such as IT or pandemic planning).

A real strength of this new approach is the identification of risk owners and the necessary widespread education about risk—both within inside and outside your organization. It increases accountability and strengthens communication. The link to business objectives (at all levels) strengthens both the relevance and the importance of risk management. Ultimately, it will make risk management central to the success of an organization, and an intimate part of key processes such as planning, management and governance. If you are ready to lead your organization’s approach to risk management to the next level, this standard should be your first investment and your guide.

Why is ISO 31000 relevant to public sector managers?

“ISO 31000 is a flexible, manageable and appropriate enterprise risk management framework to fit the wide array of public sector applications. It will provide consistency for organizations with a portfolio of diverse operations such as ports, public utilities, law enforcement, etc. The carrot of better credit ratings for agencies going to the capital markets for public finance solutions provides a golden opportunity for risk managers to offer a truly relevant enterprise-wide risk management program, and one that has a better chance of success.”

Matt Hansen, Director Risk Management Division City & County of San Francisco

“ISO 31000 provides guidance to public sector managers to effectively manage their organizational risks in a coordinated and strategic manner. An enterprise risk management framework promotes an environment where risk awareness is part of the organization’s culture. Traditionally, most public sector entities have managed risks from a reactive standpoint. As they move toward taking a proactive stance to systematically manage their risks, they are able to better prepare themselves by understanding why certain outcomes occur and to avoid triggering causes. This in turn promotes better usage of organizational resources. Enterprise risk management is a continuous cycle that provides long-term value to a public entity.”

Nancy Hom, Director Assurance and Internal Controls San Francisco Public Utilities Commission

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Public Risk | January 2010

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RISK MANAGEMENT:

It’s Quite the Ride

PRI Conference MA’s 31st Annual June 6 – 9, 2010 | Orlando, FL For more information, visit www.primacentral.org.

Calendar of Events The Public Risk Management Association (PRIMA) hosts or sponsors a wide variety of educational programs for public risk practitioners. These meetings and events provide an optimum forum for public risk professionals to acquire new knowledge or skills, exchange ideas and expand peer networks.

PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

Webinars 2010 January 20 Risk Management 101 February 24 Wrong(ed) and Right(s)—Recent Trends Related to Wrongful Conviction and Government Liability April 21 The Anatomy of a Lawsuit May 19 Public Sector HR Basics September 15 Key Issues in Loss Mitigation— Is Your Organization Prepared to Respond?

October 13 Protecting our Children: Keeping our Communities and Schools Safe November 17 Winning Strategies for Contractual Risk Transfer

PRIMA Annual Conferences June 6–9, 2010 PRIMA 2010 Annual Conference Orlando, FL Orlando World Center Marriott June 5–8, 2011 PRIMA 2011 Annual Conference Portland, OR Portland Convention Center

Registration opens January 2010!

June 3–6, 2012 PRIMA 2012 Annual Conference Nashville, TN Opryland Hotel

January 2010 | Public Risk

15

Managing the Risks of an Aging Workforce

“Will You Still Need Me When I’m Sixty-Four?”

Managing the Risks of an Aging Workforce

By Eva LaBonte and Vic Nolan

Paul McCartney was 16 when he wrote the lyrics for the song, “When I’m Sixty-Four.” Today, many people heading for, or have recently reached, age 64, and risk managers need to examine how this aging population may affect their organizations.

Starting in 1946, there was a sharp increase in the birth rate in the United States that lasted until 1965. This period, known as the “Baby Boom,” includes 79 million Americans born between 1946 and 1964. After several years of lower birth rates, in 2007, birth rates reached the 1957 peak once again. These statistics have set a dynamic in motion that impacts everything from health care to politics (figure 1). Many Boomers are finding they either want, or need to continue working. In the workplace, the issue of the aging workforce can present many risk related issues ranging from worker safety and health to a loss of institutional knowledge and labor shortages.

General Issues of an Aging Workforce The affects of the Baby Boom generation on the economy can be staggering: 64 million Baby Boomers are poised to retire in the next few years. Complicating this impending exodus is the related population trend. Between 2002 and 2012 the U.S. population over age 55 will have grown 49 percent while the population under age 55 will have only increased by 5 percent.

What Could This Mean for Your Organization?

If there are a large percentage of employees who are currently or soon will be eligible to retire, the organization could be facing a sudden loss of the leadership, knowledge, skills and talent that these employees provide and the organization depends upon. On the other hand, some older workers will continue working for a variety of reasons. People are living longer, and many Boomers do not view their lives in the same manner that previous generations have. While results may be different now due to the recent economic downturn, a 2008 survey found that 30 percent of employees over the age of 50 plan to continue working past age 62 because they feel they will have to, while 60 percent reported they plan to continue working because they will want to.

What is Old? When asked this question, most people quip, “Anyone older than me.” Most of the research around aging workforce issues use age 55 as the beginning of the classification of older workers.

Employers may find that that they will want or need to retain older workers to maintain staffing levels or retain the institu-

16

Public Risk | January 2010

tional knowledge and leadership skills that experienced workers possess. With fewer employees in the 25- to 45-year-old age bracket, organizations may find that they need to apply different advancement models than they may have used in the past.

One trend that employers may see with older workers is a request for reduced hours, shortened work weeks or differing hours of work in order to fulfill their personal needs. One tactic that organizations may find beneficial and attractive to their more mature workers is to establish formal mentoring programs. By changing the job duties of the experienced employees to focus on knowledge transfer rather than output, the organization can pass the knowledge along to less experienced employees. Regardless of the type of organization, keeping older employees healthy and productive will present some challenges, but if managed well, the investments will pay dividends for both employers and their employees.

Injury Prevention in an Aging Workforce The American Society of Safety Engineers (ASSE) recommends designing systems and processes that enable older workers to maximize productivity and reduce error rates and injuries. ASSE also cautions that there is no “One Size Fits All” solution and that organizations will need to develop organization-specific loss prevention measures.

ASSE recommendations include: • Improve illumination; add color contrast • Eliminate heavy lifting and long reaches

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F i g u r e 1 : B i r t h r at e s i n t h e U . S . b y y e a r 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000

Legend Current Workforce (18–85)

1,000,000

Baby Boomers

500,000

• Design work floors with smooth and solid decking while still allowing some cushioning • Reduce static standing time • Remove clutter • Utilize large video displays • Reduce noise levels

When Older Workers are Injured Older workers often present complicated claims as a result of a combined condition—part of the injury is work-related, while some of the issues are either degenerative in nature or arose from the natural aging process. When any employee reports an injury or files a workers’ compensation claim, it is essential that the organization follow the same procedures regardless of the employee’s age or tenure in the position.  Conduct an investigation to determine the root cause. There are two main reasons for investigating and finding the root cause for every incident that is reported to have occurred at work.

The first is to implement loss control measures so the same injury doesn’t happen again. The second reason to investigate each injury is to assist the physicians and workers’ compensation administrators in determining the compensability of the claim.  Establish a plan and utilize history. Most claims filed by older workers are at least partially compensable.

When a mature worker sustains an injury, consider what you know about that person and establish what that employee needs to successfully maneuver through the system, fully

2000

1990

1980

1970

1960

1950

Generation X

1940

0

recover and get back to work. By personalizing your communication style, the employee will feel valued which encourages him to want to return to regular work.  Explain the process. It is often stressful for an employee when she files a workers’ compensation claim, especially if there are concerns about a full recovery.

Taking 15 minutes to sit down with the injured employee and answer questions will pay big dividends. Providing information will reduce the employee’s anxiety and make him feel valued and respected, which will keep the employee emotionally connected to the organization.  Offer a return-to-work program. Bringing an injured worker back into the workplace in a light duty position benefits the employee and the entity. The longer a worker is away from the job, the more he may begin to feel disconnected from the organization. Since older workers will take longer to recover from illness and injures, a light duty program is even more important. Organizations can increase the injured employee’s chance of a quick recovery as well as save a substantial amount of money on time-loss benefits by finding a suitable modified duty assignment. Employers need to monitor the temporary light duty assignments closely, ensuring the injured employee is not being asked to work beyond her restrictions and is also not volunteering to perform work he is not medically cleared to do.  Play Good Cop/Bad Cop. If the injured employee has someone in the organization that delivers useful information and helps the employee through the process—a Good Cop—the worker will have less anxiety and feel valued. The Bad Cop is the person who delivers news the employee may

“The aging and retirement of the Baby Boomer generation is a dramatic demographic transformation for our country. According to the U.S. Census Bureau, by 2030, 19.7 percent of the population, or about 71.5 million Americans will be 65 or older, compared with just 12.4 percent in 2000.

The aging of the American people will affect many aspects of our society, from the healthcare system to financial markets, and has many implications for the U.S. labor market.

Employers rely on the skills and experience of this skilled labor pool, and as the population ages and more people retire, many industries could face worker and skill shortages.”

Report of the Taskforce on the Aging of the American Workforce—February 2008

January 2010 | Public Risk

17

Managing the Risks of an Aging Workforce not want to hear, such as claim denial. Separating these roles will allow the injured worker to understand that someone is looking out for their best interests.

When Older Employees Become Frequent Filers Most organizations have mature employees who begin to file at least one workers’ compensation claim each year over a span of several years. Once an employee begins to file multiple claims, the question to ask is, “What needs to change?” There are several reasons why older workers file multiple claims: • As jobs and technology evolves, are the mature workers properly trained to keep up with the changes? Workers of all ages should be kept up to date on required training and educated on new procedures or equipment.

• Is the employee still physically able to perform the essential functions of the job? The treating physician should have the physical requirements for the injured employee to assist in determining if the employee can return to regular work.

• A vast majority of employees that file claims believe that they were injured during work—but a select few will attempt to take advantage of the workers’ compensation system to address medical issues that are not work-related. While this is rare, it is imperative to be on the lookout for this situation.

Hurting at work is different than being hurt by work. As everyone grows older, physical changes can make tasks more challenging and what used to be easy can cause aches and pain, or even serious injury. It can be difficult for mature workers to understand that feeling sore at work is not the same as being injured during the scope and course of employment. Educating employees before they file a claim can save the organization the time and cost of investigating and denying claims.

Regardless of the type of organization, keeping older employees healthy and productive will present some challenges, but if managed well, the investments will pay dividends for both employers and their employees.

18

Every organization has to balance between compassion for an older worker and the fiduciary responsibility risk managers have to their entity. It is crucial to consider the potential costs for palliative care, disability awards and aggravation rights when accepting workers’ compensation claims. A five-minute talk with the doctor, which is possible under the workers’ compensation system where HIPAA legislation does not apply, can reveal that an employee has been suffering from degenerative disease, which is not a condition that arose in the scope and course of employment.

An Ounce of Prevention…

Utilizing loss prevention measures to reduce the frequency and severity of employee injuries is money well spent.

The indirect costs of injured workers can be as much as two to 17 times the direct costs. Beyond the medical and indemnity expenses are production downtime, expense to train another employee to perform the same work, internal claims management, lower employee morale, long-term

Public Risk | January 2010

productivity effects on the injured worker and higher workers’ compensation insurance rates. There are several loss prevention techniques that can greatly benefit older workers.  Career Development: Assist employees in developing a career path that will move them from physical jobs to more sedentary positions as they age. Moving up the organizational chart may be desirable, but career development can also result in a horizontal move across an organization. With a small amount of additional training, older workers can utilize their considerable knowledge to move into a position that is much less physically demanding.  Worksite Modification: As workers age, it is even more important to conduct regular ergonomic evaluations and job safety analyses to ensure workers are utilizing the proper safety equipment and procedures.

When new equipment or job modifications are introduced, be sure all employees are property trained.  Wellness Programs: A fully developed wellness program addresses physical, nutrition and mental health issues for aging workers. A wellness program is beneficial for both the employer and employees. Studies show that organizations can see a long-term return on investment ranging from $2.50 to more than $5 for every dollar spent on wellness.

Organizations can make a significant impact on the factors that influence employee wellness. While pieces of the wellness puzzle such as access to medical care and work environment play a role, the most crucial factor in any employee’s overall wellness is their own behavior and choices. Although organizations cannot control whether or not workers take care of themselves, employers can create a culture that values employee wellness. As older workers benefit from a healthier lifestyle, employers also reap the rewards through less sick leave usage, higher productivity, fewer injuries and faster recovery from injuries and illness.

The Bottom Line Regardless of the type of organization, the issue of an aging workforce can present many risk-related issues ranging from worker safety and health to a variety of labor-related risks such as loss of institutional knowledge and labor shortages.

While not all organizations will be impacted in the same way, entities that examine how the aging workforce may affect them will lessen the potential negative impacts.

Keeping older employees healthy and productive will present some challenges, but the investments will pay large dividends for both the organization and its employees.

Eva LaBonte, MS, ARM, is a risk and benefits analyst for Clean Water Services, Hillsboro, OR. Victor Nolan, CSP, ARM, is a risk and benefits manager for Clean Water Services, Hillsboro, OR.

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Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program underbudget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

Your Newest Member Benefit:

RISKWATCH RiskWatch is PRIMA’s new weekly e-news service that delivers handpicked, highquality news articles relating to the public risk management industry directly to your email inbox. In addition, RiskWatch will provide PRIMA members with valuable association-related news.

Distributed each Thursday, RiskWatch is an excellent opportunity for you to increase the value of your PRIMA membership and share valuable knowledge with your peers!

Want others in your entity—such as your senior management—to receive this new benefit of PRIMA membership? Subscribe up to two additional recipients in your entity by contacting Jessica Konrath at jkonrath@primacentral.org and provide the name, title and email address of your colleague(s).

January 2010 | Public Risk

19

Member Spotlight

PWC Makes a Difference

with a Slip, Trip and Fall Campaign Each month, Public Risk features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members.

To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

L

ike most public entities, Prince William County (VA) has its share of slip, trip and fall (STF) injuries.

In fact, STF injuries are one of the top three causes for frequency and severity of workers’ compensation claims.

In 2008, Prince William risk management staff created the Make a Difference Campaign to raise employee awareness and gain employee participation in identifying these STF hazards throughout the county.

“Since the first step in effective risk management is to identify the hazards that have a potential for loss, employees are in the best position to notice, report, and take corrective action for these types of hazards,” said Lori Gray, risk management division chief. “Therefore, by increasing employees’ awareness and involvement using brief e-learning training slides and a short, easy inspection checklist, employees were introduced to risk management concepts.”

The Make a Difference Campaign included several levels of participation with prizes awarded at each level, including the Individual Challenge, in which each employee completed both the e-learning training and the inspection checklist for an opportunity for a prize in a random drawing. The next tier of participation was the Department Challenge that was designed to encourage friendly competition among departments to earn a spot in the Safety Jeopardy event.

Each department strove to obtain the highest percentage of participation for their size category, based on number of employees, to qualify for the big event, Safety Jeopardy.

“The Safety Jeopardy was an unprecedented success and reinforced key safety concepts all while having fun,” said Gray. “Safety Jeopardy categories included STF, Driving, PWC’s Safety Briefs, Hodge Podge, and Safety at Home.”

Throughout the campaign, information was communicated to the workforce in several ways; through the Safety Brief

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Public Risk | January 2010

newsletter, news tabs on the intranet homepage, and the Risk Web intranet. Additionally, weekly status updates were provided at Management Staff, a weekly staff meeting consisting of top-level management representing all 31 Prince William County departments. This update was provided in a graphical representation of each department’s percentage as illustrated by a falling stick figure (slip-ometer): the more upright the figure became, the higher the department’s percentage, until the figure was fully upright once the department reached 100 percent.

The Make a Difference Challenge was extremely successful.

At the close of the challenge, 2,110 employees completed the e-learning training and submitted an inspection checklist— a 55 percent participation of the employee base; and there were six departments that achieved 100 percent completion.

The benefits of this program were enormous, said Gray. “The ability to have inspections conducted at all county facilities in 60 days was invaluable,” she said. “Furthermore, the innovative ability to educate and empower the employees by having them complete a simple training to learn the basics about slips, trips, and falls and then immediately apply that knowledge to their work area in order to improve the overall safety of their workplace was immeasurable.”

The success of this initiative was measured by the level of participation. “Not only was a minimal amount of money spent, it tackled a leading cause of loss, increased staff awareness for hazard identification, and paved the way for future initiatives that highlight risk management and loss control importance in balancing budgets,” said Gray.

PWC’s program was also honored with PRIMA’s Product Achievement award at its 2009 Annual Conference. For more information on this program, contact Lori Gray at lgray@pwcgov.org.

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