Public Risk October 2012

Published by the Public Risk Management Association

www.primacentral.org

OCTOBER 2012

HOW TO SAY YES:

Casting a Positive Light on Risk Management As the Crow Flies:

REDUCING THE RISK OF AIRCRAFT BIRD STRIKES WHAT IS YOUR LOSS RUN TRYING TO TELL YOU?

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Volume 28, No. 9 | October 2012 | www.primacentral.org

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

PRESIDENT Dan Hurley, CSP, ARM-P, MS Senior Director, Risk Management & Safety Norfolk Public Schools Norfolk, VA

CONTENTS

PAST PRESIDENT Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA PRESIDENT-ELECT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC

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6 How To Say Yes: CASTING A POSITIVE LIGHT ON RISK MANAGEMENT

By Victoria Nolan, ARM, CSP

11 As the Crow Flies: REDUCING THE RISK OF AIRCRAFT BIRD STRIKES

By Joseph G. Jarret

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL Dean Coughenour, ARM Risk Manager City of Goodyear Goodyear, AZ Michael Fann, ARM-P, MBA Director of Loss Control TML Risk Management Pool Brentwood, TN Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

16 WHAT IS YOUR LOSS RUN TRYING TO TELL YOU?

EXECUTIVE DIRECTOR Marshall W. Davies, Ph.D. EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

By Marcus Beverly, CPCU, AIC, ARM-P

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com

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Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, 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.

POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

IN EVERY ISSUE

Copyright 2012 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

OCTOBER 2012 | PUBLIC RISK

1

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Message from PRIMA President Dan Hurley

PRIMA MEMBERS, FRIENDS INDEED

T

here is an old proverb that often strikes me when I hear of someone reaching out to help another: “a friend in need is a friend indeed.” The origin of that phrase is thought to have come from Quintus Ennius, a writer from the Roman republic era. The phrase was originally scripted in Latin as ‘Amicu certus in re incerta cernitur.’ The translation is, ‘a sure friend is known when in difficulty.’ The modern phrasing allows for broad interpretation; however, knowing the original from Ennius clarifies the meaning that someone with a need provides an opportunity for deepening friendship through assisting that individual when the need arises.

This proverb came to mind again just after reading a PRIMAtalk request for sources of information and policy guidance and then reading the multitude of responses from associates providing not only their policies to share, but also offering sources of information. One such request came from Dexter Dews from Irving Texas, who received responses

from Dan Marran of Sparks, Nev.; Donna Dolinger-Capria of Lenexa, Kan.; Stephen Finley from Denver, Colo.; Amy Larson of Bloomington, Minn; Nicholas Sassic of Delton, Fla.; Nancy McKenzie of Fort Worth, Texas; and Jessica Konrath, education manager for PRIMA. PRIMAtalk features a wealth of contributors whose names are very familiar to all of us: Dave Parker, Keith L’Esperance, Marilyn Rivers, Mick McBride, Valerie Horton, Scott Kramer, Katie Durfree, Cynthia Stuart, Charlene Lamph, Bill Kostner, Laura Peterson, Matt Sleeth and Mary Sue Linville, to name just a few.

The strength of any organization quite often is based on the support of its membership; the strength of a professional membership is often framed by the contributions of its members. When I first attended a PRIMA conference, one of the first things that impressed me, aside from the outstanding sessions, was how colleagues, either attending or presenting a session, would go out of their way to share work experiences, offer guidance and offer a business card.

I feel very fortunate to belong to an organization with members that see a request for help as an opportunity to share their professional knowledge. Friends indeed.

Sincerely,

The strength of any organization quite often is based on the support of its membership; the strength of a professional membership is often framed by the contributions of its members…

I feel very fortunate to belong to an organization with members that see a request for help as an opportunity to share

Dan Hurley, CSP, ARM-P,MS 2012–2013 PRIMA President Senior Director, Risk Management and Safety Norfolk (VA) Public Schools

their professional knowledge.

OCTOBER 2012 | PUBLIC RISK

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News Briefs

NEWS

BRIEFS FACEBOOK TO CITIES: CHANGE YOUR PAGE NAME, OR ELSE

MIAMI STRIKES DEAL GIVING POLICE RAISES, CITY SAVINGS

Chances are you’ve visited city Facebook pages for information on local events, city services or elected officials. But how can you be sure you’ve landed on the city’s official page and not a look-a-like? With so many groups and organizations representing a municipality in some way, it can be confusing for a user to determine who can legitimately lay claim to the official city moniker.

The city of Miami and its police union reached preliminary agreement on a two-year contract that would give officers pay raises in 2014 while reining in pension costs for the cashstrapped city.

Because official city pages should have the word “government” incorporated into the page name, Facebook made a few recommendations for municipalities looking to satisfy this new requirement, using Denver as an example: City Government of Denver, City of Denver Government or Denver, Colorado Government.

Miami has been trying to close a $40 million hole in its $485 million operating budget by negotiating employee concessions. Earlier this summer, the Fraternal Order of Police had walked out of collective bargaining sessions, and threatened not to return to the table.

Facebook contends that users are likelier to engage with a page if its administrator is clearly represented, reports Government Technology. The “government” distinction differentiates a city’s official page from other closely affiliated organizations, like tourism offices or chambers of commerce. Similarly, elected officials who use Facebook must clearly identify their pages, with a distinction like City of Denver– Mayor’s Office.

“I believe it’s a step in the right direction,’’ Miami FOP Vice President Sgt. Javier Ortiz said after 11 hours of negotiations. “Ultimately, it will be up to the membership to decide.’’

Some government pages are opting to incorporate their tagline into their page name -- also an acceptable differentiator from look-a-like pages, according to Facebook. The northern European country of Latvia, for example, calls its page, “If You Like Latvia, Latvia Likes You.”

In addition, the department would be able to purchase new police cars next year. And officers would no longer have to pay a per-mile fee for their take-home cars.

Cities need not change the URLs for their Facebook pages, and the company assures cities that changing the page names won’t cause them to lose any fans or content. Facebook’s page name change form is available online.

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The tentative agreement, which would generate $11.5 million in savings for Miami, represents an important step forward in the city’s quest to balance its budget.

PUBLIC RISK | OCTOBER 2012

Some of the proposed contract language was still being reviewed by the city’s pension experts, but administrators were confident the agreements would hold.

If approved, the new contract would award a 3 percent raise to police department employees in April 2014. Officers haven’t gotten a pay increase since 2009. Their salaries were slashed the following year to balance the budget.

Most of the savings would come from an accounting change, which would alter the way the city’s pension obligation is calculated. Moreover, new employees would have to chip in more for their retirement plans. Although the contribution required from current employees would stand at 10 percent, new hires would have to contribute 13 percent.

Officers would also give up physicals and new uniforms in the second year of the contract, and the department would cut back on some fuel and overtime expenses.

The proposed contract must still be approved by union members and the city commission.

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HACKING OF UTAH HEALTH EXCHANGE RAISES SECURITY QUESTIONS With the news that the Utah health exchange—one of just two state-run online insurance marketplaces in operation— was recently hacked, states planning their own exchanges as prompted by the Affordable Care Act (ACA) might want to take a closer look at how they’ll handle cybersecurity.

The exchanges will hold digital records of a potential minefield of personal information—Social Security numbers, federal tax and income data and more. To gain approval from the U.S. Department of Health and Human Services (HHS) for their exchange, states must prove they meet five provisions related to privacy and security, reports Governing.com.

In short, the federal guidance for applications, which are due Nov. 16, requires that states provide “adequate safeguards” to protect personal information on the exchange. States must also secure a letter of acceptance from the Internal Revenue Service (IRS), affirming that they’re capable of protecting federal tax information, which will be used to determine eligibility for Medicaid and tax subsidies on the exchanges.

According to the exchange rules, “Personally identifiable information should be protected with reasonable operational, administrative, technical and physical safeguards to ensure its confidentiality, integrity and availability and to prevent unauthorized or inappropriate access, use, or disclosure.”

States must comply with the federal Health Insurance Portability and Accountability Act (HIPAA), as well as the standards set out in the ACA, but they do have significant leeway in how they meet those parameters.

For example, Rhode Island (which is viewed as a case study for exchange planning) will require the company building the digital infrastructure for its exchange to hire a security manager. The vendors must also purchase an insurance policy that would cover up to $1 million in damages for any security failure.

GALLUP: STATE, LOCAL GOVERNMENTS HIRING MOST SINCE ECONOMIC COLLAPSE Governing.com reports that for the first time since the start of the economic downturn, state and local governments created more jobs than they lost in August, according to a recent Gallup survey.

State and local government employees were more likely to report that their agencies were hiring instead of firing in August, according to the poll. Twenty-eight percent of state workers and 27 percent of local workers reported job creation, compared to 25 percent and 24 percent, respectively, reporting job losses.

That equals a +3 job creation index for both state and local governments. During the worst part of the recession, state and local governments reported a job creation index of -28 and -26, respectively.

Meanwhile, private-sector employment remained essentially unchanged with a +23 job creation index, and federal government employment dipped slightly to -12.

Overall, the U.S. economy had a job creation index of +19 in August—up from +17 in July. Coupled with +20 readings in June and April, the poll’s authors concluded that “the past six months reflect the best U.S. job market conditions workers have reported since the global economic collapse.”

Gallup conducted random telephone surveys of 17,603 U.S. adults to create the August index.

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5

HOW TO SAY YES:

CASTING A POSITIVE ON RISK MANAGEMENT

LIGHT

By Victoria Nolan, ARM, CSP

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any years of therapy. Sometimes that seems like the answer to the question: “How can a risk manager overcome the perception of others that the only answer a risk manager can give is ‘NO’?” Face it, as risk professionals charged with protecting and preserving the resources of our organizations, we can face an uphill battle when it comes to overcoming the perceptions of being nay-sayers. While there are always going to be times when our best advice will be considered a no answer, there are things we can do to show that we can and will say yes if we have the information and the opportunity to provide input that allows the organization to understand the risks involved, the perils creating the potential for failures and the prevention and protective measures that can be used to minimize the impacts of the risks.

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If risk management’s reputation is tarnished, there may be reluctance from others to share information or consult with risk management about the potential perils that would cause an initiative or project Risk professionals understand how reputational risks can impact an organization in terms of claims, lost revenue and a loss of productivity. But what about the risk manager’s or risk management department’s reputation? Is it important? You bet it is! Just as your organization needs to be concerned with the risks that can impact its reputation, the risk manager and the risk management department need to be concerned with its own reputational risk. If risk management’s reputation is tarnished, there may be reluctance from others to share information or consult with risk management about the potential perils that would cause an initiative or project to fail. In addition, if risk management does not have the needed information or is excluded from the decision-making process, there may be missed opportunities to initiate loss prevention measures or put adequate or cost-effective risk financing in place. Sometimes risk professionals find that the risk management function is viewed as an impediment to progress or a hurdle to overcome rather than a value-added function.

Of course before you can make adjustments to improve how the organization views the risk function, you need to assess and understand what that view is. While you can do some self-assessment based on observations and asking for feedback, you will most likely want some form of outside help to get an accurate picture of how the risk function is viewed in your organization. You can also use surveys to get some information, however they are limited to the questions asked, the choices of answers offered and the number of open-ended questions and comment opportunities within the survey. However you go about getting a view of how the risk function is viewed, you will need to be prepared to hear the answers. Keep in mind that it may not be so much about how you go about your job as it is about how people perceive the role of risk management.

One question to ask in a self-assessment is how would you (the risk manager) describe what risk management is to your organization? Another question is how would you

describe your role in the organization? The answers to these questions can provide some clues as to the reputation that the risk function has within an organization. Be objective as you think about the answers to these questions which can help you improve the reputation within your organization.

The next level of examination is to find out how your organization would describe risk management and the role that risk management plays within the organization. To do this, you may need to employ some help from outside your department in order to get a clearer picture of how others in the organization view the risk management function. Have the people doing this solicit candid feedback from others in the organization that have interactions with the risk management function. In a larger organization, you may need to employ other techniques to gain the needed insights including the use of surveys and possibly a consultant.

You may hear a variety of descriptions from those that provide feedback. This feedback will probably fall into one of three descriptive ranges: the good, the bad and the ugly.

Of course, what you want to hear are the good descriptions, things like, “They are problem solvers.” Or “They have saved my bacon on numerous occasions.” As you move to the less desirable answers, you may hear comments like, “You mean the insurance people?” or, “They are a necessary evil but we have to go through them to get things done.” These types of comments mean that you have some work to do so that people at least understand what it is that you bring to the organization. The downright ugly comments that you do not want to hear include things like, “They are an impediment to progress,” or, “We avoid them at all cost, we by-pass them whenever we can.” These descriptions mean you have a lot of work ahead of you if you want to change these perceptions and create a more positive view of risk management.

to fail. In addition, if risk management does not have the needed information or is excluded from the decision-making process, there may be missed opportunities to initiate loss prevention measures or put adequate or costeffective risk financing in place.

So where to start? Sometimes we find that communication is a key issue when it comes to improving perceptions. How many

OCTOBER 2012 | PUBLIC RISK

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Casting a Positive Light on Risk Management

THE THINKER Perfectionist

Follows Direction

Slow Paced

Works Well Alone

TASK FOCUS

Task Oriented

THE DIRECTOR Emphasis on Results

Little concern for relationships

Domineering

Does not share feelings

Results oriented

PASSIVE STYLE

ASSERTIVE STYLE THE RELATOR Warm & Friendly

Good Listener

Slow & Easy

Cooperative

AGGRESSIVE STYLE THE SOCIALIZER

Shares Feelings

RELATIONSHIP FOCUS

Relationships Important

Enthusiastic & Persuasive

Personal Worth

Risk Taker

Fast paced

FIGURE 1

times have you heard, “What we got here is failure to communicate.”? (As quoted from “Cool Hand Luke,” 1967). Two aspects of communication that can be useful to understand in ourselves and others are our communication style and our communication focus. Everyone has a default communication style that falls into one of three categories: aggressive, passive and assertive. The focus of our communication style then falls into either a task or relationship orientation thus creating four distinctive overall styles as shown in Figure 1. The more extreme the differences between the communication style and focus, the more likely there will be miscommunication and conflict, whereas the more both parties can communicate within the center or assertive zone the better the outcomes will be. Risk professionals should learn to recognize their own and other people’s default communication style and focus, which they can then use to adjust their communication style to help get their message out and understood.

While understanding communication styles and focus is useful, they are not the only aspects of communication we can leverage to improve the effectiveness of the risk function. Our organizations are made up of people and everyone in the organization brings a set of competencies, knowledge and personality that allows them to be productive and add economic value. These attributes create the human capital of our organization. Just as the risk professional can invest in loss prevention measures for a building, we can invest in our human capital that will improve our effectiveness as risk professionals and improve the perceptions within our organization. Employees want to work for a reputable organization that has integrity and offers a

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PUBLIC RISK | OCTOBER 2012

culture of high values and standards. Risk management can help create this within their organization through involving employees as part of the assessment, loss prevention or implementation process, communicating the vision and goals of the risk department, responding to issues and questions and demonstrating that we care about employees as individuals.

By engaging employees at all levels in the organization, risk professionals can motivate people to go beyond their job assignment. This helps to align everyone’s goals and aspirations with the organization’s goals and objectives.

Ways to engage employees and other managers include broadcasting good news, reporting the positive outcomes to everyone, congratulating those departments that meet or exceed their risk-related goals and showing everyone their efforts are appreciated. You can also clarify expectations including the expectations you have of others as well as those they have of risk management. Risk management is there for the good of the team; make sure you demonstrate that at every opportunity and show the organization that you trust and respect their input by engaging in meaningful dialogue. When possible, explain things in a manner that will allow others to reach their own conclusions, when this occurs they will become personally invested in the success of the outcomes.

This will also help build trust between risk management and the rest of the organization and help them understand that you are really there to help them succeed. The higher the

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level of trust, the more employees and managers will engage the risk group in the planning and review process, providing the opportunity to build additional positive synergy and elevating the risk process to an asset rather than a no-value-added function.

Of course, there may be times when it seems like the job you are doing is set up to create some level of mistrust and conflict. Take an investigation as an example; just the nature of asking questions about what went wrong can leave one feeling like they are interrogating an employee, leaving little room for a positive interaction. However, how you go about asking questions can make the process at lot less painful and create a positive sense about the purpose of the investigative process. When asking questions, avoid the why and what questions such as, “Why did you do that?” or “What is that supposed to mean?” These types of questions will cause people to shut down and create excuses and alibis rather than provide descriptions and explanations. Using leading questions such as, “Tell me more about that,” can help draw out the facts without the feel of an interrogation. You should also employ an open-ended invitation such as “What else can you tell me?” to draw out information you otherwise may not get.

For many interactions, you can also employ the use of acknowledgment to create positive communications. Acknowledgment is not the same as agreement; however it does provide a validation of an employee’s opinions, thoughts, ideas and values. It is a way that you can let someone know you have heard them and that you understand their concerns. Using phrases such as, “I hear what you are saying,” and “I can see your point of view,” can help you discuss contrary concepts and avoid hearing feedback such as, “Risk never listens to what we have to say,” or “Risk is completely closed-minded to our concerns or needs.” So while it may seem that at times you will need years of therapy to learn to deal with a perception that your vocabulary is limited to the word “No,” you can learn to overcome this and improve your reputation as a risk professional. By seeking feedback from those you work with and identifying the positive and not-so-positive perceptions the risk function has, you can make some adjustments that will help you demonstrate the value that you and the risk function bring to the organization, create a positive understanding and synergy at all levels of the organization and allow you to leverage the opportunities for your organization to achieve their strategic goals. And who knows, perhaps you will be able to say no once in a while!

Victoria Nolan, ARM, CSP, is the risk and benefits manager for Clean Water Services of Hillsboro. Ore.

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

WEBINARS 2012 • November 17: Generational Differences in the Workplace (session presented by Genesis Management and Insurance Services Corporation)

PRIMA ANNUAL CONFERENCES June 2–5, 2013 PRIMA 2013 Annual Conference Tampa, FL Tampa Convention Center June 8–11, 2014 PRIMA 2014 Annual Conference Long Beach, CA Long Beach Convention Center June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center

OTHER MEETINGS November 5–7, 2012 PRIMA Institute 2012 Charlotte, NC

UPCOMING CHAPTER MEETINGS Chapter meetings are listed on a space-available basis. For a complete list of PRIMA chapter meetings, visit www.primacentral.org. For information on a specific meeting, please contact the chapter directly.

Florida-Tampa Bay October 7–9 Idaho October 16 Kansas November 16 Tennessee November 14–16 Texas November 11–14 To have your chapter meeting listed on the PRIMA Web site, contact Bles Dones at bdones@primacentral.org.

OCTOBER 2012 | PUBLIC RISK

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AS THE CROW FLIES:

Reducing the Risk of AIRCRAFT BIRD STRIKES

By Joseph G. Jarret

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rior to the 9/11 terrorist attacks on the United States, municipal airports had the reputation of places from which it was a joy to fly. You could arrive at such places minutes before your flight was due to take off, your friends or family were

able to escort you to the departure gate, you could check your bag at the counter, keep your shoes on, bring liquids of various size and type on the aircraft and use the bathroom, even on short flights. Needless to say, the terrorist attacks of 9/11 induced a major overhaul of airport security resulting in a dramatic transformation in the way people travel by air. However, there is one airport risk that has remained constant over the years, namely, aircraft coming into contact with birds. This phenomenon poses unique challenges for today’s public risk manager.

OCTOBER 2012 | PUBLIC RISK

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Reducing the Risk of Aircraft Bird Strikes

To say that birds and aircraft don’t mix is indeed an understatement, especially when viewed from a risk management perspective. Any time you combine aircraft movements with the presence of many birds, a wide range of considerable aviation safety hazards ensue.

THE PROBLEM

RISK FACTORS

A bird strike is most commonly defined as a collision between a bird and an aircraft which is in flight or on a take-off or landing. To say that birds and aircraft don’t mix is indeed an understatement, especially when viewed from a risk management perspective. Any time you combine aircraft movements with the presence of many birds, a wide range of considerable aviation safety hazards ensue.

Statistics compiled by the Federal Aviation Administration (FAA) reveal that wildlife strikes have killed more than 229 people and destroyed over 210 aircraft since 1988, resulting in billions of dollars in loss annually. The number of strikes annually reported has increased more than five-fold from 1,793 in 1990 to 9,622 in 2011 (109,107 for 1990-2011).

Along with the obvious safety issues, bird strikes can impinge on the efficiency of airside operations and add to both airline and airport costs due to the requirement to close the affected runway after a reported strike and conduct an investigation. The most common bird strike scenarios include bird ingestion into aircraft engines, causing that engine to malfunction or cease working, and structural damage to aircraft windshields, wings and landing gear.

Risk factors that contribute to the constant threat of bird strikes include increasing populations of large birds in and around airports and increasing air traffic by quieter, turbofanpowered aircraft. Further, as a result of a marked increase in the number of flights worldwide, the incidence of bird strikes continues to increase exponentially. Unfortunately, most bird strikes go unreported, causing the FAA to embark on a bird strike education program that includes the development of software designed to make strike reporting easier, and the publication of 12,000 Report Wildlife Strikes awareness posters that were distributed to more than 4,000 airports, aviation flight schools and the aviation industry in 2011.2

From 1990 to 2011, 431 species of birds have been identified as struck by aircraft. Waterfowl, gulls, starlings, blackbirds, pigeons and raptors are the species groups of birds with the most damaging strikes. In the U.S., large migratory birds like Canada Geese and Snow Geese populations have risen significantly, posing increased risk to aircraft. Further, many populations of wildlife species commonly involved in strikes have increased markedly in the last few decades and, as a result of natural habitat have readily adapted to living in urban environments, including airports. Further, the majority (90 percent) of bird strikes occur at low altitudes, in close proximity to airport runways and during takeoff or landing.1

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PUBLIC RISK | OCTOBER 2012

RISK ASSESSMENT Although this scenario is slowly changing, few quantitative assessments of risks of bird strikes have been conducted by airport operators/managers. A risk assessment establishes the current risk of strikes, which can be used as a benchmark to focus wildlife control activities and to assess the effectiveness of the program in reducing bird strike risks. A quantitative risk assessment is invaluable in documenting the process and information used in assessing risk and allows the assessment to be repeated in the future in order to measure the change in risk over time in an objective and comparative manner. Such a risk assessment should involve a full site assessment and survey of the immediate and surrounding habitat and bird species nesting or feeding in close proximity to the airport. By better understanding the habits of bird species present, the risk manager is then in a position to determine the risk each bird species poses to aircraft that frequent runways and airspace.

POSSIBLE SOLUTIONS The risk manager should endeavor to create a practical airport bird strike program. An integral component

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to the success of an airport bird strike program is the education and training the risk manager provides to airport. The risk manager, relying upon resources provided by the FAA, can provide practical education and training involving bird identification, strike reporting, wildlife dispersal and control measures as well as effective ongoing monitoring and habitat management. For instance, the risk manager should inculcate in airport personnel the fact that most ornithologists (scientists who specialize in the branch of zoology that concerns the study of birds) seem to agree that habitat control and not bird control is the key to reducing the frequency and severity of bird strikes. Habitat control includes managing airport turf, forests, landfills, water sources, grazing and cropland.

attractiveness to birds. This most commonly translates into placing nets over large bodies of water and keeping grasses constantly mowed to reduce the possibility of roosting. Some airports employ sound equipment as a risk control device to scare birds; there are products on the market that cause problem birds to move away from airport runways and helipads, using electronic sounds, distress and alarm calls and predator attack cries. By implementing measures to discourage and disperse birds from critical departure and arrival points, while taking into account the broader surrounding habitat, impacting environmental factors and the unique mix of species present in each airport vicinity, the risk manager is in a unique position to minimize risk to aircraft operations, while establishing a safer operating environment.

The FAA, in its attempts to reduce aircraft bird strikes, recommends that airports make habitats less attractive to species that are the most dangerous in terms of aircraft collisions. This is accomplished by:

As a result of the FAA’s bird strike education program, we are experiencing a growing awareness of the importance of managing bird strike risks in and around airports. Often, it is to the risk manager that stakeholders and regulators will turn to determine what, if anything, the airport is doing to mitigate risks from bird strikes. By taking the time to conduct a risk assessment of the environment in and around the airport, identifying high-risk birds and crafting a bird strike program unique to one’s airport, the risk manager can go a long way in reducing the frequency and severity of this dangerous, costly risk.

• Studying which species use the airport property, how they behave in that environment, and why they are attracted; • Controlling bird species by restricting access to attractive features like storm water ponds; • Employing emerging technologies designed to harass and deter hazardous species; • Evaluating avian radar systems for detecting and tracking birds on or near airports; and • Employing aircraft-mounted alternating, pulse lights to enhance aircraft detection and deter strikes.

END NOTES: 1. Federal Aviation Administration National Wildlife Strike Data Base, Serial Report 17, 2011, Weller, John, National Wildlife Biologist, Office of Airport Safety and Standards, Federal Aviation Administration, 800 Independence Ave., SE, Washington, DC 20591 2. Id.

Joseph G. Jarret is an attorney, federal and state mediator and former public risk manager.

By educating key personnel as to the particular species of birds that frequent the airport and surrounding area, a plan can be implemented that reduces the airport’s

OCTOBER 2012 | PUBLIC RISK

13

PRIMA 2012

WEBINAR SERIES FREE FOR PRIMA MEMBERS! Looking for a cost-effective way to train your staff while avoiding the frustration of budget cuts and travel expenses? The Public Risk Management Association’s Webinar series is designed to help risk management professionals like you excel in the field without leaving your office.

WEDNESDAY, NOVEMBER 14 | 12 PM – 1:30 PM EST Making Generational Differences Work for You Presenters: Abe Kane, CPCU, ARM-P, ARe, Second Vice President, Public Entity Division Genesis - A Berkshire Hathaway Company Lauren Oliver, Second Vice President, Public Entity Division Genesis - A Berkshire Hathaway Company For the first time in history, four generations are represented in the workplace at once. These demographics present a significant challenge as miscommunication and conflict across these generations can negatively affect productivity, morale and even increase turnover. If left unaddressed, your division, department or entity’s long-term viability may be in question.

With this challenge comes a tremendous opportunity. If managed correctly, the diversity of viewpoints represented by the four generations can lay the groundwork for a dynamic and rewarding work experience for all.

However, in order to take advantage of this opportunity, one needs to spend some time learning a bit more about what drives each of these groups.

This session will outline what motivates each generation, detail some of the events that helped shape who they are and offer strategies for managing a multigenerational workforce.

During this Webinar, participants will: • Identify the four distinct generations currently populating the workforce, each of whom have different goals, values and sources of motivation.

• Develop actionable strategies on how the strengths of each generation can be used to create a truly dynamic workforce.

• Identify strategies to retain and recruit members of each generation.

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S E R I ES S P O N S O R :

Visit www.primacentral.org to register.

In 2012, PRIMA welcomes back one of its most popular and successful education programs:

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Each day concludes with case study presentations from experienced risk managers!

PI 12

PRIMA INSTITUTE 2012

THANKS TO OUR SPONSORS:

REGISTER TODAY! primacentral.org/institute

WHAT IS YOUR LOSS TRYING TO TELL YOU?

By Marcus Beverly, CPCU, AIC, ARM-P

RUN

Loss runs are a staple of every risk management program, as evidenced by the thousands of reports that are sent regularly by third-party administrators (TPAs), insurers and in-house claims management operations. And the information those reports contain has a ripple effect on an organization’s cost of risk, from the amount of their outstanding liabilities, to their budget for services, to the price they pay for coverage.

However, most of the information available is never used to analyze risk and take action that will lower the frequency and severity of claims—and, by extension—the total cost of risk. By encouraging you to “Grab, Pivot and Share It,” this article aims to improve your ability to analyze, understand and ultimately address the factors that drive your workers’ compensation and general liability claims.

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WHAT IS A LOSS RUN? When you ask for a “loss run,” there’s a wide variety of data you might receive. Be as specific as possible when you request a report, such as “all workers’ compensation claims, by date of loss between 7/1/2005 to 6/30/2012, including paid and reserved by payment type, as of 12/31/12.”

A report listing your claims “as of” a certain date is a snapshot in time and the numbers are used in whole or in part to create your entity’s Statement of Net Assets (Balance Sheet). “As of” reports are also used by actuaries to determine loss development factors, the Incurred But Not Reported (IBNR) portion of your ultimate losses and your outstanding liabilities.

A report listing changes in your claims “from/to” a particular date range is used in your entity’s Income Statement and to track open and closed claims during a period. Many loss runs are a combination of the two, showing activity during the last month and the total incurred for open claims as of the end of the month.

GRAB IT A report with a claim number and financial data may be good enough for your actuary or auditors, but for risk management purposes, you need to grab enough information to be able to analyze the nature, cause and extent of the claims, allocate the costs to the appropriate party and identify ways in which a particular type of claim can be prevented or mitigated. To do so, your report should include the claim type, claimant name, a description of the loss, its location, cause, damage or injury description and department and/or division from where the loss originated. For workers’ compensation claims, include additional data about the injured employee, including age, life expectancy, hire date, job title and days on temporary disability.

Most importantly, you want to “grab” your claims in an Excel file with the data for each claim or occurrence on one line of the report. This will enable you to perform the analysis needed to look for errors, patterns or outliers that deserve further scrutiny. Ask for all the data that is being captured to gauge its usefulness and quality.

PIVOT IT A powerful way to analyze and understand what your losses are trying to tell you is to use the pivot table function in Excel.

A pivot table allows you to quickly and easily sort and analyze your claim frequency and severity by fiscal year, cause of loss, department, type of injury, location of loss, or any other data point you grabbed from your loss run. Manipulating the data in a pivot table enables you to see gaps or errors in the data as well as patterns and outliers that deserve further investigation.

REPEATERS AND OUTLIERS On the pattern side of the analysis, you are looking for “repeaters,” which can include claimants, locations,

causes of loss, job titles, departments and types of injury.

For example, you may notice a number of accidents in a particular location and realize you need to investigate to determine whether or not there is a dangerous condition that could lead to more claims. Or you may notice your most common type of workers’ compensation claim is carpal tunnel due to cumulative stress and decide to focus your risk control efforts on ergonomics and training to prevent these types of injuries.

You also want to look for repeaters among your employees, who can be “carriers” who cause liability claims or “frequent fliers” through the workers’ compensation system. Training and/or intense focus on the person’s performance can help to identify and correct the problem. If you see a high frequency of claims within a particular department, investigate to determine the cause. One agency noticed that most police workers’ compensation claims resulted from training exercises and changed their tactics, resulting in a 40 percent decrease in the number of claims per year.

In the outlier side of your analysis, look for inconsistent or incorrect coding of claims data, such as cause of loss, claim type, department and job title. Sorting your claims will reveal if you have a lot of “other” claims that should be coded more specifically. It can also reveal if you have too many cause codes, so that you end up with one of everything. While it may be tempting to have a code for every possible scenario, when you have too many choices you end up with more errors and data that’s too scattered. Limit your choices to the major categories and drill down on each claim as needed to get the details.

Delays in reporting claims can be identified by comparing the date of loss with the date reported. That can be a red flag for workers’ compensation claims and it deserves investigation. Training may be needed to make sure supervisors know what to do when a claim occurs or delays could signal workers’ compensation fraud on the part of the employee(s).

Analysis of the date a general liability claim was filed and when it was reported to the claims administrator can reveal internal roadblocks to responding in a timely manner. For example, one city eliminated the average four-day delay in reporting claims by asking the city clerk to send a copy of each claim filed to the claims administrator, saving valuable time in responding to new claims.

In the outlier side of your analysis, look for inconsistent or incorrect coding of claims data, such as cause of loss, claim type, department and job title… While it may be tempting to have a code for every possible scenario, when you have too many choices you end up with more errors and data that’s too scattered. Limit your choices to the major categories and drill down on each claim as needed to get the details.

OLD DOGS AND NEW DOGS Every so often, at least once a year, take a look at the “old dogs” in your loss run and ask why each claim is still open.

Determine if the reserves are still adequate, the plan of action for resolving the claim and the target date for resolution. A regular claim review with your claims team is a perfect setting not only for addressing older claims but also to dig deeper into the trends or issues uncovered in your loss run analysis.

OCTOBER 2012 | PUBLIC RISK

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What is Your Loss Run Trying to Tell You?

GL CLAIMS BY FISCAL YEAR

AVERAGE BY DEPARTMENT

$900,000

140

$800,000

$35,000

120

$30,000

100

$25,000

80

$20,000

250 $29,655

200

$700,000 $600,000 $500,000 $400,000

60

$15,000

40

$10,000

20

$5,000

$22,747

150 $15,245

100

$11,766

$300,000

$10,896

$200,000

50

$100,000 $0 $ Incurred No. of Claims

2002–03

2003–04

2004–05

$372,743

$81,635

$473,723 $767,453 $429,570 $229,202 $443,768 $120,177 $235,564 $229,390

126

58

63

2005–06

123

2006–07

72

2007–08

66

2008–09

57

2009 –10

53

2010–11

36

2011–12

0

44

Triage your new claims as soon as possible to identify the “new dogs” that typically are the most expensive. Analyzing your losses by incurred layer ($1 to $1,000, $1,001 to $5,000, etc.) will help you identify those claims that are relatively few in number but drive most of your expenses.

It’s not uncommon for 5 percent of your claims to make up 80 percent or more of your incurred losses. Focus your efforts on mitigating those losses as soon as they are received and make them a priority in your loss prevention efforts.

For example, one agency noticed that shoulder injuries had the highest average cost of any of their workers’ compensation claims.

They began expediting referral of shoulder injuries to a specialist who had an excellent track record of successful treatment and started a work-hardening program to prevent future claims. As a result, they lowered their average cost by more than $20,000 per claim and saw their frequency drop by over half.

On the other end of the spectrum, look at those claims that are most frequent but least expensive and then identify those types of claims within that group that could result in a large or catastrophic loss under certain circumstances. For example, a sewer backup claim might average below $5,000, but under the right circumstances, such as when a home’s occupants are away on vacation, it could be a $500,000 claim. The same is true of vehicle accidents.

They are usually minor, but if one happens to involve permanent disability to a young parent, it may become the largest claim you will ever see. That’s why fleet management and driver safety are bedrock elements of a comprehensive risk management program.

Utilities

Public Works = Average

Police

Fire

Community Services

0

= No. of Claims

your average claim by 10 percent, reduce the number of sidewalk trip and falls by 20 percent, or reduce the amount you are spending on legal fees by 25 percent. Develop strategic objectives and plans of action based on those goals and follow up throughout the year to gauge progress.

Perhaps you want to meet with legal counsel every time you have a new lawsuit to develop a strategy to quickly resolve those claims you know have settlement value.

Allocating your loss costs by department is highly recommended as the most effective way of highlighting the value of risk management. Putting the costs in each manager’s budget has a way of getting their attention, especially when they can be reduced to make room for more needed resources. It also helps to put a number on the “soft” costs of claims, such as lost time and productivity, overtime expenses and the costs of resolving the claims themselves, including investigation, testimony and attendance at hearings or mediation. These costs illustrate the ripple effect claims have on your organization.

The frequency of reporting will depend on the size of your organization and the number of claims. You may send monthly reports to your safety committee and department managers, quarterly reports to your executive committee and a yearly report for your governing body, summarizing results, achievement of objectives and goals for the coming year.

Last but not least, share your findings with everyone in your organization. Summarize the information in tables or graphs that make it easy to see what the trends are and where the most frequent and costly claims are coming from.

Loss runs are a powerful but often overlooked tool for managing your risks and they directly impact your organization’s cost of risk. By developing a regular process to “Grab, Pivot and Share” the data they contain, you can illustrate the impact losses have on your organization, develop strategies to prevent and mitigate those losses and show the value you bring to your organization by recognizing, responding and reducing their costs.

Set goals based on the data and give regular feedback on how you are doing. For example, your goal may be to reduce

Marcus Beverly is a senior account manager for York Risk Services in Roseville, CA.

SHARE IT

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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.

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Keep up with what’s happening at PRIMA and connect with your risk management peers!

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Member Spotlight

ASCIP PUTS THE BRAKES ON BULLYING Each month, Public Risk features a member who has gone above and beyond

M

ost people have been affected by bullying at one time or another during their lifetime. One look at the nightly news and you can see the dire consequences some have paid for being bullied—teen suicide, mass shootings and the like.

in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

The Alliance of Schools for Cooperative Insurance Program (ASCIP) implemented financial support toward innovative bullying and suicide prevention programs to assist member districts with the challenge of stopping school bullying.

The program provides elementary, middle and high school students with the tools necessary to address the complex issue of bullying and contemplation of suicide.

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

“Many of our member school districts report incidents of bullying regularly,” said Donna Abersman, ASCIP’s deputy chief executive officer. “Over the years, ASCIP has become increasingly concerned with the growing number of these incidents. Students’ use of social media Web sites, cell phones and text messaging has increased the ways that students communicate with each other, which also increases the avenues available for bullying.”

or 703.253.1267.

ASCIP also understood that it is the responsibility of its member districts to provide a safe and healthy learning environment.

ASCIP’s bullying and suicide prevention program centered around various financial support for programs offered

by Safe School Ambassadors, Teen Truth Live, and/or Michael Pritchard. Each of the programs is somewhat different from the other and targets different age ranges.

All the programs focus on preventing bullying behaviors

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PUBLIC RISK | OCTOBER 2012

that have been tolerated in the school environment, either by speaking up, intervening, or bringing awareness of the behavior to the forefront. Examples such as name-calling, which has been tolerated in many schools, is considered the first stage of bullying. Students are taught, in all these programs, that it’s this kind of bad behavior as a recipient or the bully that our schools will no longer find acceptable.

The results have been positive and encouraging. ASCIP’s districts reported an immediate change in the school environment after the programs. Less referrals and bullying incidents were reported immediately following the programs’ implementation.

For more information on ASCIP’s bullying prevention program, contact Martha Espinoza at espinoza@ascip.org.

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