Public Risk April/May/June 2023

MEET LAURIE OLSON PRIMA’S NEW PRESIDENT

ALSO IN THIS ISSUE CAN WE PREVENT THE NEXT CRITICAL INCIDENT? PAGE 8

IMPROVE YOUR RISK PROFILE TO BECOME A MORE FAVORABLE RISK

BUILDING TRUST TO BUILD YOUR TEAM

PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION

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

CONTENTS

PRESIDENT Scott J. Kramer, MBA, ARM County Administrator

Autauga County Commission Prattville, AL

PAST PRESIDENT

Melissa R. Steger, MPA, CRM

Asst. Dir., WCI & Unemployment Ins. University of Texas System

Austin, TX

PRESIDENT-ELECT

Laurie T. Olson

Sr. Risk Management Consultant City/County Insurance Services

Salem, OR

DIRECTORS

Sean Barham, MBA, ARM

Executive Director of Human Resources

Las Cruces Public Schools

Las Cruces, NM

Dana S. Henderson, CWCP Risk Manager

Town of Mount Pleasant

Mount Pleasant, SC

Jennifer Hood

Safety & Risk Director

Montgomery County Government

Clarksville, TN

Steve M. LePock, II

Risk Manager

Virginia Beach City Public Schools

Virginia Beach, VA

Meet Laurie Olson — PRIMA’s

By Claire Howard

By Lisa Hammond

By Randy Anderson

Adam F. Maxwell, CLRP Director, Administrative Services City of Westerville Westerville, OH

Ann-Marie A. Sharpe, ARM, RMPE Director, Risk Management City of Miami Miami, FL

NON-VOTING DIRECTOR

Jennifer Ackerman, CAE

Chief Executive Officer

Public Risk Management Association

Alexandria, VA

EDITOR

Claire Howard

518.360.3285

Claire.Howard@CLHCosmo.com

ADVERTISING

Claire Howard

518.360.3285

Claire.Howard@CLHCosmo.com

Public Risk is published 6 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.

Copyright 2023 Public Risk Management Association

Listening and Reflecting

Afew months ago, I attended a presentation that provided insight about strategic listening techniques. The objective was to engage both hemispheres of the brain in order to stimulate creativity and maximize productivity.

By understanding these techniques, the intent was to increase problem-solving abilities by examining and tapping into the enormous powers of the mind. Most of us have heard, “The mind is a terrible thing to waste.” As such, if the brain is not understood, not exercised, not explored and not fully developed, it can limit a person’s efficiency and effectiveness.

This speaker taught me a little more about maximizing creativity and productivity. Both sides of the brain should complement each other in most all activities. I was surprised to hear that 55% of a person’s communication is non-verbal and 38% is conveyed through voice inflection. As risk managers, we need to be good communicators and realize our audience may be more focused on non-verbal communication and voice inflection than on the content of our message.

As I reflect on the past year, one of my personal goals was to be a better listener. The Board members and the PRIMA CEO met monthly virtually or in-person. Each of these members are great leaders in their own right with great ideas. In leading this organization, I wanted to make sure that each member felt like they had the opportunity to share their ideas in moving our innovative organization forward together. There have been so many previous Board members and PRIMA staff members who

have laid the groundwork for our association to thrive. Over the years, I have listened to these thoughts and learned from them both personally and professionally.

I am excited to have been a part of leading this organization this past year, as I have observed more risk managers be trained in enterprise risk management. I witnessed the record number of attendees at PRIMA Institute. We continue to provide resources to those employees who assume many risk management functions. We want to remain the premier organization for risk management resources to local and state government entities. In addition, we want to advance and promote the

profession of risk management. I think we have accomplished that. Thank you for allowing me to serve. I have thoroughly enjoyed it.

Sincerely,

Scott J. Kramer, MBA, ARM PRIMA President 2022–2023 County Administrator Autauga County Commission Prattville, AL

In leading this organization, I wanted to make sure that each member felt like they had the opportunity to share their ideas in moving our innovative organization forward together.

NEWS Briefs

FIRST REPUBLIC SHOWS WHY RISK MANAGEMENT AND INNOVATION SHOULD BE ALLIES, NOT ENEMIES

Stephen Wunker | Forbes | April 29, 2023

First Republic grew like a weed through its innovative business model. From 2011 (right after its IPO) to 2022, its assets increased roughly 10-fold. Then it went off the rails. The story holds lessons for innovators everywhere.

The bank’s magic stemmed from its holistic approach to clients—rather than seeing customers as a collection of owned products, it viewed them through the lens of a relationship. First Republic wouldn’t just pitch for a business’ line of credit or asset finance, for example, but also aim to get the owner’s mortgage and wealth management too. This was a bright idea—the bank wasn’t cross-selling in the traditional sense, but rather seeking overall relationships right from the get-go.

But there was a problem. This unique model made risk hard to assess. Theoretically, the bank should have had superior insight into someone’s overall liquidity, the health of their business, and their financial prospects. In practice, that’s hard to execute. A few companies work out detailed, sophisticated ways to alternatively assess risk (see: Capital One). More seem to try and fail. So, the nature of the risks on First Republic’s books is hard to assess. Add to that, the bank financed its lending using some bad market bets, and it was a victim of the SVB-triggered bank run. So the stock is now down over 97% for the year, and even at a bargain-basement price the company has struggled to find a buyer.

Here’s the big lesson: innovation and risk management shouldn’t be opposites. They’re complements. If you’re going to build a truly innovative business or business model, there will absolutely be risks. Many companies reflexively dislike these, don’t articulate them well, and kill the idea early. A few just go for it and worry about the risks later. Neither course is a good one. A far better route is to build up a capability in risk management alongside a strength in innovation.

Read More:

https://www.forbes.com/sites/stephenwunker/2023/04/29/first-republicshows-why-risk-management-and-innovation-should-be-allies-notenemies/?sh=716c3ce06fe5

A PROCLAMATION ON NATIONAL HURRICANE PREPAREDNESS WEEK, 2023

Briefing Room | WhiteHouse.Gov | April 28, 2023

Powerful hurricanes, typhoons, and tropical storms can devastate our communities, threaten the lives of our families, and damage everything we have worked so hard to build. During National Hurricane Preparedness Week, we raise awareness about the hazards posed by hurricanes and share resources to help Americans stay safe and protect their property before these storms make landfall. We also celebrate the remarkable first responders and community members who help rescue, recover, and rebuild in the aftermath of these natural disasters.

During last year’s hurricane season, especially in Florida and Puerto Rico, we witnessed the overwhelming damage these storms so often leave in their wake. Families lost their homes. Business owners lost their livelihoods. Survivors were left with unimaginable grief. As the climate crisis intensifies, the impacts of storm surges, flooding, mudslides, and heavy rainfall will only increase, and communities that lack the resources to respond and recover will be hit hardest.

That is one reason why I signed the historic Bipartisan Infrastructure Law, which will keep Americans safer from natural disasters by building stronger roads and bridges, improving levees and floodwalls, and making our power grid more resilient. This law includes over $50 billion to shore up our defenses against flooding and other weather and climate disasters. It provides States with billions of dollars to prepare evacuation routes and improve other at-risk coastal infrastructure. It also invests in communitywide planning to ensure that those most impacted by extreme weather have a voice in preparing for the future.

Our Inflation Reduction Act takes these efforts a step further, making the largest investment in our Nation’s history to combat climate change. With historic funding for green manufacturing, clean energy development, and climate-smart agriculture, this law puts us on a path to cut America’s greenhouse gas emissions in half by 2030. It gives families tax credits to make their homes more energy efficient, saving money and helping ensure that the power stays on when the grid goes down. And it provides the National Oceanic and Atmospheric Administration with billions of dollars to improve weather forecasting and invest in resilience projects in coastal communities that will help them more easily recover from extreme weather events.

Read More:

https://www.whitehouse.gov/briefing-room/presidential-actions/2023/04/28/aproclamation-on-national-hurricane-preparedness-week-2023/

AI TECHNOLOGY — GOVERNANCE AND RISK MANAGEMENT: WHY YOUR EMPLOYEE POLICIES AND THIRD-PARTY CONTRACTS SHOULD BE UPDATED

Yasamin Parsafar | National Law Review | April 27, 2023

AI technology is a powerful tool and “with great power comes great responsibility.” Use of AI technology can give rise to various forms of liability that may not even occur to you. And use of generative AI impacts not only your liabilities but also your rights.

If you are developing or using products that use AI technology, it is important to understand the legal implications and factor them into your governance and risk management policies as soon as possible, if you have not yet done so. And even if you do not use or develop AI-driven products as a company, whether known or unknown to you, it is likely you have employees or vendors who are using generative AI tools in the performance of their duties. They may be using these tools to do anything from writing code to creating images, music, apps, or your marketing content. Your employees’ and vendors’ use of AI tools can impose liability and vulnerabilities on you in a significant way. As the FTC explained: “If something goes wrong – maybe it fails or yields biased results – you can’t just blame a third-party developer of the technology. And you can’t say you’re not responsible because

that technology is a ‘black box’ you can’t understand or didn’t know how to test.”

Below is a high level overview of some AI-related liabilities and vulnerabilities to factor into your governance and risk management, including by updating your employee policies and third-party agreements, now.

Violations of Consumer Protection Laws May Result in Algorithmic Disgorgement

Have you ever heard of algorithmic disgorgement? If your employees or service providers use AI tools (and they probably do, or will soon), you should be aware of this severe penalty imposed by the FTC when consumer protection laws are violated in the process of collecting information used to train AI models.

Companies who use data that was unlawfully acquired or unlawfully used to train algorithms used in machine learning models or other AI tools may be required to destroy ill-gotten data as well as the algorithms or models that were trained using such data.

Read More: https://www.natlawreview.com/article/a

POLICIES TARGET KIDS’ ACCESS TO SOCIAL MEDIA, BUT WILL THEY WORK?

Arianna Prothero | GovTech | May 1, 2023

A rising number of state and federal lawmakers are crafting legislation that would restrict young kids’ access to social media and institute other protections for young social media users—all in the name of improving mental health.

But some policy experts worry that the bills—which are generating bipartisan support—will be difficult to enforce and may have unintended consequences.

“This is all new territory for Congress: how do you protect the First Amendment? How do you keep kids’ autonomy online?” said Allison Ivie, the government relations representative for the Eating Disorders Coalition for Research, Policy and Action, which has been tracking this issue closely. She was referring to a bill recently filed in the U.S. Senate. “There is a level of frustration in this country when we see these levels of mental health problems skyrocketing, and people want a quick fix.”

Many lawmakers, who are parents and grandparents, are seeing this problem play out in their homes, said Ivie. And she suspects there was an expectation from a lot of adults that kids’ mental health issues would dissipate once they were back to learning full time in-person again.

“That didn’t happen for a lot of kids,” she said. “The damage had been done. So, now it’s like, ‘they’re not the same kid—they’re still glued to their phone, and I don’t know what to about this.’”

Taken together, bills filed in at least nine states and at the federal level generally have three primary goals: compel social media companies to verify users’ ages; bar social media companies from using algorithms to recommend content to young users; and restrict minors from using social media either through age requirements, parental permission requirements, or curfews and time limits.

Read More:

https://www.govtech.com/policy/policies-targetkids-access-to-social-media-but-will-they-work

MEET LAURIE OLSON

PRIMA’S NEW PRESIDENT

BY CLAIRE HOWARD

TRIPPING UPON YOUR PASSION AND TURNING IT INTO A LONG AND FRUITFUL CAREER, only many can dream of. Laurie Olson is the exception. Twenty-five years ago, Laurie began her career in public service but little did she know risk management would be the sector to change her life.

“Interestingly enough, I fell into risk management on a fluke of honesty.” After welcoming her three beautiful children into this world and taking some time off, Laurie had to decide between two potential job opportunities: a Budget Analyst with Oregon county or a Business Manager in her local school district. She faced a conundrum we all face when applying for a new job: the waiting game, weighing the pro and cons of possibly saying yes to the wrong offer and being honest with the interviewer about the number of roles you're actually applying for. Laurie took the graceful route in telling the County of Oregon about her interest in another company. “I struggled ethically whether to accept the job I was already offered, knowing that I would then turn it down IF I was offered the other job OR come clean with the county about my situation. The later move was risky because it meant I could end up with neither job. At the end of the day, I decided to be honest and tell the county the real situation.” Her honesty eventually paid off, she never took the Budget Analyst position but was offered something more in return, a referral for a Risk Manager position with the county that changed her life forever.

WHAT INTERESTED YOU IN BEING THE NEW PRIMA PRESIDENT?

I truly believe in what PRIMA stands for. I’ve been able to grow my career and knowledge in risk management with the help of PRIMA and the wonderful people I’ve met through PRIMA. Additionally, there is an exceptional Board of Directors right now, along with PRIMA staff that just feel like family. I want to continue to grow the programs that reach out to new members, the next generation of risk managers, and the development of mentoring programs that have already been started.

DURING YOUR 25-YEAR CAREER, WHAT HAS BEEN YOUR FAVORITE PART OF THIS INDUSTRY?

The people — hands down! Across the board — whatever field (Risk and HR Managers, School Districts, Special Districts, Pooling, Public Safety, etc.) — the people at our conferences represent individuals who are hungry to bring better risk management to our organizations along with the insurance brokers, vendors, consultants, PRIMA staff, retirees,

and everyone’s support for each other make this FUN. YOU are my favorite part of this industry.

It’s also nice to be a part of the solution by helping communities and workplaces to be safer and leaner organizations.

HOW HAS PRIMA HELPED WITH YOUR CAREER?

I became a Risk Manager and three days later attended an Oregon PRIMA conference. So almost immediately, I began learning from and about PRIMA and networking with Risk Managers, vendors and agents in my state and on a national level. I attribute a large amount of my knowledge in risk management to PRIMA and the PRIMA membership, who welcomed and helped me learn about the field of risk, particularly when I was just starting out.

WHAT THINGS WOULD YOU CHANGE OR IMPLEMENT AT PRIMA?

Maybe a better way to answer this is where do I think we need to focus our attention, and that is with inclusiveness and awareness about PRIMA to people who need it most. No doubt there has been a shift in the workforce, and we all have an opportunity to mentor our next generation of risk managers.

WHAT IS SOME PRIMA BENEFITS OUR MEMBERS SHOULD TAKING ADVANTAGE

OF?

It’s wonderful that online networking capabilities through PRIMA Talk, PRIMA Cybrary, and ERM Training are now online. There are very well attended in-person networking and educational opportunities at the Annual

Conference and PRIMA Institute. Your PRIMA membership allows multiple people from your organization to receive these benefits as well as webinars, discounts for events, and PRIMA magazine.

WHERE DO YOU HOPE TO SEE YOURSELF IN FIVE YEARS?

Risk is my passion, but I’m looking at opportunities to branch out and better utilize some of the leadership skills I’ve developed in my EMPA program. I have a fire inside me and I don’t want to let burn out right now. So, I cannot wait to see where that takes me.

WHAT ADVICE WOULD YOU OFFER THOSE THAT ARE NEW TO THE INDUSTRY?

It’s the greatest industry I’ve been a part of so far. You can make a real difference and if you end up working in risk management, it’s challenging, exciting and different every day.

WHAT ADVICE WOULD YOU HAVE GIVEN YOURSELF FIVE YEARS AGO? When faced with a difficult decision, trust yourself and always lean into the answer that leads to doing the right thing. Be vulnerable in your friendships and brave enough to use your voice at work.

I would also tell myself to apply for the PRIMA Board of Directors….because you never know, you just might be the PRIMA President in five years and have the best experience of your entire career!

Claire Howard, Marketing Consultant, CLH Cosmo

Three days into my job, I went to an Oregon PRIMA conference where I was told Scott Moss, former PRIMA board member, would find me. He became my mentor and good friend, introducing me to people and tools. The next year I was on the Oregon PRIMA board and completely invested, and never looked back.

CAN WE PREVENT THE NEXT CRITICAL INCIDENT?

Case Study on Improving Law Enforcement Outcomes with Evidence-Based Risk Management

BY STEVE BREWER

WHY DO SOME LAW ENFORCEMENT AGENCIES have up to 60% fewer critical incidents, officer injuries or accidents than other agencies of similar size, serving similar communities?

This question and a mission to help its member agencies reduce officer injuries and improve community outcomes prompted a large risk pool in the Midwest to embark on a partnership with Benchmark Analytics. The pool administers property/casualty and workers compensation coverage for cities throughout their state and further supports members with a robust loss control program.

However, due to continuing trends of increasing frequency and severity of law enforcement related claims, the pool and its board sought new ways to harness data and analytics to offset these trends. Benchmark designed a data-driven, continuous improve-

ment program based on proven Statistical Process Control (SPC) methods. The program was configured to support unique aspects of municipal government and risk pool needs.

In any industry, the practitioners must implement changes to improve outcomes. Results show strong engagement from agency command staff who find program analytic insights actionable, relevant, and timely to help them prioritize time and resources to act. This is an important leading indicator to measure program success.

This case study provides ideas applicable to any public sector or insurance risk management

program. Through my work with Benchmark supporting municipalities and risk pools across the country, I see incorporating capabilities of SPC into risk management as one of the biggest opportunities to improve the practice of municipal risk management today.

THE LOSS CONTROL PARADOX

If a risk management program mitigates risk and prevents a claim, did the risk ever exist in the first place? How can we know if a loss control investment is working?

The inability to measure loss control programs is the biggest blocker to risk management success today. When we can’t measure the benefit program initiatives become hamstrung by limited adoption, funding constraints, changing priorities and resistance from the practitioners we need to implement the risk management into their everyday work. Rarely do risk managers incorporate data capture and analysis design into new program business plans which results in stakeholders wondering if a program worked and filling in their own perspective on the value of the investment.

STATE OF PRACTICE FOR MUNICIPAL RISK MANAGEMENT

Most public sector risk management programs are Initiative-Driven or Individual-Driven Approaches as illustrated in Figure 1.

In the Law Enforcement world, risk managers offering an Initiative-Driven Approach deploy one or more programs such as a virtual training simulators, policy manual subscriptions, training courses, or equipment grants. Typically, the same programs are offered to all members with the assumption that every member should participate and would get equal benefit from doing so. Agency command staff (the practitioners from an SPC perspective) usually see these initiatives as extra work and only engage them if the grants align with a priority the Chief of Sheriff has already identified. Feedback from risk pool and municipal risk managers is that these programs suffer from low adoption.

Risk Managers offering an Individual-Driven Approach typically deploy a former law

Initiative-Driven Approach

Individual-Driven Approach

enforcement or corrections leader as a loss control consultant who meets with each Agency to discuss operations and recommend changes command staff can implement to reduce risk. This approach can feel personalized and deepen critical relationships between and agency and its risk management partner. However, recommendations are typically vague and/or not aligned with command staff priorities. In the end, Agency leaders usually see these recommendations as extra work and out of reach for agency budget and competing priorities unless they tie directly back to a significant loss or regulatory requirement. Feedback from risk pool and municipal risk managers is that recommendations don’t often get implemented due to resource constraints and the lack of a mandate.

The result? Both approaches fail to gain traction and achieve sustained qualitative or quantitative success.

APPLYING A PROVEN APPROACH TO PUBLIC SECTOR RISK MANAGEMENT What can we learn from successful methodologies in other industries?

Statistical process control (SPC) is a wellknown, data-driven approach to quality control that uses statistical methods to monitor and control a process. SPC can be used in risk

management to improve outcomes by identifying and addressing potential problems before they become significant issues. SPC can help identify potential risks by monitoring data from processes over time. By measuring the variation in the process output, SPC can identify when the process is not operating as expected.

For example, in a manufacturing process, SPC can be applied via Six Sigma or similar frameworks to monitor the quality of the product being produced. By tracking the variation in product quality over time, the process can be monitored to ensure that it is operating within the desired parameters. In a healthcare setting, SPC can be applied via Quality Improvement (QI) frameworks and can be used to monitor patient safety. By tracking the number of adverse events over time, healthcare providers can determine if the safety of patients is being maintained.

Applying SPC to public sector risk management programs is a powerful addition. Most loss control staff utilize claims runs to inform their Loss Control Approach. Prior claims are informative but alone are insufficient. Without statistical context we can’t know if prior claims patterns are within expected ranges. For small Agencies, few claims certainly doesn’t mean low risk. This results in loss control recommendations aimed to prevent recurrence of a prior event but unlikely to address key risk factors which haven’t yet resulted in claims. This is

Figure 1: State of Practice for Risk Management Programs

Figure 2: Frequency Thresholds for Law Enforcement Liability, by Agency Size

learn and replicate the factors that make top performing agencies successful.

EVIDENCE-BASED PRACTICES

Can law enforcement agencies really reduce officer injuries and critical incidents, or are these risks inherent to the communities they serve?

Through our work in this case study, we observed that community factors showed little to no correlation with a law enforcement Agency’s predicted claims outcomes. That is, the crime rate, median income, education levels, demographic and socioeconomic factors had very little impact on an Agency’s expected claims. Rather, an agency’s operational practices were far more predictive of expected claims thresholds. With this insight, we set out to systematically capture key aspects of agency operations and statistically measure which factors had the strongest correlation to reduced claims outcomes. We call these “EvidenceBased Practices” which are actual policies, operations, programs, training or equipment whose implementation shows statistical correlation to reducing claim frequency or severity.

akin to driving a car by only looking in the rear-view mirror. We’re destined to frequently run off the road at each turn and crash into obstacles we can’t see until we are past them.

CASE STUDY RESULTS

This brings us back to our case study with a large risk pool in the Midwest. In this program, we integrated SPC into their loss control program in two ways:

• Predictive Risk Profiles

• Evidence-Based Practices

PREDICTIVE RISK PROFILES

By analyzing time series data of payments such as claims, we established expected frequency and severity thresholds for member police departments, by peer group. Peer groups included a multitude of factors about the agency and community they served. Figure 2 shows a time series of typical distribution of property/casualty claims for agencies serving different size communities. Size of agency or population served is a critical variable to consider when establishing SPC thresholds —

especially for smaller agencies where a single claim could be considered an outlying event.

We then deployed predictive analytics to identify expected frequency (number of claims) and severity (cost of claims) expected for each agency by line of coverage. These models also identify risk attributes that most contributed to the threshold prediction.

These insights significantly advanced the pool’s public safety loss control expert’s understanding of risk levels and contributing factors for each member Agency. These insights also elevate a loss control reps’ status as trusted advisor to agency command staff and municipal leaders. Agencies outperforming their peers can be recognized and engaged as a reference point and source of insight as to what practices have made them successful. Agencies under-performing their peers can receive specific recommendations based on their unique risk factors. Agency command staff and municipal leaders tell us they appreciate data-driven insights and the opportunity to

Like all good research and analytics, the more we discover, the more we want to know. We have a long list of new loss control practices to continue researching and analyzing. Recent results yield a critical insight: Law Enforcement command staff are eager to learn about Evidence-Based Practices and deploy them within their agency. Research and statistical evidence supporting recommendations help command staff prioritize changes and justify investment from their municipal councils.

Leading metrics of success are the number of agencies and municipalities adopting new Evidence-Based Practices. Lagging metrics are lower claims frequency and severity. With each iteration of the SPC-driven loss control cycle we learn more, better prioritize resources and empower practitioners to make data-driven decisions as part of their everyday agency operations.

Steve Brewer, Partner, Benchmark Analytics

NETWORK WITH SUPPLIERS IN THE PRIMA23 Business Exchange

BUSINESS EXCHANGE

MONDAY, JUNE 5

9:30 AM – NOON 1:15 – 3:00 PM

TUESDAY, JUNE 6 9:00 AM – 2:00PM

Don’t miss this opportunity to talk one-on-one with suppliers who recognize the power and influence of public sector risk managers.

IMPROVE YOUR RISK PROFILE TO BECOME A MORE FAVORABLE RISK

BY LISA HAMMOND

EVERY PUBLIC ENTITY faces risks that can cause losses and claims, and as a result, potentially increase insurance premiums. Understanding the entity’s risk profile and implementing effective risk control measures can help the entity obtain insurance coverage at a competitive rate.

When considering a public entity as a potential customer, insurance carriers develop a risk profile of the entity that frequently includes:

• An assessment of auto, property and liability exposures

• A review of historical loss, frequency and severity

• An analysis of loss trends and payouts

• An evaluation of the entity’s current risk control policies and measures

An entity with a favorable risk profile will likely find it easier to obtain coverage and have more choice in selecting a carrier.

RISK MANAGEMENT IS CRITICAL TO RISK PROFILE IMPROVEMENT

Risk management has perhaps never been more important than it is now.

As government and industry compliance rules continue to expand, scrutiny of risk management practices has also increased. This has resulted in risk management becoming an important business strategy.

Also, the risks public entities face have increased in complexity and severity, and new risks are constantly emerging. For example, the COVID-19 pandemic affected the health and safety of employees, disrupted operations and supply chains, and had lasting impact on how entities conduct business. Public entities,

like all other types of organizations, were forced to rapidly identify and address emerging risks and find new ways to operate under shifting circumstances.

For public entities to effectively deal with the changing risk landscape, as well as improve their risk profile, reduce losses and claims, and control insurance costs, they should include risk management in their organizational process.

STEPS TO IMPLEMENT AND IMPROVE RISK MANAGEMENT

1. IDENTIFY RISKS

Begin by identifying the entity’s risks. Try to identify as many as possible and don’t ignore the small or infrequent risks. It is critical to gather solid data on the organization’s risk culture and operating procedures for the purpose of analyzing and determining how to best deal with risks.

2. ANALYZE RISKS

Once the risks are identified, analyze their potential impact, prioritize addressing them, and determine the resources needed to do so. For example, an employee calling in sick is a high-probability event that likely poses little or no risk to the entity. Addressing this risk would not be given the same level of priority and resources as preparing for the risk of a natural disaster, an example of a potentially low-probability event with high impact on the entity.

3. DETERMINE RISK CONTROL

Determine the processes and procedures most effective to reduce risks by weighing the cost versus the benefit to the entity. The goal is to have controls in place to reduce or eliminate as many risks as possible. Once established, develop and implement a communication strategy for the entity that helps ensure risk control is considered in decisions made at every level.

4. IMPLEMENT RISK CONTROL

Implement the risk control processes and procedures to reduce the frequency and severity of losses. Share the controls and improvements with the entity’s insurance agent to ensure they are considered during the carrier’s underwriting process to help improve the entity’s risk profile.

5. MONITOR RISKS AND CONTINUOUSLY IMPROVE RISK CONTROL

Finally, assess all risks and evaluate risk control effectiveness on an on-going basis. As needed, make changes to improve the program and notify the agent when this is done. There are insurance carriers that provide insureds low- or no-cost risk control services. Public entities insured by these carriers should take advantage of these valuable programs and resources to improve their risk management.

COMMON PUBLIC ENTITY RISKS AND RISK CONTROL RECOMMENDATIONS

Public entities commonly face exposure in areas including property and auto, professional and employment law, disaster, and cybersecurity.

PROPERTY MAINTENANCE

Conduct frequent property inspections, including roof and fire and security systems. Annual roof inspections can identify maintenance issues that when corrected, can prevent property damage.

Review power protection methods, especially for electronic equipment such as servers and communication equipment that can be damaged in a lightning strike.

Address slip and fall concerns with maintenance procedures for sidewalks, wet floors, and snow and ice removal.

A MORE FAVORABLE RISK

AUTO LIABILITY

Implement a motor vehicle policy that includes a distracted driving policy prohibiting the use of any handheld or hands-free electronic devices or voice features while driving an entity-owned motor vehicle or while driving a personal vehicle while on entity business.

The motor vehicle policy should also require annual driving record checks for all drivers and a review of any accidents and/or moving violations. The policy should include criteria for the acceptable number of points and violations for employees who drive for the entity.

Require vehicle operation training for specialuse vehicles, such as those used in public works departments.

Provide specialized training for those operating emergency response vehicles. Enhanced driver performance skills include how to:

• Drive defensively and professionally at all times

• Drive at higher speeds

• Correctly use required warning equipment on emergency runs

• Back vehicles and maneuver in closequarters situations

EMPLOYMENT LAW

Employers must comply with employment laws at the local, state and federal levels. Nationally, employee-related claims are on the rise. Consider these areas of employment law:

Hiring Practices – Standardize your application process. Apply best practices such as pre-employment physicals, drug tests and background checks. Provide every employee with a comprehensive employee handbook that is compliant with federal and state laws, clearly written, easily accessible and reviewed annually for updates.

Wage and Hour Rules – Ensure policies are current and compliant with the Family Medical Leave Act and the Fair Labor Standards Act.

Harassment and Discrimination – Ensure policies are current and address the Civil Rights Act, the Americans with Disabilities Act and the Age Discrimination in Employment Act.

Health and Safety – Enhance safety practices throughout the entity to minimize accidents for employees and customers. The Occupational Safety and Health Administration standards address minimum guidelines for workplace safety.

DISASTER PREPAREDNESS

Disasters caused by storms and other weatherrelated events are on the rise and can negatively impact public entities for long periods of time.

Every entity should have a plan that includes actions to be taken to protect the entity as much as possible in advance of a weather event and during the response and recovery phases of a disaster. The Federal Emergency Management Agency offers guidance on crafting a preparedness plan: fema.gov/emergencymanagers/national-preparedness/plan.

Disaster preparedness planning can help build resiliency and sustainability. Identifying and addressing potential risks improves an entity’s ability to identify future threats, develop solutions, adapt to changing conditions, and quickly recover from the impact of a disaster.

CYBERSECURITY

Public entities of all sizes are vulnerable to cyberattack, so internal security policies and remaining informed on emerging security risks are necessary to protect the organization from threats. Cybersecurity best practices include frequent software updates, on-going employee training programs, multi-factor access authentication and data backup procedures.

There are a number of additional risks public entities face that can be managed through risk control, including:

FINANCIAL

Public entities face a variety of financial risks. Measuring, monitoring and responding to these risks minimize threats to the entity’s financial well-being and reputation. Implement risk control processes such as two-person check sign off to help prevent internal crime.

CONTRACTS AND AGREEMENTS

Well-written contracts and agreements that include risk transfer, indemnification, hold

harmless language, insurance requirements, and additional insured status help protect entities from risk. Before entering into any contract or agreement, qualified legal counsel should review and approve.

GOVERNANCE

Any new regulation has the potential to impact entity operations, create new responsibilities or require new technologies. Because federal, state and local laws change often, it is necessary to stay informed to ensure compliance. Robust governance processes and controls are essential to reducing risks and public officials should be trained on ethics and regulations to avoid any potential missteps.

OPERATIONS

Each department faces its own set of risks that must be assessed and managed. Ensure departmental policies are current and updated at least annually to meet current federal and state laws.

Law Enforcement – Claims related to use of force, pursuits and civil right infringement have increased, and risk management is essential to address these areas. Ongoing training and enforcement of written policies help reduce the potential for liability. Review department contracts and agreements, including any task force agreements, to ensure they include governing policies and chain of command.

Fire – Fire departments should operate under updated policies, procedures, contracts and agreements such as mutual aid. Although compliance with National Fire Protection Association standards are not required, these standards are considered best practices under duty of care.

Parks and Recreation – Parks and recreation departments face a wide variety of risks in both their indoor and outdoor physical spaces and in their program offerings. To provide positive participant experiences and avoid losses and claims, these risks must be identified and addressed.

Up-to-date policies and procedures should include documented park inspections, preferably by a certified playground safety inspector. Playground equipment should be installed by certified installers, in accordance with manufacturers recommendations, and maintained regularly.

Groups sponsoring special events should be required to complete an application that includes providing a description of the event, the number of expected participants and facilities to be used. Hold harmless agreements and certificates of insurance with additional insured status should be required when public facilities are used. Public safety agencies should be included in planning for traffic control and

emergency situations such as severe weather, fire or casualties.

Public Works – Public works departments provide critical infrastructure services, and their responsibilities require maintaining a proper level of governance and adherence to regulatory requirements. Disruption of public works services can lead to emergency situations such as interruption to the water or power supply.

Deterioration of infrastructure (e.g., roads, sidewalks and water and sewer lines) can result in liability issues as well as reputational risk for the entity.

A robust risk management program is important to help an entity comply with laws and rules, promote transparency, build public trust, increase resiliency and reduce costs to the taxpayers. In today’s changing risk landscape, developing such a program can be a challenge. When public entities partner with an insurance carrier that provides risk management services, they benefit from risk control expertise and strategies that help them identify and manage current and emerging risks.

Lisa Hammond, Risk Control and Business Development Manager, Tokio Marine HCC –Public Risk Group

Disaster preparedness planning can help build resiliency and sustainability. Identifying and addressing potential risks improves an entity’s ability to identify future threats, develop solutions, adapt to changing conditions, and quickly recover from the impact of a disaster.

NETWORK WITH YOUR PEERS

DURING PRIMA23 IN LONG BEACH, CA

WELCOME RECEPTION

SUNDAY, JUNE 4 | 6:30 – 8:30 PM

Sponsored by

Kick off the best educational and trade show in public risk management Sunday evening at the Cove. There’s no better way to get into the conference frame of mind than meeting up with old friends, networking with fellow leaders in the industry, and building new relationships!

*Guest tickets can be purchased online or onsite.

HEADSHOT LOUNGE IN THE BUSINESS EXCHANGE

MONDAY, JUNE 5 | 9:30 AM – 12:00 PM & 2:00 – 3:00PM

TUESDAY, JUNE 6 | 9:00 AM – 2:00 PM

Sponsored by

Get a complimentary professional headshot portrait to use on resumes, social media and creating the perfect brand, YOU!

PRIMA’S AWARDS PRESENTATION & LUNCHEON

MONDAY, JUNE 5 | 12:15 – 1:15 PM

Sponsored by

Let’s Celebrate! Join your fellow peers as we celebrate outstanding risk managers within the profession, including the distinguished Public Risk Manager of the Year.

DESSERT RECEPTION IN THE BUSINESS EXCHANGE

MONDAY, JUNE 5 | 1:15 – 2:15 PM

Sponsored by

Directly following the awards presentation, join our fellow honorees and your friends in the Business Exchange to celebrate.

PRIMA’S SIGNATURE SOCIAL EVENT

TUESDAY, JUNE 6 | 7:00 – 10:00 PM | BALLAST POINT BREWERY LONG BEACH

Sponsored by

Ballast Point is a stunning waterfront venue in Long Beach Harbor with panoramic views of the Pacific. Join your colleagues and friends for a breathtaking sunset sky as we relax and unwind.

BUILDING TRUST TO BUILD YOUR TEAM

Becoming a Catalyst for Building Trust Within Your Organization

BY RANDY ANDERSON

FEW THINGS IN LIFE ARE AS CRUCIAL AS TRUST. That’s a strong assertion but think about it and see if you wouldn’t agree. With trust, you can experience better relationships and pursue much larger goals and challenges than you can without it. When trust is absent, you not only feel somewhat lonely, but you often feel like you must “watch out” for people around you. Personally and professionally, trust is an essential ingredient in interpersonal relationships.

Is trust prevalent in your various teams in life? Do you generally trust your boss, your coworkers, your subordinates, and your customers? Do you usually trust your neighbors, your friends, and your children? That second question may seem strange, because you probably don’t worry about friends doing something to “wrong” you, but lack of trust isn’t limited to a concern about moral compromise. Do you trust others to be competent enough to do things correctly and committed enough to do them thoroughly? Or do you feel like you must constantly “remind” them what to do and how to do it? (By the way, to them, you’re nagging… not reminding.)

Whether you don’t really trust other people or feel like you’re not trusted as much as you deserve to be, a lack of trust can work to slow things down, add frustration to an already stressful world and life, and it can trigger many other counterproductive thoughts and actions. If you are a trusting person, and you do feel trusted, there is still the challenge of helping others to reach that point, so I want to give you some strategies for increasing the level of trust you give, receive, and cultivate in life.

Trust is built through three things: actions, interactions, and reactions. Whether you build or destroy trust will depend on how you navigate those three things. Here are some ideas for handling them more effectively.

TRUST IS BUILT THROUGH OUR ACTIONS

More than what we say, people often judge us by what we DO in life. We’ve all had the experience where someone SAYS one thing but DOES something different. A manager that promises an opportunity to be a part of a significant project or to move into a position of added responsibility, then never follows through, or gives a dozen reasons why it “didn’t work out”. Maybe it is a co-worker that offers to help you finish something, only to retract later because they didn’t complete their own work. Even more hurtful, a family member that commits to attending a special event or helping with a significant occasion, but as always, something comes up, and they’re not

going to be able to make it…AGAIN. People watch, judge, and remember our ACTIONS much more than our PROMISES.

Trust is usually built over the course of a relationship, but it can be lost in a moment. You may have known and trusted someone for years, but all it takes is one significant event where they break a promise, betray a confidence, and take a liberty that goes beyond what you were prepared to extend, and it can all be gone, literally in a matter of minutes.

4 SUGGESTIONS OF WAYS TO BUILD TRUST THOUGH YOUR ACTIONS

1. Be fully present and engaged – Eliminate distractions that keep you from giving people or tasks your full attention. That may mean turning your email off, putting your phone on do not disturb, moving from a high-traffic place to a quieter, more private place to have a conversation.

2. Demonstrate a willingness to work hard with people – whether you’re in a position of authority, a peer/equal, or are in a subordinate role, we trust people who we believe are “in the trenches with us”. We develop an appreciation and a trust for those that understand the battles we face and the frustrations we experience. Find a way to be a “whatever it takes” team member. Stay until the work is finished… not until you’re tired (or more often, tired of it). As people’s respect for you grows, so will their trust in you.

3. Keep commitments – Be a person of your word. The best way to destroy trust is to break promises. It seems elementary, but if you want people to trust you, then you must be trustworthy. Don’t overpromise. Do WHAT you say you’ll do, WHEN you say you’ll do it, and if you can’t, manage their expectations, and explain how you’re going to rectify your shortfall.

4. Make sure your scope of perspective is bigger than just your own agenda – If other people think you’re only interested in selfpreservation or self-promotion, they will always believe you have ulterior motives. Never lose sight of the fact that we are all together in this adventure called life. Don’t push people away

by only focusing on yourself and your needs and/or desires.

TRUST IS BUILT THROUGH OUR INTERACTIONS

How we communicate, whether verbally or non-verbally, sends messages to people that are processed consciously and subconsciously allowing them to form an opinion of us that is referred to as our reputation. Your reputation is built or reinforced constantly…but so is your character. While reputation is who or what other people believe you to be, character is who you know you really are.

When you interact with others, whether personally or professionally, it is vital that you practice being communicative. You must be willing to speak the truth, but you also need to be prepared to hear the truth. How well do you give and receive feedback? How would others rate you on the timeliness and clarity of communicating? Are you actively working to become a better listener? What grade would you give yourself on being compelling, persuasive, and memorable. While many of these questions seem to be more about communication than trust, much of the trust we develop is based on how well we communicate and relate to those around us.

When you’re interacting, make it a point to demonstrate genuine empathy. Try to understand other people’s challenges and frustrations. Respect the fact that everyone has certain things that make their job more difficult. Make sure you aren’t guilty of what frustrates you. And if you really want to build trust, live by the Platinum Rule: Do unto others as they would have you do to them. That is harder than the Golden Rule which instructs us to treat others the way we want to be treated. They may not want you to treat them the way you want to be treated. Maybe they aren’t as direct or confrontational as you. Maybe they are very direct and prefer to confront things early, but you tend to avoid conflict. Treating others the way they want to be treated is the ultimate test of empathy, and we have the opportunity to do it multiple times each day.

Keep confidence if someone shares something private with you. Don’t damage trust by

repeating something that the other person didn’t want to be made public. This is especially true in personal matters. Maybe they confided in you about their family, a career change they are considering, or some other challenge they are struggling with. If you betray that confidence, you can be sure it will permanently damage their trust in you.

TRUST IS BUILT THROUGH OUR REACTIONS

While we would like for people to judge us and form opinions about us when we are at our best and circumstances are predictable and calm, the fact is, they often draw those conclusions when they see us in the midst of difficulties. How you react in a tough situation will go a long way in revealing your true, unguarded character.

When a problem arises, try to be responsive not reactive. In other words, measure your words and actions. Avoid coming back with an instinctive knee-jerk. Make sure you don’t push people away with harsh reactions. And don’t cultivate an “us and them” atmosphere or allow that to exist.

How would people describe your typical “response mechanism” when the unexpected and unpleasant erupts? Do you remain objective? Are you fair in your assessments? That to mean do you work to treat everyone equitably if not equally? Are you consistent in how you react so people generally know what to expect from you?

Building trust in the various parts of your life is one of, if not the most significant factor in developing personal influence. Doing the things put forth in this article will allow you to strengthen your relationships and deepen your impact. Take the time to do some honest self-assessment and self-reflection. What do you need to work on? How can you become someone that others trust and want to be close to? If you answer those questions honestly, and work purposefully to do what you know you need to, then you will grow your personal influence exponentially.

Randy Anderson, CSP, Independent Training Consultant, E3 Professional Trainers, LLC

ADVERTISER INDEX

HAS YOUR ENTITY LAUNCHED A SUCCESSFUL PROGRAM? An innovative solution to a common problem? A money-saving idea that kept a program under-budget? 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.

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.

PRIMA ANNUAL CONFERENCES

June 4–7, 2023

PRIMA 2023 ANNUAL CONFERENCE Long Beach, California Long Beach Convention Center

June 16–19, 2024

PRIMA 2024 ANNUAL CONFERENCE Nashville, Tennessee Gaylord Opryland Hotel

June 1–4, 2025

PRIMA 2025 ANNUAL CONFERENCE Seattle, WA Washington State Convention Center

PRIMA WEBINARS

June 28

Life Plan: A Strategy for Achieving and Maintaining Life Balance

July 19

Award-Winning Ideas and Lessons from PRMYs

August 23

Active Assailant: How to Avoid Missteps in the Aftermath of an Event

September 27

Disaster Risk Reduction: Mitigation, Infrastructure Hardening, Plans and Policy

October 25

Ergonomics in Today’s Changing Workplace

PRIMA INSTITUTE

October 16–20, 2023

New Orleans

THANK YOU PRIMA 2023 SPONSORS

MANY SPECIALTIES ONE FOCUS ONE CENTURY

A century of delivering dedicated and reliable insurance solutions has taught us that business is always changing. That’s why Old Republic General Insurance Group is always evolving – expanding our specialties, deepening our partnerships, and sharpening our focus on what matters most: You.

With gratitude, here’s to another 100 years of insurance expertise wherever your business happens.

Our companies deliver specialized expertise.

• BITCO INSURANCE COMPANIES1

• GREAT WEST CASUALTY COMPANY

• OLD REPUBLIC AEROSPACE2

• OLD REPUBLIC EXCESS & SURPLUS

• OLD REPUBLIC GENERAL INSURANCE CORPORATION

• OLD REPUBLIC HOME PROTECTION

• OLD REPUBLIC INLAND MARINE3

• OLD REPUBLIC INSURANCE COMPANY

• OLD REPUBLIC INSURED AUTOMOTIVE SERVICES2

• OLD REPUBLIC PROFESSIONAL2

• OLD REPUBLIC RESIDUAL MARKET SERVICES3

• OLD REPUBLIC RISK MANAGEMENT2

• OLD REPUBLIC SPECIALTY INSURANCE UNDERWRITERS3

• OLD REPUBLIC SURETY

• PMA COMPANIES3