OCTOBER/NOVEMBER/DECEMBER 2024 | Volume 40, No. 4 | www.primacentral.org
Employment Practice Liability Trends and How to Reduce the Risk of Claims
By Greg Zarotney
By Patrick J. Haraden
The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.
PRESIDENT
Adam F. Maxwell, CLRP
Director, Administrative Services City of Westerville Westerville, OH
PAST PRESIDENT
Laurie T. Olson
Risk Manager
Clean Water Services Hillsboro, OR
PRESIDENT-ELECT
Steve M. LePock, II
Risk Manager
Virginia Beach City Public Schools Virginia Beach, VA
DIRECTORS
Sean Barham, MBA, ARM
Executive Director of Risk Management and Health Services
Las Cruces Public Schools Las Cruces, NM
Cathie T. Chancellor, JD, MS, CRM
Risk Manager City of Norfolk Norfolk, VA
Joe Costamagna
Risk Manager
Schools Insurance Authority Santa Rosa, CA
Chester Darden Director of Loss Control
Public Entity Partners Franklin, TN
Jennifer Hood, COSS Safety & Risk Director
Montgomery County Government Clarksville, TN
Robert Warren, CRM Manager, Risk and Safety
Trinity River Authority of Texas Austin, TX
NON-VOTING DIRECTOR
Jennifer Ackerman, CAE
Chief Executive Officer
Public Risk Management Association Alexandria, VA
EDITOR
Nick Baker
703.528.7701 nbaker@primacentral.org
ADVERTISING
Nick Baker
703.528.7701 nbaker@primacentral.org
Public Risk is published 4 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.
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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 2024 Public Risk Management Association
DECEMBER WEBINAR
Award-Winning Ideas and Lessons from PRMYs
DECEMBER 18 | 12:00 PM – 1:00 PM ET
SPEAKERS:
Allie Matthews, Risk Management Administrator, City of Tucson, AZ (Ret.)
John Burkholder, Risk Manager, LYNX
Megan Damato, Esq., Director of Risk Management, Town of Greenwich, CT and Greenwich Public Schools
Sean Catanese, ERM Manager, King County, WA
This panel of PRIMA’s Risk Managers of the Year will help every level of risk professional. New risk managers can learn how to establish a solid program and more seasoned risk managers might leave knowing a few new tricks. These experts come from all different types of public risk (City, County, State, Schools, Special District Utility and Air/Seaports). They offer implementable strategies with million-dollar impacts. Attendees can learn ways to make risk managers superstars in their organization.
ATTENDEE TAKEAWAYS:
1. Learn how to build credibility and influence in your organization by using performance-driven solutions
2. Develop and apply metrics to demonstrate your success
3. Identify and resolve organizational exposures
4. Evaluate your program, identify areas of improvement and apply effective solutions
IGearing up for PRIMA25
hope that you had a wonderful fall and are enjoying the transition into winter. The holidays bring school vacations, time with family, and, for many of us, snow.
While you may be focused on the upcoming holidays, it isn’t too early to think about PRIMA25, which will be held June 1 – 4, 2025, in Seattle. Right after this year’s conference ended, planning for PRIMA25 began. At the conclusion of each conference, PRIMA staff hold a debriefing to discuss how the previous conference went. They also review feedback submitted by attendees and assemble proposals for the Conference Planning Committee to review and evaluate in time for the Committee’s planning session in September. PRIMA received a lot of great proposals this year, and I want to thank everyone who submitted a proposal. I’m confident that you’ll be excited by the quality of educational content that will be offered in Seattle.
I’ve always found the Annual Conference one of my favorite PRIMA events because it’s a grassroots effort. With the Committee comprised of board members and corporate partners, there is a lot of diversity, energy, and enthusiasm in ensuring that the highest quality presentations are selected. PRIMA staff members do a wonderful job of supporting the nearly two dozen committee members, and they also provide perspectives based on past successes and identify opportunities for improvement. This year’s meeting was no exception, as the committee members rolled up their sleeves and jumped head-on into the process.
I’ve always found the Annual Conference one of my favorite PRIMA events because it’s a grassroots effort. With the Committee comprised of board members and corporate partners, there is a lot of diversity, energy, and enthusiasm in ensuring that the highest quality presentations are selected.
As 2025 approaches, many of us will make New Year’s resolutions. I want to remind you of all the great PRIMA professional development opportunities. One of them is PRIMA’s monthly Risk Management webinar series, which is focused on relevant and timely topics for our industry. These webinars are free for PRIMA members and are a great way to keep your skills sharp from the comfort of your home or office. If you can’t join one live, you can watch archived recordings—just go to primacentral.org/education/webinars.
Finally, if you want to improve your leadership skills, consider registering for the PRIMA Leadership Academy (PLA), which will be held March 4-5 in Alexandria, VA. Over two
days, you’ll learn how to apply the adaptive leadership framework to the current challenges you’re facing within the entity you serve. Further, you’ll collaborate with your peers to develop solutions to challenges you face within the public risk management profession. Visit primacentral.org/pla for more information and to register.
All the best,
Adam Maxwell PRIMA President 2024–2025
NEWS Briefs
EVACUATING IN DISASTERS LIKE HURRICANE MILTON ISN’T SIMPLE — THERE ARE REASONS PEOPLE STAY IN HARM’S WAY, AND IT’S NOT JUST STUBBORNNESS
Carson MacPherson-Krutsky | Homeland Security News Wire | October 12, 2024
Evacuating might seem like the obvious move when a major hurricane is bearing down on your region, but that choice is not always as easy as it may seem. Evacuating from a hurricane requires money, planning, the ability to leave and, importantly, a belief that evacuating is better than staying put.
As Hurricane Milton roared ashore near Sarasota, Florida, tens of thousands of people were in evacuation shelters. Hundreds of thousands more had fled coastal regions ahead of the storm, crowding highways headed north and south as their counties issued evacuation orders.
But not everyone left, despite dire warnings about a hurricane that had been one of the strongest on record two days earlier.
As Milton’s rain and storm surge flooded neighborhoods late on Oct. 9, 2024, 911 calls
poured in. In Tampa’s Hillsborough County, more than 500 people had to be rescued, including residents of an assisted living community and families trapped in a flooding home after a tree crashed though the roof at the height of the storm.
In Plant City, 20 miles inland from Tampa, at least 35 people had been rescued by dawn, City Manager Bill McDaniel said. While the storm wasn’t as extreme as feared, McDaniel said his city had flooded in places and to levels he had never seen. Traffic signals were out. Power lines and trees were down. The sewage plant had been inundated, affecting the public water supply.
Evacuating might seem like the obvious move when a major hurricane is bearing down on your region, but that choice is not always as easy as it may seem.
Evacuating from a hurricane requires money, planning, the ability to leave and, importantly, a belief that evacuating is better than staying put.
I recently examined years of research on what motivates people to leave or seek shelter during hurricanes as part of a project with the Federal Emergency Management Agency and the Natural Hazards Center. I found three main reasons that people didn’t leave.
EVACUATING CAN BE EXPENSIVE
Evacuating requires transportation, money, a place to stay, the ability to take off work days ahead of a storm and other resources that many people do not have.
With 1 in 9 Americans facing poverty today, many have limited evacuation options. During Hurricane Katrina in 2005, for example, many residents did not own vehicles and couldn’t reach evacuation buses. That left them stranded in the face of a deadly hurricane. Nearly 1,400 people died in the storm, many of them in flooded homes.
When millions of people are under evacuation orders, logistical issues also arise.
Gas shortages and traffic jams can leave people stranded on highways and unable to find shelter before the storm hits. This happened during Hurricane Floyd in 1999 as 2 million Floridians tried to evacuate.
Read more:
https://www.homelandsecuritynewswire. com/dr20241012-evacuating-in-disasterslike-hurricane-milton-isn-t-simple-there-arereasons-people-stay-in-harm-s-way-and-it-s-not-j
AI FOR SCHOOL SAFETY: STRATEGIC APPLICATIONS BEFORE, DURING, AND AFTER AN EMERGENCY
Joey Melvin | Campus Safety Magazine | October 16, 2024
The increasing complexity of school safety challenges has led educators, administrators, and public safety professionals to seek innovative solutions that can enhance preparedness, response, and recovery efforts. Over 90% of public schools nationwide have written emergency plans, and traditionally, school safety planning relies on well-established protocols, comprehensive training, and collaborative relationships between schools and local emergency services.
However, the rapid advancement of artificial intelligence (AI) technologies, particularly AI-driven language models like ChatGPT, Claude, and others, presents a new opportunity for school safety stakeholders to transform these efforts. AI tools excel in processing vast amounts of information, providing real-time communication support, and generating tailored responses. They offer significant potential in addressing the dynamic and unpredictable nature of school emergencies.
The utilization of AI continues to be a growing trend. A 2024 study by National University revealed that 77% of companies currently use or explore AI in their business plans. Leveraging AI in school safety extends beyond
predictive analytics or automated alerts; it includes optimizing emergency communication, enhancing decision-making during crises, and supporting recovery efforts post-incident.
AI platforms can serve as versatile tools for school administrators, enabling the drafting of emergency plans, coordinating responses, and assisting in disseminating critical information to staff, students, and parents. These systems also have the potential to address long-term recovery needs by providing resources and facilitating debriefing processes.
This article explores how AI technologies can be integrated into a comprehensive school safety strategy. By examining the specific applications of AI before, during, and after emergencies, we will highlight the unique advantages these tools bring to the evolving landscape of school safety management. The discussion will center on how AI can enhance human decision-making, streamline communication, and improve the overall resilience of school communities during emergencies.
Read more: www.campussafetymagazine.com/insights/ ai-for-school-safety-strategic-applicationsbefore-during-and-after-an-emergency/162342/
THE HAVOC EXTREME HEAT WREAKS ON OUR AGING INFRASTRUCTURE
Suyun Paul Ham | Governing | August 7, 2024
Summer 2024’s record heat is creating problems for transportation infrastructure, from roads to rails.
New York’s Third Avenue Bridge, which swings open for ship traffic on the Harlem River, was stuck for hours after its metal expanded in the heat and it couldn’t close. Roads have buckled on hot days in several states, including Washington and Wisconsin. Amtrak warned passengers to prepare for heat-related problems hours before a daylong outage between New York and New Jersey; the risks to power lines and rails during high temperatures are a growing source of delays for the train system.
It doesn’t help that the worsening heat is hitting a U.S. infrastructure system that’s already in trouble.
The American Society of Civil Engineers gave U.S. infrastructure an overall grade of C-minus in its latest national Infrastructure Report Card, released in 2021. While there has been some improvement — about 7.5 percent of U.S. bridges were in poor condition, compared with over 12 percent a decade earlier — many bridges are aging, making them difficult to maintain. Forty percent of the road system was considered in poor or mediocre condition, and maintenance costs have substantially increased.
The rate at which a bridge or road deteriorates depends not only on the materials and construction methods used but also on the climate during the structure’s life span. Extreme heat, in particular, significantly affects transportation infrastructure. As climate change progresses, the frequency and intensity of heat waves are expected to increase, exacerbating these issues.
I lead the Smart Infrastructure and Testing Laboratory at the University of Texas at Arlington, where my team works on ways to better monitor the structural health of infrastructure. Here’s why infrastructure struggles in the heat and how engineers are innovating to help extend its life.
Read more: www.governing.com/infrastructure/the-havocextreme-heat-wreaks-on-our-aging-infrastructure
TRENDS AND HOW TO REDUCE THE RISK OF CLAIMS
BY GREG ZAROTNEY
THERE IS BOTH GOOD AND BAD NEWS for employers about employment practice liability (EPL).
The good news is that total employment practice charges have been decreasing. The U.S. Equal Employment Opportunity Commission (EEOC) received approximately 61,000 charges in 2021, a notable decline from the average 86,354 charges per year it received over the previous 10 years.
The bad news is that the cost of employment practice complaints is rising sharply. There are a number of reasons for the increase. These include social inflation, which is the rising cost of insurance claims for costs not accounted for in general economic inflation. A factor contributing to social inflation is shifting societal attitudes that lead to juries awarding
more and larger settlements than they did in the past. “Nuclear verdicts” (awards exceeding $10 million) have become more common.
Also, because EPL lawsuits can be complex to defend, employers can expect to spend a significant amount of time and money to reach a settlement or have a case decided in court.
EMPLOYMENT TRENDS
There are a number of employment trends contributing to EPL charges being filed against organizations large and small. Awareness of how these trends affect the workplace and taking steps to prevent them will help reduce the chance that public entities will face EPL charges, claims and lawsuits.
Workplace retaliation—inappropriate actions taken by an employer against an employee for exercising their rights—accounts for an average of about 60% of all discrimination charges filed with the EEOC.
RETALIATION
Workplace retaliation—inappropriate actions taken by an employer against an employee for exercising their rights—accounts for an average of about 60% of all discrimination charges filed with the EEOC. Besides being the most common type of charge, they are typically the most expensive for employers.
SOCIAL INFLUENCE
The #MeToo movement went viral in October 2017, heightening public awareness and sensitivity to sexual harassment and sexual assault. Between 2014 and 2017, the EEOC received an average of 6,700 sexual harassment charges per year. There was a notable increase in these charges in 2018 (7,609) and 2019 (7,514).
According to the EEOC, charges alleging sexual harassment and retaliation are often linked. Of the 27,291 sexual harassment charges filed in
2018 through 2021, 43.5% were concurrently filed with a retaliation charge.
COVID-19
COVID-19 introduced EPL complaints related to issues such as remote work and leave as well as employment discrimination and retaliation in the layoff and rehiring process.
MARIJUANA AND PSYCHEDELICS USE
Marijuana use is increasing as more states legalize its medical and recreational use. Through state legislative reforms, psychedelic drugs are in the early stages of becoming accessible in some states.
MISHANDLING OF PUBLIC SAFETY HR ISSUES
Some public entities allow public safety department leaders to manage HR responsibilities independently. This is unwise. Like all
municipal departments, public safety leaders need professional human resources (HR) advice to ensure compliance with local, state, and federal laws. Also, if the police and fire departments are allowed to make their own HR decisions, employees of other departments could claim they are treated differently. In HR, consistency is key, and ensuring that all departments adhere to the same HR policies can help prevent or defend against possible lawsuits.
TAKE STEPS TO REDUCE EMPLOYMENT PRACTICE LIABILITY RISK
1. Have on staff or consult legal counsel who thoroughly understands and practices employment law. Employment law is a highly specialized field, and many general municipal attorneys do not have the experience to provide advice on complicated HR scenarios.
2. Some insurance carriers provide policyholders with no-cost, third-party human resources compliance support which can include:
• Access to HR professionals and/ or attorneys for advice, guidance on developing an employee handbook
• Management and employee training programs
• An anonymous employee hotline to report complaints
If available, take advantage of these types of HR compliance services even if you have in-house HR staff. Consulting another HR professional can uncover potential blind spots if in-house personnel are too close to the issue.
3. Establish clear workplace policies, including those against harassment, discrimination, and retaliation, and those that focus on maintaining a safe workplace, and include them in the entity’s employee handbook. Regularly update the handbook to ensure it is compliant with current federal, state and local laws, including those related to marijuana and psychedelics usage. Ensure every employee receives the handbook and acknowledges receipt of the handbook and understanding of the policies by signing an acknowledgment form that is kept on file.
4. Regularly train all employees on workplace policies, including civility and respect in the workplace, to prevent sexual harassment, discrimination, and retaliation.
5. Have a secure method for receiving employee complaints. When a complaint is received, immediately begin a fair and professional investigation, documenting the complaint and what the entity did to resolve it.
6. Purchase employment practices liability insurance (EPLI) coverage for defense costs and damages related to employmentrelated claims.
Greg Zarotney is Vice President, Risk Control for Tokio Marine HCC Public Risk Group.
EMPLOYMENT PRACTICES
LIABILITY INSURANCE
All employers face the risk of prospective, current and former employees alleging discriminatory or retaliatory behavior by the employer. These allegations can lead to charges being filed with the EEOC and costly settlements or lawsuits.
Employment practices liability insurance provides coverage for employers’ defense costs and losses for a variety of employment-related claims such as:
• Sexual harassment
• Discrimination
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Wrongful discipline
• Deprivation of career opportunity
• Violation of the Family and Medical Leave Act
• Mismanagement of employee benefit plans
The (Not So) Subtle Art of Issuing a Request for Proposal (RFP) for Your Broker/Consultant
BY PATRICK J. HARADEN
THE REQUEST FOR
PROPOSAL
(RFP) process is necessary for both risk management and employee benefits professionals and the broker/consultant community.
A better understanding of how the broker/consultant views the RFP and the process is critical to the success of the process and the entity’s risk management and/or employee benefits program.
As more organizations utilize the RFP, which is required by some entities, to select their broker/ consultant, the use of technology coupled with meaningful questions and requests will allow for a better outcome and experience. The RFP can be designed to generate more, and betterquality responses which will, in turn, result in a better risk management program and better coverage(s) and customer service.
BACKGROUND
Public entities should have a vendor management strategy as part of their overall risk management/employee benefits resources strategy. Brokers and consultants should be part of that vendor management strategy. The vendor management strategy should include a vendor review or RFP process at regular intervals, or when otherwise warranted (triggers).
For the RFP process to be effective, it should be designed and executed in a formal manner.
Brokers and consultants are used to the RFP process — especially those that specialize in the public sector. Price should be a factor in the evaluation, but the projected Total Cost of Risk under each vendor should be the guiding principle for an award — along with other technical criteria.
The RFP process can be done quickly and efficiently if designed properly. The goal of the RFP process is to choose the right partner, not a specific partner. The RFP is a more formal process than a vendor review, and it does not mean that you will make a vendor change. A vendor review can also be effective if run in a controlled manner.
Although the RFP is a valuable tool, you don’t want to be known in the market as a “Serial RFPr.” The RFP process should be designed to foster a long-term relationship/partnership.
WHY/WHY NOT PERFORM AN RFP PROCESS
There are several reasons why you should perform the RFP process and a few reasons why you should not:
Why:
• Contract expiration
• Vendor dissatisfaction
• New provider/new benefit
• New service(s) needed
• Merger or acquisition
• Geographic/global expansion
• Staff turnover (both)
• Fiduciary Duty [Critical]
• Regulatory requirement
Why Not:
• To choose the broker/consultant you want to use anyway
• To achieve better pricing (unless evaluating total cost of benefits)
• To evaluate new strategies (free consulting)
• If one was conducted in the last 1-2 years, unless there was a major event
• If you cannot commit the time and resources required (commit to completing the RFP Process)
WHAT TO INCLUDE/EXCLUDE IN THE RFP
The RFP document should be developed to be efficient but comprehensive. If you use someone else’s RFP or create a “Frankenstein’s monster” RFP, be very careful, as these tend to be confusing and less efficient for both parties.
If your purchasing/procurement department needs to be involved, have several meetings with them to explain what is being purchased and provide a little education on the market, services, and how your current broker/consultant receives compensation.
Someone needs to be the point person and take ownership of the process to ensure the process is completed. Issuing an RFP and not making a decision is the worst-case scenario — staying with your incumbent broker/consultant as a result of the RFP process is not the same thing.
To reduce the number of vendor questions and requests for clarification, the RFP should include:
• An overview of your organization and organizational history and philosophy
• Detailed timeline of the RFP process
• Point person and contact info
• Reason for the RFP — be honest if any issues, or what would make you change
• Submission instructions and any specific requests
Specific policies or benefits the broker/ consultant would be responsible for (a schedule is best)
• Current broker/consultant and for how long
• Current compensation (more on this later)
• Minimum criteria and evaluation criteria
• The requested scope of services (note if the service is not currently provided)
Vendors should respond to each requested service on how they would deliver [consider page or word limits]
• A questionnaire
Company overview
Proposed client team
Resources available (internal)
Transition plan
References
Essay questions — tailor to what is important to you, no more than three
Proposed total compensation and methods
Proposed performance guarantees and penalties
Process for questions and answers as well as information for the bidder’s conference
RFP process — sample timeline
RFP PROCESS
Internally, the RFP should be developed — either use a past RFP with updates, a homegrown RFP, or one from a colleague at another company. Use caution when utilizing an RFP(s) from another company or from a prospective broker/consultant. Some employers use a third-party consultant to run the RFP process; unless the lead person is a former broker/consultant in your specific market (size, industry, funding, etc.), the process may not produce the most optimal result. An evaluation team should be identified and involved in all aspects of the RFP process. A timeline should be developed with your renewal date(s) in mind
Once the RFP is completed, it should be sent to brokers/consultants who meet your minimum criteria. If using a public or electronic service — include the minimum criteria or qualifications early in the RFP document, or if the system allows, use a “check the box” before the document can be accessed to ensure vendors meet the qualifications.
After issuing the RFP, conduct the bidders conference and Q&A period, which will give you a sense of who will be bidding (you can also ask for an intent to bid as part of the RFP). Keep in mind:
• Many large brokerage/consulting firms have separate teams that respond to RFPs
• They may ask questions that are not relevant to the response
• Knowing the bidder’s conference and Q&A are “public;” some potential responders do not ask questions — don’t take this as a lack of interest
• If legitimate questions are asked, responses should be provided within seven days
RFP should be submitted electronically, but allow for a hard copy also in the event some materials are hard to provide through email
A good strategy, which is required in some jurisdictions, is also to ask for the compensation response questions/form to be provided separately. The evaluation team would score the proposals and conduct the interviews before reviewing the compensation proposals. For those proposers who are selected for finalist interviews, a good process to follow is:
• Notify the finalists and provide day/time options. Two hours is a good meeting length
• Ask if they would like to schedule a half-hour prep call with your RFP contact person
Provide an agenda
Give them an opportunity to ask questions
• A finalist meeting should be more of an interview (Q&A), rather than a rehash of the RFP response or capabilities presentation
• Ensure that the actual proposed client team will be present
The proposed day-to-day person is the most critical part of their team
Ask questions of all their team members
Ask the proposer if they have questions
If they ask how many or who are the other finalists — it may be helpful to tell them
Outline the process for decision-making and the timeframe
COMPENSATION/PRICE PROPOSALS
Proposers only control direct compensation— not contingent or overrides (you can specify that they do not accept them on your account, but this will result in higher direct compensation).
Review the Total Cost of Risk/Benefits under each proposer:
• If a commission-based proposal, still ask for a dollar amount of what they expect in commission compensation based on the information provided
• For example, if one proposer is $50,000 more in fees/commissions, but their strategies result in 1%-2% lower costs, then they may be the “lower” bidder
• Fees and commissions are negotiable
• You can ask the broker/consultant to pay for certain insurance-related services (subject to state rebating laws)
• If you ask for a fee-only proposal, allow the proposers to offset the fee with any commissions that either can’t be removed (e.g., Flood) or would not lower the premiums if quoted net
• A requirement of the RFP and resulting contract should be a full disclosure and accounting of all compensation received by the broker/consultant as a result of your account
RFP CONTRACTING AND IMPLEMENTATION
Broker vs. Consultant
In most cases, there is no difference between the services provided by an insurance broker or an insurance consultant unless you are contracting for a risk management consultant — one who does not place policies. In some states, a separate license is required to call yourself an “Insurance Advisor” or “Insurance Consultant.” Many believe the compensation method — fees vs. commissions makes the determination. In reality, brokers and consultants can get paid by either method.
Again, full disclosure of all compensation received should be required as a result of the RFP.
There are different types of commissions:
• Direct — these commissions (percentage of premium) are included in the premium rates
• Indirect — these commissions are based on the broker/consultant’s overall book of business with a particular insurer (does not directly impact premium rates)
RFP Contracting and Implementation
• Agency Fees — these fees are paid to brokers/consultants for performing certain tasks on behalf of the insurer, such as claim management (does not directly impact premium rates)
• If you ask that your vendors provide rates “net of commissions,” which is not always the case
Many brokers/consultants utilize a hybrid approach — a combination of fees and commissions. The organization controls the direct compensation paid to the broker/consultant. A contract with your employee benefits broker/consultant is important whether you are paying fees or commissions.
The essential elements of a broker/consultant contract are:
• The specific scope of services to be provided
• The term and renewal terms (the contract should have no more than a 90-day notice to be terminated)
• Any performance guarantees, measurement criteria, and penalties
• Any services in which the broker/consultant will be outsourcing/subcontracting or paying on behalf of the employer
• Data breach notification and remedies
• Insurance requirements (require a Certificate of Insurance)
• License requirements (require a copy of license(s))
• A requirement for a no less than annual disclosure of all compensation received (dollar amounts) in all forms and from any source
Although arduous, the Request for Proposal should result in a stronger partnership between the organization and the broker/consultant and, ultimately, a lower cost of risk/benefits.
Patrick J. Haraden, CPCU, ARM, AIC, ASLI, AIS, AIAF, ARC, AMIM, PRC, AIC-M, is President – Lockton Boston/Portland for Lockton Companies.
BEST OF THE BLOG
CLIMATE RISKS, DATA BREACHES, AND FREEZING PIPES
WHEN IT RAINS, IT POURS: HOW MUNICIPALITIES CAN WEATHER THE CLIMATE RISK STORM
BY GREG SISSON
Climate risks, from extreme weather events to rising sea levels, pose a significant threat to public infrastructure, finances, and safety. Municipalities must conduct comprehensive risk assessments to identify potential vulnerabilities and prioritize mitigation efforts. This includes assessing the vulnerability of critical infrastructure such as roads, bridges, and water treatment plants to extreme weather events like floods, hurricanes, and wildfires. By understanding their unique risk profile, municipalities can develop targeted strategies to reduce exposure and enhance resilience.
Investing in resilient infrastructure is crucial for municipalities. This involves repairing and maintaining existing infrastructure and implementing proactive measures to strengthen it against future weatherrelated hazards. One effective strategy is incorporating climate adaptation measures into infrastructure planning and development processes. This may involve elevating buildings in flood-prone areas, improving drainage systems, or incorporating green infrastructure such as rain gardens and permeable pavement to mitigate the impact of heavy rainfall. Municipalities can reduce long-term risk and protect their communities from costly damage by integrating climate resilience into infrastructure investments.
In addition to physical resilience, municipalities must prioritize financial resilience to ensure they have the resources and capacity to respond to and recover from extreme weather disasters. This requires a comprehensive understanding of the financial implications of climate risks and the development of strategies to mitigate those risks. For example, potential extreme weather-related losses
should be factored into municipality budgets. Leaders should also consider comprehensive risk assessments to quantify the potential costs associated with climate-related hazards. By better understanding their exposure, municipalities can allocate resources more effectively and ensure they have the financial capacity to respond to climate-related disasters.
Furthermore, collaboration and partnerships are essential for building resilience at the local level. This includes engaging with community organizations, businesses, and residents to raise awareness about climate risks and develop collective strategies for adaptation and mitigation. By fostering collaboration and sharing knowledge and resources, municipalities can leverage the expertise of diverse stakeholders to build more resilient communities. Municipalities can also invest in public awareness campaigns to inform residents about climate
risks and encourage proactive measures such as emergency preparedness, flood insurance, and sustainable land use practices.
Municipalities must also consider the critical role of their workforce in maintaining essential services and responding to climate-related emergencies. It’s imperative to engage with stakeholders such as community organizations, businesses, and labor unions to ensure the safety and protection of municipal workers during climate-related disasters. Municipalities should engage with a trusted partner who can provide expertise and support in developing strategies to protect workers. With the right partners, municipalities can access the necessary tools and resources to safeguard their workforce better and reduce liability.
Greg Sisson is Chief Claims Officer for Charles Taylor.
DATA BREACH RISKS ARE MORE COMPLICATED THAN MANY KNOW
BY WALTER HOFFMAN
Risk teams are no strangers to the nuanced threat of data breaches and system compromises. Yet an emerging peril is making breach risk management even more complicated. The rise of the third-party breach, sometimes called a supply-chain attack, is adding to the list of risks faced by public sector organizations.
THIRD-PARTY BREACHES ON THE RISE
An analysis of U.S. data breaches in TransUnion’s 2023 Omnichannel Fraud Report showed a 145% increase in third-party breaches between 2020 and 2022. The severity of the breaches, in terms of the potential identity and fraud risks measured by TransUnion’s Breach Risk Score algorithm, also rose by 23%.
Cybercriminals favor third-party breaches mainly because of the scale they provide. Penetrating the cyber defenses of a large enterprise can take months of research and multiple attempts. Targeting smaller service providers — often with less robust cybersecurity resources — can give attackers access to the data and systems of dozens of the organizations that vendor services. With less effort and a higher volume of targets, bad actors realize significant financial gain.
DISPROPORTIONATE IMPACT ON THE PUBLIC SECTOR
While third-party breaches can happen to organizations in any sector, last year’s MOVEit breach is an example that drastically impacted public institutions.
While colleges and universities have taken the greatest hit, a significant number of government agencies and public health programs were also affected. Sensitive personal data was stolen from several high-profile platform users, including the U.S. Departments of Energy and Agriculture, the New York City School District, motor vehicle registries in Oregon and Louisiana, Colorado’s state health agency, and more than 850 colleges and universities.
Criminal access to private personal data, such as student records and driver’s license information, exposed millions of constituents to the risks of identity theft, social engineering scams, and financial schemes.
NUMEROUS POST-BREACH RISKS IMPACT PUBLIC ORGANIZATIONS
As risk management teams plan for potential third-party breaches, they should establish
controls and mitigation strategies that not only help reduce the risk of such attacks but also help the organization recover in the wake of an incident.
Some of the considerations to weigh when planning those strategies include:
• Ongoing disruption of services or benefits for constituents – By their nature, thirdparty breach forensics takes longer, often delaying the restoration of critical systems and processes.
• Undue stress and hardship among employees – Whether fielding calls from upset constituents or losing access to technology, breaches can make even menial tasks a headache.
• Exposure of internal and employee data – Cybercriminals frequently seek the personal data of employees to help them execute sophisticated social engineering schemes that can provide access to the employer’s systems. This can lead to a loss of trust among constituents, the public, and funding sources.
• Long-tail exposure of sensitive dataOnce stolen data is brokered on the dark web, it can cause problems for victims for years.
• Compliance with state notification rules – Regulations vary wildly depending on the state, the size of the breach, and even the sector — and they frequently change.
After rampant attacks in 2023, cybercriminals are eyeing opportunities to replicate their success, so the threat of supply chain attacks is only expected to increase. Make sure your team has taken proactive steps to minimize the risk of being caught in a supply chain attack and that your organization has a response plan in place to enable a fast, effective reaction if an incident does occur.
Walter Hoffman is Vice President, Public Sector for Sontiq (a TransUnion Company).
PREVENTING PIPE FREEZES AND PIPE BREAKS
BY J. BRETT CARRUTHERS, ASP, CSP, RSSP
The trees are bare. Mother Nature’s fury has started for winter. The clocks have been changed and with the additional hours of darkness, temperatures are now settling below freezing at night. As winter begins its annual visit, this is the time to minimize the opportunities for conditions leading to freezing pipes and their subsequent rupture, damage and disruption.
WATER DAMAGE LOSSES
Water damage losses are among the most common losses during cold and freezing temperatures. These losses affect all areas of school buildings and create significant disruption to activities. Many of these losses are preventable with adequate pipe insulation, pipe tracing, heating system extensions, proper building management system setbacks and emergency generators.
FREEZING AND BURSTING PIPE BASICS
The time to start preparing is behind us. Being proactive now can keep your pipes warm and protected this winter. The following tips will prevent your pipes from freezing and keep water flowing this winter.
When pipes freeze, pressure builds, potentially bursting them at their weakest point and causing water damage. Pipes in crawl spaces, exterior walls, team and locker rooms, and outdoor hose bibs are particularly vulnerable, especially when they’re subjected to extra cold air.
We all know that freezing begins at 32° F, but at what point do pipes freeze within our buildings? Temperatures only need to drop to about 20° F for a few hours to put exposed pipes at risk. So, your best bet is to insulate your exposed pipes to keep that temperature well above the freezing point.
BEST PRACTICES TO KEEP PIPES FROM FREEZING
The key to keeping your pipes away from freezing temperatures isn’t reaction — it’s preparation. Check out these tips to help prevent the risk of your pipes even coming close to freezing temperatures.
COVER EXPOSED PIPES WITH INSULATION SLEEVES
Insulation sleeves, usually made of foam and are available at any building supply store, are inexpensive ways to surround your pipes with warmth and keep them from freezing in cold temperatures. They’re affordable and easy to install, making them an excellent alternative to paying thousands of dollars to fix a frozen and burst pipe and its aftermath.
SEAL CRACKS IN THE WALLS THAT LET COLD AIR IN
A small wall crack that lets in a small account of cold air might not seem like a big deal but add all those little cracks together and you’ll find out that they’re costing you quite a bit of money on your heating bill and damaging your pipes, too. Seal cracks and openings around windows, doors, and at sill plates. Use weather stripping to stop the air from getting in and consider picking up a couple of draft stoppers for your doors to the outside. They’re both easy to install, help prevent your pipes from freezing and are even easier to remove come springtime.
TURN OFF AND EMPTY
OUTDOOR FAUCETS
A pipe without water in it won’t be able to freeze or burst, so make sure you turn off any outdoor faucets. After shutting them off, open the faucet to drain any remaining water. While you’re at it, disconnect and store any hoses you might have left outdoors so they don’t become damaged by the freezing temperatures.
PAY ATTENTION
TO PIPES IN UNHEATED OR UNDER-HEATED AREAS OF YOUR BUILDINGS
Pipes in crawl spaces and basements run a higher risk of freezing than your main-level pipes, so consider all tips and pay special attention to those areas.
KEEP YOUR GARAGE AND SHOP DOORS CLOSED
Not only will closing your garage and shop doors keep critters from getting into your stuff, but it’ll also keep your garage or shop areas warmer and add an extra layer of protection to stop any pipes from freezing in these areas or along their walls.
OPEN INTERIOR FAUCETS
If a cold snap is fast approaching and you don’t have time to take all the previously recommended steps, you can still help prevent frozen pipes with a simple turn of the faucet handle. Open your faucets just slightly to allow a small flow of water. Moving water is less likely to freeze, relieving excess pressure that builds if freezing does occur.
ADDITIONAL HELPFUL TIPS
Cold weather is an equal-opportunity freezer. Both metal and plastic pipes will break when water freezes and expands.
• Keep thermostats above 60 degrees in areas that are poorly insulated. Every degree counts!
The winter months have a host of extended breaks and long weekends. These are particularly worrisome because fewer staff are available to detect heat malfunctions, frozen or burst pipes, low thermostat settings or renovations and repairs that expose pipes.
• Drain all pipes not in use or not used for fire protection.
• Check for pipe insulation in basements, crawl spaces, under stages, and other areas where pipes may be under-heated.
• Check for wet pipe insulation in the same locations. Wet insulation is an indication of an active leak and requires correction before a freezing condition occurs.
• Identify all water main valves and maintain clear access to them in case they must be closed quickly. Ensure closure devices are in place.
• Open doors from heated areas to unheated areas to keep pipes sufficiently warm.
• Take and monitor thermometer readings, especially on cold days, to help determine vulnerable areas.
• Check fresh air intakes (especially in boiler rooms) to ensure the louvers are not frozen open.
• Check to see if pipe sleeves and heat tapes are working.
Double-check vulnerable areas such as:
• Pipes running against exterior walls
• Outdoor hose bibs, pool or outdoor shower supply lines and sprinkler lines that run through unheated or uninsulated spaces
• Supply lines in garages or receiving areas
• Water lines in locker or team rooms
If you’ve had a pipe freeze in the past — or experienced a near miss — anticipate a repeat unless you’ve taken adequate preventive measures.
BE PROACTIVE OVER WINTER HOLIDAYS AND LONG WEEKENDS
The winter months have a host of extended breaks and long weekends. These are particularly worrisome because fewer staff are available to detect heat malfunctions, frozen or burst pipes, low thermostat settings or renovations and repairs that expose pipes.
Arrange for staff to check buildings during these breaks. Early detection can prevent significant damage and coinciding disruption to school operations.
BUILDING MANAGEMENT SYSTEMS
Meet with your building management system (BMS) contact. Ensure temperature setbacks are not below 55 degrees. Ensure univents are programmed to increase heat if temperatures in the room fall below 55 degrees. Check boiler operating temperature set points to ensure they are compliant with the manufacturer’s specifications. Check other temperature parameters and sensors to ensure they are properly set for the change in seasons.
If your BMS provider has the capability to send critical alerts via text or email, ensure these are set to notify you of rooms with temperatures below 55 degrees (in an unoccupied state). This is also a great time to update your contact points with your automated BMS alerts (above) and EMS, police, and security companies to reflect personnel and contact number changes that may have occurred in the last year.
LOSS OF POWER
The loss of power is a leading cause of pipe freeze and pipe break losses. Buildings are without heat for an extended period, leading to their freezing, rupturing, and subsequent damage. Buildings without emergency power should have arrangements made for portable generators to provide emergency power to mission-critical equipment [heat plant, freezers, coolers, IT equipment, and building alarm systems]. Alternatively, provisions should be made for portable heating units to provide building heat while the building is without power.
EMERGENCY GENERATOR CHECKS
Emergency generators should be run weekly for at least 30 minutes and periodically under load to ensure they will start and can handle the load. They should receive preventive maintenance by a qualified firm semi-annually to ensure their reliability during emergencies. Staff should receive training in their operation.
For fueled generators, the fuel should be fresh, and the tank(s) topped off prior to cold weather setting in. There have been numerous instances of generators failing due to contaminated fuel. Stored fuel can accumulate algae, which can quickly plug fuel strainers and filters.
CAPITAL PLANNING
This must become a priority for upcoming capital projects in buildings without emergency power generation. Protecting mission-critical equipment is essential.
OTHER STEPS
If leaks occur, remove and discard waterdamaged ceiling tiles, clean up the water as soon as possible, and utilize drying equipment (fans and dehumidifiers). Call a restoration company or flooring expert immediately If water gets on or underneath. It needs rapid attention to avoid a significant loss. When necessary, contact a restoration company for emergency mitigation services.
J. Brett Carruthers, ASP, CSP, RSSP is Senior Vice President, Risk Management and NYSIR Director of Risk Management for Wright Public Entity.
PRIMA INSTITUTE 2025 BIG IDEAS.
The Industry’s Premier Risk Management Educational Program
October 20–24 // Columbus, OH
PRIMA Institute 2025 (PI25) is an innovative educational symposium comprised of fundamental risk management curriculum, outstanding faculty, and excellent networking opportunities. PI25 is aimed at new and seasoned risk management professionals who want to learn more about emerging trends and best practices.
REGISTRATION OPENS IN JUNE
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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 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 Nick Baker at nbaker@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 1–4, 2025
PRIMA 2025 ANNUAL CONFERENCE Seattle, WA Washington State Convention Center
June 7–10, 2026
PRIMA 2026 ANNUAL CONFERENCE Fort Lauderdale, FL Broward County Convention Center
PRIMA WEBINARS
December 18 Award-Winning Ideas and Lessons from PRMYs
PRIMA INSTITUTE
October 20–24, 2025 Columbus, OH
PRIMA LEADERSHIP ACADEMY
March 4-5, 2025 Alexandria, VA
THE PRIMA LEADERSHIP ACADEMY
LEADERSHIP IS THE WORK OF STRATEGICALLY USING THE TOOL THAT IS YOU.
MARCH 4–5, 2025 | ALEXANDRIA, VA