PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION JANUARY 2017
F O R P U B L I C R I SK M A N A G EM EN T PAGE 6
ALSO IN THIS ISSUE
PRECISION MEDICINE IMPROVES PATIENT HEALTH USING GENETIC TESTING PAGE 10
FOUR KEY COMPONENTS TO REDUCING FLEET RISK PAGE 14
PRO
TER
SUPPOR UD
PRIMA 2 017
BITCO Insurance Companies1 Old Republic Aerospace2
Specialized Offerings and Public Entity Expertise. Old Republic Insurance Group offers a full suite of risk management and insurance solutions, and Third Party Administration (TPA) services, with specialized offerings and expertise to meet the unique needs of public sector clients.
Old Republic Specialty Insurance3 PMA Companies3
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Insurance contracts are underwritten and issued by: 1. BITCO General Insurance Corporation and BITCO National Insurance Company; 2. Old Republic Insurance Company; 3. Pennsylvania Manufacturers’ Association Insurance Company, Manufacturers Alliance Insurance Company, Pennsylvania Manufacturers Indemnity Company.
JANUARY 2017 | Volume 33, No. 1 | www.primacentral.org
CONTENTS
The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.
PRESIDENT Terri L. Evans Risk Manager City of Kingsport Kingsport, TN PAST PRESIDENT Dean R. Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ PRESIDENT-ELECT Amy J. Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN DIRECTORS Brenda Cogdell, AIS, AIC, SPHR Risk Manager, Human Resources City of Manassas Manassas, VA
Data Analytics for Public Risk Management
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Scott J. Kramer, MBA, ARM City/County Director of Risk Mgmt Montgomery County Commission Montgomery, AL Jani J. Jennings, ARM Insurance & Safety Coordinator City of Bellevue Bellevue, NE Scott Moss, MPA, CPCU, ARM, ARM-E, ALCM P/C Director Oregon Public Entity Excess Pool Salem, OR Lori J. Gray Risk Manager County of Prince William Woodbridge, VA Donna Capria, CRM, CIC, AINS Risk & Insurance Coordinator WaterOne of Johnson County Lenexa, KS
By Michael Elliott, CPCU, AIAF
NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Risk Management Association Alexandria, VA EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org ADVERTISING Jennifer Ackerman, CAE 703.253.1267 • jackerman@primacentral.org
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Precision Medicine Improves Patient Health Using Genetic Testing By Belva Hale and Larry Saunders
IN EVERY ISSUE
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Four Key Components to Reducing Fleet Risk By Phillip E. Russo, CAE
| 4 NEWS BRIEFS | 19 ADVERTISER INDEX
Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year. Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine. POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314. Copyright 2017 Public Risk Management Association
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PRIMA’S 2017 ANNUAL CONFERENCE JUNE 4–7, 2017 // PHOENIX, AZ
REGISTRATION NOW OPEN!
MESSAGE FROM PRIMA PRESIDENT TERRI L . EVANS
W
Let’s Talk Loss Control!
elcome to 2017! Winter is upon us, some more severely than others, and with the New Year, it is a good time to reflect on our risk management goals and accomplishment. And good loss control is the best place to start. Without good loss control, it is unlikely that you will be able to meet your goals or achieve your accomplishments. As risk managers, one of the most important aspects of our job is loss control. Losses cost our entities in time, money, equipment, reputation, manpower and human suffering. Using our risk management training and experience, we are constantly looking for ways to mitigate our potential losses. We ask ourselves, how can we get better outcomes? Most of our entities have a wide variety of operations, which may include schools, police, fire, water, sewer, fleet maintenance, transit, streets, garbage/trash, landfills, parks, pools, hospitals, airports and tribal gaming operations, just to name a few. Then, we all have the administrative side of things like legal, finance, HR, maintenance, planning/zoning and governing boards/commissions. To better implement loss control, we need to clearly understand these operations as well as the regulations and/or guidelines that apply to specific situations, for example: state/federal OSHA, CPSC guides for playgrounds and other recreational facilities, NFPA, IACP, EPA, ADA, DOL, FHWA, DOT, FAA, Homeland Security, FEMA, CDC, NIOSH, Joint Commission for Healthcare Providers, GFOA. We must also look at workers’ compensation rules, as the only good employee injury is the one that never happens; evaluate reputational risks faced by our entities, knowing that constituents are quick to criticize and slow to forgive; and the list goes on and on.
As risk managers, one of the most important aspects of our job is loss control. Losses cost our entities in time, money, equipment, reputation, manpower and human suffering. Using our risk management training and experience, we are constantly looking for ways to mitigate our potential losses. We ask ourselves, how can we get better outcomes?
Knowledge and best-practices sharing goes a long way to help your entity be the best at what it does. We need to review and investigate past losses for root causes and trends, determine what risks we have, and develop a plan of action to reduce our potential for losses by removing the risk, engineering out the risk, insuring the risk at appropriate levels or accepting the risk as is. We must also develop ways to impact and change employee behavior, attitudes and habits. Piece of cake, right? PRIMA and its members are the go-to resource for the latest trends in loss control. From learning best practices at the annual conference or sharpening our skills at PRIMA Institute, to immersing ourselves in the ERM training or to connecting with peers who face the same challenges on PRIMAtalk— remember, working together is the best loss control tool we have. You may recall that PRIMA commissioned a Needs Study in 2013. One of the top issues the respondents mentioned was getting a handle on loss control. We currently have a task force
working to divide the overall, huge topic of LOSS CONTROL into smaller elements around which we can develop training modules to help our members with loss control issues. This is a very exciting project that I believe will bring a lot of value to our members. Stay tuned! While 2016 was a trying year, with its’ share of risk management tragedies, including the January blizzards, hurricane Matthew, the Lockhart Hot Air balloon crash, the mass shooting in Orlando, a deadly school bus crash in Chattanooga and the wildfire destruction and loss of life in and around the Great Smokey Mountain National Park, let’s hope Mother Nature gives us a little break so we can focus on a vitally important part of our jobs—Loss Control.
Terri L. Evans 2016–2017 PRIMA President Risk Manager City of Kingsport, Tenn.
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NEWS BRIEFS
NEWS Briefs
IN DISCIPLINING STUDENTS, U.S. EDUCATION SECRETARY URGES SCHOOLS TO PUT DOWN THE PADDLE U.S. Education Secretary John B. King Jr. sent a letter to governors and school leaders making his case that corporal punishment, which can include paddling or spanking, is ineffective. He cited statistics he says show it doesn’t improve student performance and can lead to long-term mental health issues. He also argued it’s used disproportionately against students who are African-American or have a disability. “This practice has no place in the public schools of a modern nation that plays such an essential role in the advancement and protection of civil and human rights,” King wrote.
In Georgia, about 1 in 8 public schools use corporal punishment, according to state Education Department data on nearly 6,000 students last school year. Most Georgia school districts that use corporal punishment are in rural parts of the state. None of metro Atlanta’s school districts employ such measures. Some Georgia educators told The Atlanta Journal-Constitution in a recent article about corporal punishment that some
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high school students would rather take a spanking over an in-school suspension. Some parents, the educators say,
“
ask teachers to spank their children for household transgressions.
This practice has no place in the public
schools of a modern nation that plays such
“
King’s letter does not suggest penalties to schools that continue to use corporal punishment. News accounts have reported that President-elect Donald Trump is considering different candidates for education secretary. American Federation of Teachers president Randi Weingarten called on Trump to end corporal punishment during a conference call with reporters, reports the Tribune News Service.
an essential role in the advancement and protection of civil and human rights.
John B. King Jr., U.S. Education Secretary
EARTHQUAKE COMING? NEW WARNING SYSTEM WILL GIVE CALIFORNIANS PRECIOUS SECONDS TO PREPARE
WHY SOME PEOPLE ARE GETTING PENSION REFUNDS IN ARIZONA A state Supreme Court ruling will require refunds to elected officials and public-safety officers who since 2011 were required to pay more for their pensions, with local governments likely to cover the projected $220 million cost to an already fragile public-pension trust fund, reports the Arizona Republic. The divided court upheld a Maricopa County Superior Court ruling that found a 2011 pension-reform law was unconstitutional. Specifically, it overturned provisions in the law that increased employee contributions to their own retirement and curtailed certain benefit increases. The law was intended to improve the financial health of the Public Safety Personnel Retirement System trust fund.
In the next few years, if you are a California resident, an alert advising of a slight chance of earthquake might fly across your social media accounts in the same week an Amber Alertlike blast hits your cellphone, warning of an imminent temblor, reports the Sacramento Bee.
They worry that people become complacent as time passes without a major earthquake. They hope alerts—either a fairly long-term forecast or instant bulletins from the early earthquake warning system—may jolt Californians into better preparing themselves for a disaster.
The first one might lead you to avoid bridges for a few days; the second should prompt you to duck and cover.
“In my view, they should be put out on a regular basis, weekly seismic weather reports,” Jordan said. “They’re always there.”
They’re two of the communication tools the California Office of Emergency Services is refining as it builds out the state’s early earthquake warning system, a project that gained a $10 million boost from a bill Gov. Jerry Brown signed in September.
The new surge in funding for the early earthquake warning system is intended to strengthen a network that is already in use by a handful of public agencies. It will give the state more earthquake sensors to place near major faults, which should help it issue more precise warnings.
It aims to give Californians a few seconds or minutes to prepare for a shake. That sounds short, but could buy enough time to stop a full-speed BART train or give a construction crew a moment to find cover.
They will mostly be placed in the Bay Area and Southern California, which face greater earthquake risks than inland counties, though Yolo County last week experienced a swarm of low-magnitude shakers. If a big one hits, Sacramento residents would most want to be prepared to help evacuees from the coast, said Steve Cantelme, chief of the county’s Office of Emergency Services.
“You might have time to think about it and prepare yourself,” said Tom Jordan, director of the Southern California Earthquake Center. “I went in for back surgery a couple years ago and I remember thinking, ‘Gee, I wish we had an earthquake early warning system’ ” in case a temblor struck at a critical moment in his operation. He’s among the geologists and emergency management leaders who are urging ever-more communication about earthquake risks in California.
Eventually, the state Office of Emergency Services wants the system to quickly assess an earthquake’s direction and warn the public through cellphone blasts that would resemble alerts for child abductions or flash floods. It’s similar to a system in Japan that instantly warns residents of coming earthquakes.
The decision means hundreds of PSPRS members whose employee contributions were increased will receive refunds, while some retirees will receive retroactive benefit increases. Justices also ordered attorneys’ fees paid to the plaintiffs’ counsel, and interest on the repayments. Federal education officials are pleading with school districts, including some in Georgia, to stop using corporal punishment as a means of student discipline.
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FOR PUBLIC RISK MANAGEMENT BY MICHAEL ELLIOTT, CPCU, AIAF
G
overnment agencies and municipalities have no lack of data. Public entities are swimming in databases, with documents and detailed reports going back decades—and much of them collecting dust in basement cabinets. In fact, surveys have found that very little of this housed information is being used. So the vast insights that could be gleaned from all that documentation are left almost entirely undiscovered. This presents a revolutionary opportunity for public sector risk managers to harness the power of data analytics. The tools and techniques available today for analyzing information can unlock a sea of statistics to inform better risk management decisions and cut down on waste. Let’s be clear: government entities need data scientists to seize this potential. Risk managers can’t be expected to pick up the necessary, relevant skills in their spare time. But at the same time, data scientists need risk managers to speak their language if they really want to get the most out of their
efforts. Data scientists can’t be expected to figure out all on their own what insights would be most useful for government decision makers. That’s why the best way for public sector risk managers to take advantage of data analytics is to think and speak in terms of data—to have a data mindset. This will help them work with data scientists to fully leverage the information at their disposal. The first step is understanding some of the ways that analytics can help solve their problems.
TEXT MINING
Maybe the most exciting innovation for governments steeped in information and documentation is the ability to organize, search and analyze it all through text mining. This approach involves using programs to analyze typed or handwritten text.
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DATA ANALY TICS FOR PUBLIC RISK MANAGEMENT
Text mining allows public entities to seek insights from tens of thousands of pages of documents developed by all sorts of departments. It exponentially increases the amount of information that leaders can use—from inspection reports for buildings, to traffic fines, to years’ worth of meeting minutes from advisory boards and committees. In addition, text mining can uncover trends that have been hidden in plain sight, as well as help find answers faster when decisions need to be made quickly. Text mining can also allow governments to address problems as they occur. Algorithms that seek out certain words or phrases and actually parse the sentiment of those statements can identify potential issues for risk managers. Just as businesses analyze social media comments to manage their professional reputations, so can governments to quickly address issues their constituents are reporting. The technical capabilities can be assured, but it’s incumbent upon risk managers to guide data scientists in creating programs that search for the most helpful information. Risk managers will know what questions need to be answered, but will need to work with their more technically savvy colleagues to build processes for finding those answers. The more that risk managers understand what’s possible, the more they will be able to propose actionable ideas.
ACCIDENT PREVENTION AND INVESTIGATION Workplace accident prevention is another area where data analytics can play a key role.
Efforts to preventing accidents and injuries on the job have always relied on some form of data, mainly past accidents. However, analyzing past accidents is inherently limiting, usually focusing on a single action or situation with its own set of specific circumstances. In reality, even basic, commonplace accidents are the result of multiple actions and complex interactions. That makes them ripe for more detailed analysis through the application of data science techniques. There are two key ways that the introduction of analytics represents a revolutionary step forward
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in this regard: it allows for the collection of information from sensors that greatly expand the volume of data that can be evaluated, and it lays the foundation for predictive models to better estimate accident probabilities. When it comes to data collection, wearable sensors, a.k.a. wearables, are already popular among consumers in the form of fitness trackers. The applications go even further with wearables in the workplace, such as head gear that can identify toxic fumes or even detect brainwave activity to measure worker fatigue. Some of the data detected by these sensors isn’t necessarily immediately telling—for example, the number of steps a worker has taken in a given day. However, when combined with other factors, like the number of consecutive days that employee worked and the last time the employee received safety training, individual pieces of data can become more relevant, helping risk managers build probability models for accidents. Again, the only way to develop truly helpful programs is for risk experts and analytics experts to work together. Risk managers are the experts in knowing what factors may contribute to an accident, while data scientists are the experts in knowing how to gather, sort and analyze data. Combining these skill sets and knowledge bases is dramatically more productive than having either side work in isolation.
CLAIMS HANDLING
Self-insured government entities that handle their own workers compensation claims can also make use of data analytics to improve their processes and crack down on fraud. Large enterprises have been quick to use analytics to root out fraud. They use them to spot patterns that seem suspicious, not just coincidental, such as various auto claims that involve the same drivers, accident witnesses and auto body shops. Public sector risk managers could similarly track and analyze whether claims from government employees bear suspicious similarities and merit further investigation. On the flip side, data analytics tools can help cut costs by streamlining the investigation process for claims that have little potential for fraud.
Analytics can make claims handling faster and more efficient in other ways as well. A method called process mining applies the concept of data mining to an entire process rather than just a certain set of data, serving to quantify an entire workflow. Process mining might reveal that a certain step in the claims handling process takes disproportionately long—two days to call someone back, for instance—and that if the protocol were tweaked, it might fix the persistent issue. Much frustration could be avoided for everyone involved if an isolated problem in the process was solved.
DATA MINDSETS
Risk management wouldn’t work without data, so data has always been part of the industry. But when analytics allow for making sense of previously unexamined information, as well gathering all new datasets, risk managers have a dramatically expanded toolbox for doing their jobs more effectively. That reality is incredibly exciting for risk managers, who have traditionally been saddled with too much information and not enough time to go through it. That being said, what happens to those organizations and agencies without data scientists on staff? In such cases, there’s one more advantage for risk managers who know how analytics can be applied: they can articulate the potential to leadership to secure buy-in. Being able to explain in clear, concise terms exactly how analytics can create efficiencies and reduce waste can help the public sector catch up to its private sector colleagues. As agencies and municipalities look to create and refine organization-wide risk management strategies, a deep understanding of what data is available and how it can be put to use is essential. That all comes back to the importance of risk managers getting into a data mindset. They need to conceptually understand data analytics and be able to bring their own knowledge and skill sets to the conversation. Those who do will be assets to their organizations and have a bright future in their industry. Michael Elliott, CPCU, AIAF, is the senior director of knowledge resources for The Institutes.
Everyone else is doing it. Why aren’t you?
Join PRIMA’s 2017 Enterprise Risk Management training and learn how to add value to your risk management program by implementing an enterprise-wide approach to risk. PRIMA developed this training program to teach attendees how to apply the framework of the ISO/ANSI/ASSE 31000 Standard. Participants will learn the basics of the standard as well as how to fully integrate the framework in their organization’s risk management program.
Visit primacentral.org/ermtraining for 2017 training locations and dates.
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PRECISION MEDICINE IMPROVES PATIENT HEALTH USING GENETIC TESTING
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BY BELVA HALE AND LARRY SAUNDERS
F YOU OR ONE OF YOUR FAMILY MEMBERS HAVE EVER BEEN PRESCRIBED A MEDICATION, then you may have experienced the drawbacks of the old-fashioned, trial and error approach to
selecting drugs that has been used for centuries. Your physician knows the drug that is most effective in most people. It’s only logical then that they would have you take that drug for a while and see if it works. If not, then you could try a different drug and repeat the process over and over until you
find one that works for you. In the absence of a more precise method, we’ve tolerated the wasted
time, money, and delays in treatment of this antiquated approach. However, just as microwave ovens forever changed the way we prepare meals, the sequencing of three billion base pairs of the human genome in April of 2003 paved the way to significantly improve how medicine is prescribed.
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PRECISION MEDICINE IMPROVES PATIENT HEALTH USING GENETIC TESTING
Precision medicine, also referred to as pharmacogenetics, is the study of genetic variability that impacts a person’s ability to safely and effectively metabolize medications based on the individual’s unique DNA. Despite sharing the same diagnosis, individuals suffering from the same illness may respond differently to the same prescribed treatment. A simple, one-time, saliva test can evaluate a patient’s genetic pathways that are utilized to metabolize some medications. This takes the guesswork out of prescription drug choices and dosing. It also reduces adverse drug reactions which have been estimated to cost $136 billion annually.1 Best of all, it improves drug efficacy and eliminates the cost of drug therapies that simply do not work due to the patient’s individual genetic makeup.
BLACK BOX DRUGS
The FDA has put black box warning labels on some drugs that may be harmful to patients with certain genetic makeups. One of those drugs is clopidogrel, sold under the trade name Plavix. This drug is used to inhibit blood clots in patients with coronary artery disease and the intent of the medication is to prevent heart attack and stroke in people who are at high risk of these events, including those with a history of myocardial infarction. It is also used, along with aspirin, for the prevention of thrombosis after placement of a coronary stent.
Clopidogrel is activated in the liver by an important drug-metabolizing enzyme, CYP2C19. This enzyme catalyzes the biotransformation of many clinically useful drugs, including antidepressants, barbiturates, proton pump inhibitors, and antimalarial and antitumor drugs. In March 2010, the FDA put a black box warning on Plavix to make patients and healthcare providers aware that CYP2C19poor metabolizers, representing up to 14% of the population, are at high risk of treatment failure. Patients with variants in CYP2C19 have lower levels of the active metabolite of clopidogrel, less inhibition of platelets, and a 3.58 times greater risk for major adverse cardiovascular events such as death, heart attack and stroke; the risk is greatest in CYP2C19 poor metabolizers.2 The drug that is typically prescribed to poor metabolizers of CYP2C19 is ticagrelor, sold under the trade name Brilinta. This is because Brilinta is activated in the liver by a different drug-metabolizing enzyme, CYP3A4. The downside is that Brilinta has an estimated average annual cost of $1,800 compared to the $50 estimated average annual cost of clopidogrel. But when you consider the average cost of restenosis, replacing a clogged stent, is $19,0003 and the average cost of a heart attack or stroke is over $60,0004, it makes economic sense to identify patients that need to be on Brilinta even if it increases drug spend.
IS GENETIC TESTING BENEFICIAL IF YOU ARE CURRENTLY NOT TAKING MEDICATIONS?
Even if you currently are not taking any medications there may still be a benefit to having a genetic test to provide your physician with information about how you metabolize drugs. Particularly if you’re one of the 2% of the population who carry an extra copy of the CYP2D6 gene. These patients have a greater risk of complications under anesthesia due to their inability to normally metabolize anti-nausea drugs. This can lead to aspiration pneumonia, an anesthesiologist’s worst nightmare. Although aspiration pneumonia during surgery is rare, most physicians agree that it’s prudent to administer anti-nausea drugs when patients are going under anesthesia. One of the most commonly prescribed drugs ondansetron, sold under the trade name Zofran, is metabolized through the CYP2D6 pathway. Unfortunately, ultra-rapid metabolizers use up the drug before they receive much anti-nausea benefit making the physician’s understanding of the correct dosage critical in mitigating the increased possibility of aspiration pneumonia. Anesthesiologists at the University of South Florida’s Moffitt Cancer Center require that every surgical cancer patient undergo a genetic test to determine if special dosing is needed. Howard McLeod, medical director at the DeBartolo Family Personalized Medicine Institute at Moffitt, stated in an article for Genome Magazine that, “A two percent risk of treatment failure is much higher than they are willing to tolerate in this context. It was a real eye opener, as we tolerate between a 20 percent and 40 percent failure rate in the use of antiemetics for the prevention of chemotherapy-induced nausea and vomiting.” When you consider that patients of North African and Middle Eastern ethnicity have an estimated 28% prevalence of CYP2D6 ultra-rapid metabolizer phenotype and that Caucasian prevalence could be as high as 10%, shouldn’t every patient preparing to undergo surgery be tested?
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ECONOMICS OF GENETIC TESTING
Since healthcare budgets are limited, it was previously not practical for payers to require a genetic test for certain drugs. Fortunately advances in robotics and economies of scale have made genetic testing both actionable and affordable. You can now test 200 people for less than the cost of your average heart attack and since a person’s genetic makeup doesn’t change, they only need to be tested once. Genetic testing provides a tool to meet a critical need to manage the skyrocketing cost of specialty drugs. Implementing a drug utilization management program using genetic testing helps identify the right drug, at the correct dose, the first time; increasing safety and efficacy while reducing costs. With the implementation of precision medicine, employees and their families can enjoy access to the latest advances in healthcare by understanding what medications are best
suited for them and best of all it is a non-evasive salvia test. They can experience improved treatment and overall better long-term health. They no longer have to waste time and money experimenting with ineffective and potentially unsafe medications, and therefore possibly avoid recurring, harmful episodes of secondary risks like a heart attack or stroke. It is reasonable to assume that employers will realize potential savings on pharmaceutical benefit costs while offering participants new options in healthcare and treatment. At times, testing reveals that prescription costs can be lowered, but even when a more expensive medication is identified as a better match, they are rewarded by knowing that prescription dollars are being spent wisely on more effective medications. This results in a healthier, more productive, member population and a reduction in overall medical claims. Belva Hale is a key account manager with Sherrill Morgan. Larry Saunders is the president of MyGenetx Wellness.
With the implementation of precision
medicine, employees and their families can
enjoy access to the latest advances in healthcare
by understanding what medications are best suited
for them and best of all it is a non-evasive salvia test.
They can experience improved treatment and overall better long-term health.
FOOTNOTES 1 Johnson JA, Bootman JL. Drug-related morbidity and mortality. A cost-of-illness model. Arch Intern Med 1995;155(18):1949–1956. 2 PGxNews.Org (June 2009). “FDA updates Plavix label with PGx data”. PGxNews.Org. Retrieved 2009-06-13. 3 February 2004, Journal of the American College of Cardiology, “Can We Afford to Eliminate Restenosis? Can We Afford Not To?” 4 April 2011, Milliman Research Report, “Benefit Designs for High Cost Medical Conditions”
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FOUR KEY COMPONENTS
TO REDUCING
FLEET RISK BY PHILLIP E. RUSSO, CAE
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T
HE BASIC PURPOSE OF RISK MANAGEMENT is to make the most efficient pre-loss arrangement for a post-loss balance between resources needed and resources available to preserve the effective operation of the organization. This balance of risk is achieved through systematic programs of loss prevention and control, taking into account the organization’s risk capacity and risk appetite.
The risk management process is a systematic, methodical system ensuring the level of risk within an organization remains within an acceptable range. The process consists of well-defined steps that, when taken in sequence, support better decision-making. While the steps in the risk management process may vary slightly from organization to organization, they generally employ some or all of the following elements: • Assign responsibility for the risk management function • Identify and analyze all organizational risks and exposures • Quantify or measure the risk in terms of potential likelihood and magnitude • Examine alternative strategies for managing the risk and/or paying for the losses that are not avoided • Choose and prioritize the most appropriate elimination and/or control strategies • Develop and implement the fix to control or otherwise manage the risk and associated liabilities
• Communicate the results of the risk management process throughout the organization • Monitor the program for effectiveness and modify as necessary Fleet safety programs should be an integral part of every enterprise’s risk management plan. Fleet safety programs reduce fleet costs by preventing accidents rather than managing them. Fleet safety programs are typically customdesigned based on analyses of accident, driver, and behavioral data. The cornerstone of any company activity—and especially of a safety program—is management buy-in. The success of the fleet safety program depends largely upon what management knows about safety, expects from the safety program, and is willing to invest in it. Some key components of a fleet safety program, and therefore, fleet risk management are proper driver selection, effective driver training, driver skill assessment, and recognition for outstanding accomplishments. Let’s look at each of these.
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FOUR KEY COMPONENTS TO REDUCING FLEET RISK
PROPER DRIVER SELECTION Fleet and risk managers can reduce their total accident rates from the outset by first understanding the required skills and aptitudes of their drivers, then selecting drivers with the best potential for driving safely. For example, driving demands for a school bus driver are very different than those for a sales-related driver; fleet and risk managers must know these differences and requirements and hire the appropriate personnel. The best approach to predicting safe driving ability is to hire experienced drivers who have established Motor Vehicle Records (MVRs) that can be verified. Safe drivers share several common characteristics, including: • • • • • • • • • •
Avoiding accidents Following traffic regulations Performing pre-and post-trip inspections Avoiding abrupt starts and stops as much as possible Avoiding schedule delays Avoiding irritating the public Performing the non-driving parts of the job Finding satisfaction Getting along with others Adapting to existing conditions
DRIVER SKILL ASSESSMENT Driver assessments monitor crash, motor vehicle, and safety infraction data for
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every driver. The goal is to identify drivers that present a high accident risk before a crash occurs to allow implementation of preventive measures. Telematic devices installed in vehicles, or provided as original equipment by the vehicle manufacturers, provide the ability to identify drivers who speed habitually, deviate from planned routes, over-idle their vehicles and commit other infractions. Some devices can even prompt drivers to review the organization’s compliance policy and administer tests to improve their performance. The degree of driving skill possessed by applicants can be determined to some degree from an examination of MVRs and past driving experience as well as a review of Commercial Drivers License (CDL) endorsements. However, the only way to judge driving skill effectively is to put applicants behind the wheel of a vehicle and observe their driving ability over a prescribed course.
PROPER DRIVER TRAINING
The most important part of any driver training is the subject matter of the training itself. This may seem like an obvious statement, but your training subject matter should cover what drivers need to know to do their jobs well. Training can range from familiarizing drivers
with the operation of equipment, to modifying driver behavior through the implementation of a no-cell-phone-use policy. As in the example above, if you are training a school bus driver, your training subject matter will be vastly different than if you are training for a salesrelated driver. Regardless of your training needs, all training should stress that vehicle accidents do not happen by chance. Most of the underlying factors that cause accidents can be controlled by the driver, such as the driver’s physical, mental, and emotional condition; the vehicle’s mechanical condition; and the acts of pedestrians and drivers of other vehicles. An entire unit of instruction should address one of the most important safe driving concepts: defensive driving. Defensive driving means the driver must have both the desire and ability to control accident-producing situations. Defensive drivers accept responsibility for avoiding accidents rather than passively surrendering to an adverse situation. Defensive drivers have positive attitudes; they expect to prevent accidents by taking the initiative. The defensive driver must also demonstrate alertness, foresight, knowledge, judgment and skill. All of these qualities can be developed in your training program and further improved by experience.
The benefits of proper driver training include: • Reduction in accidents: The number of accidents and accident-related costs are greatly reduced. Trained drivers know how to act safety and what situations to avoid. • Reduced maintenance costs: A driver who knows a vehicle’s mechanical limitations and tries to conserve the vehicle will develop good operating habits, take better care of the vehicle and cooperate more fully with the maintenance department. • Reduced absenteeism and labor turnover: Training helps a driver develop a better understanding of both job and fleet problems and increases the person’s job satisfaction. • Reduced supervisory burden: Training establishes a standard of performance and a basis for effective corrective action by supervision when needed. Well-trained drivers usually require less supervision because they understand these standards clearly and know how to meet them without continued reminders from the supervisor. • Improved public relations: Drivers represent the organization in daily contacts with customers and others users of the highway. Good training reflects credit not only on drivers but also on the company.
SAFETY REWARDS AND INCENTIVES
Safety recognition and incentive programs are frequently significant components of effective fleet risk management programs. These programs can be developed internally, provided by a fleet management company, or developed through participation in a national safe driver award program. Awards can range from monetary prizes, to upgraded fleet vehicles, newsletter announcements, plaques, trips, and clothing. A well-run fleet safety program is a good investment with a great deal of potential upside. For more information on how to create and implement a fleet safety program, visit www.nafa.org. Phillip E. Russo, CAE is the executive director of NAFA Fleet Management Association (NAFA), the world’s largest not-for-profit membership association serving the needs of fleet managers in corporations, government agencies, and other enterprises across the globe.
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Further your public sector risk management education without leaving the office! This Webinar series features top presenters delivering risk knowledge to your desktop!
PRIMA’S 2016 RISK MANAGEMENT
WEBINAR SERIES PRIMA WEBINARS ARE FREE FOR MEMBERS! Visit www.primacentral.org today to register for individual Webinars or for the entire program!
JA N UA RY 18 | 1 2 : 0 0 P M – 1 : 3 0 P M E ST DRONES – RULES AND REGULATIONS AND THEIR USE IN RISK MANAGEMENT SPEAKERS: Tim Billingham, Sr. Risk Analyst, City of Plano, Plano, Texas DESCRIPTION: The presenter will discuss the current rules and regulations of the use of Unmanned Aircraft Systems a.k.a. Drones. He will also discuss what is required to fly a UAS from the public sector side, which will include applying for waivers and recommended insurance coverages. The final item of discussion will expand on the potential benefits from the use of UAS operations in the public sector from damage assessments, to building evaluations, to search and rescue operations. AT T E N D E E TA K E AWAYS : Understanding of the current rules and regulations Insurance coverage for UAS operations Their use in risk management and safety operations
For more information, or to register, visit primacentral.org/webinars.
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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 Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.
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CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-todate schedule, visit www.primacentral.org. WEBINARS 2017 • January 18 – Drones - Rules and Regulations and Their Use in Risk Management • February 15 – Community Engagement as an Effective Risk Management Tool • March 22 – Prohibited Sexual Harassment • April 19 – Body Cam 2 - Technology and Usage Issues are Growing • May 17 – Loss Control Self-Audits for Public Entities • June 21 – Successful Methods for Reducing Slips, Trips, and Falls • July 19 – How Organizational Culture Affects Risk Management • August 16 – Current Trends in Law Enforcement Liability Claims • September 27 – TBD • October 18 – Cyber Risks, Cyber Coverage, Tech E&O Risks and Coverage • November 15 – Risk Analysis, Assessing Your Key Risk Indicators: Are You Lagging Behind, or Leading the Pack? • December 20 – Mission Critical: ERM and Decision Making PRIMA ANNUAL CONFERENCES June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center June 3–6, 2018 PRIMA 2018 Annual Conference Indianapolis, IN Indiana Convention Center
Keep up with what’s happening at PRIMA and connect with your risk management peers! Visit us at www.facebook.com/primacentral.
June 9–12, 2019 PRIMA 2019 Annual Conference Orlando, FL Gaylord Palms June 14–17, 2020 PRIMA 2020 Annual Conference Nashville, TN Gaylord Opryland
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PRIMA Community Collaborate. Communicate. Network.
PRIMA Community, a social media and content website dedicated to the needs of PRIMA members. This platform provides a virtual meeting place to get the latest developments in public sector risk management, share your knowledge and increase your connections. PRIMA Community lets you: • Connect with your peers and share information on risk management • Participate in discussion groups/communities • Post questions or respond to others’ questions • Obtain access to an exclusive member directory • Access documents from digital libraries • Create private and public groups to network online with your peers • View member blogs or create your own JOIN YOUR PEERS TODAY! community.primacentral.org
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MAKING IT RIGHT... CAN TAKE A LONG TIME
Children studying hard and doing their best to impress their teachers.
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Every safety precaution has been taken, but sometimes a tragic failure with serious consequences occurs. Sexual misconduct is a constant threat that schools must protect against, and it can take years for justice to be served. Public entities, from schools to municipalities and special districts, count on Genesis to protect their interests. Genesis is a member of the Berkshire Hathaway family of companies, which has unsurpassed security and financial strength. Genesis can be trusted to always be there to help their insureds make things right...no matter how long it takes.
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