Tag Archives: Coy Sunderman

Dec 19 2013
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Business Insurance, Risk Management

How to Effectively Manage Enterprise Risk

According to a recent survey for the Risk & Insurance Management Society, more than half of risk professionals are using enterprise risk management (ERM) programs in their companies. Of nearly 1,100 risk managers, insurance buyers and other risk professionals that featured on the survey, 63% of respondents stated they have ‘fully or partially integrated’ ERM strategies into their risk management programs. Of course, the bigger the business, the bigger the number of risks. However, enterprise risk management is becoming increasingly popular among businesses of all shapes and sizes as it effectively ensures that risks are evaluated and avoided while any credible opportunities to achieve the company’s objectives are seized. But it’s not always easy finding the right ERM strategy for your business. By following these simple steps however, ERM can be made easy.risk reduction strategy

Determining your Objectives & Risk Appetite

Before you can go about identifying potential risks that could threaten your organization, you must address your risk appetite and outline a clear set of objectives. Determining the objectives of your ERM strategy will help you develop a philosophy towards risk management. What determines these objectives will be your organization’s risk appetite. Implementing an effective Enterprise risk management strategy is a process. You won’t be able to make changes over night. Defining your risk appetite and philosophy towards risk management should top your ERM agenda so that you can set about outlining objectives and subsequently identifying what risks you need to be wary ofs.

Identifying risks

In many ways, the identification of risks is exactly what your Risk Management Strategy is designed to do. Risk events that could negatively impact on the company and it’s objectives are the biggest consideration of the enterprise risk management process. These risks, internal and external, must be identified and assessed so that you can prepare for and protect against them. By considering factors such as likelihood and potential impact is surest way of assessing how they should be managed.

Responding to potential risk events

Once you have a clear indication of what risks may negatively impact on your business, you can go about setting out a preventative strategy, aimed at mitigating the possibility of a risk event occurring. The enterprise risk management process should not only be used as a preventative measure however, it should also give businesses the technical know-how of responding to these potential events. Some responsive measures include avoiding, accepting, sharing and reducing risks. Whichever step the company chooses to take depends entirely on the outlined objectives and risk appetite of the company.

Consistency

All of the above steps would be rendered completely useless if the company’s enterprise risk management strategy was not applied at every level of the organization, on a consistent basis. Employees at every level must be trained in on the risk management plan. By applying policies and procedures that allow risk response to be effectively carried out, you can brief your entire staff on company policy with regards ERM. In order to ensure every inch of the operation is under the one roof, a strong communication strategy must exist across a company, at every level.

Once an effective enterprise risk management strategy has been established, changes will occasionally need to be made to keep the plan up to date with the constant changes within the company. Other factors such as emerging risks and reputational risk management may also impact on the ERM strategy so it is important to remain flexible and open to policy changes. First and foremost though, it is important to set out your strategy as outlined above. In doing so, you can easily ensure the protection of your Business and the safety of the brand.

Risk Management can be challenging for businesses, particularly with continuously emerging risks. By getting yourself a free risk assessment, you can protect your business against the challenges that lay ahead.

 

Coy Sunderman is a risk advisor specializing in risk solutions for construction businesses, oil & gas operations, manufacturers and distributors/wholesales. Coy is a Certified Work Comp Advisory and holds his CIC (Certified Insurance Counselor) designation.

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Nov 01 2013
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Business Insurance, Risk Management

Taking the Risk Out of Building

As the U.S. home market slowly recovers, builders are seeing a boost in construction contracts. New commercial buildings are being built at a rapid pace. With these surges in construction, specialized policies like Builder’s Risk provide important protection against exposures that are unique to the building trade.

The Basics of Builder’s Risk

The Builder’s Risk policy provides protection for homes or commercial buildings under construction, while being remodeled, or undergoing renovation. The policy covers materials like concrete, lumber, and fixtures as well as machinery and equipment used to maintain the building. The policy also covers the cost to remove debris caused by a covered accident, like a fire or lightning strike.

In most cases, a Builder’s Risk policy is required for buildings under construction and purchased when the home or building is at least 30% complete. The limit of insurance is based on the estimated value of the project once its complete. Because the value will increase as glass, framing, and other materials are added, the limit should also be increased. Once the project is done, coverage will end when the building has been taken over by the owner, the work has been complete for 90 days, or the builder has abandoned the project.

Pitfalls and Perils

Accidents happen and by their nature, they’re never anticipated. An accident can stall or completely stop a building project. To avoid the pitfalls of damage, there are three types of perils coverage to choose from: Limited Perils, Specified Perils, or Special Perils.
Each has their own unique advantages but the most inclusive is Special Peril, which covers accidental losses that are not specifically excluded. While this type of coverage is the most attractive, it is also the most expensive. Though the cost may be more than its counterparts, the broad coverage pays for itself in the event of a large loss that might otherwise have been excluded.
Valuing Your Property

It’s a common misconception that all property policies replace damaged items based on their original replacement value. While many companies sell enhanced policies with special endorsements, like Replacement Cost, a great majority of policies come with Actual Cash Value.

In the event of covered damage to your property, claims are paid on an Actual Cash Value basis by default. This means only the depreciated cost to repair or replace will be paid. This can leave the project with a shortfall in funds and possibly halt further construction. To avoid this common mistake, check the policy and endorsements to ensure that Replacement Cost coverage is included.

Policy Limitations

While the coverage provided is vital to most building projects, limitations apply. Builder’s Risk does not cover Earthquake, Flood, Steam Boiler, or intentional acts of damage. Because policies vary by company, coverage for materials in transit, equipment such as scaffolding and trailers, or theft of materials may be limited or excluded. For an additional premium, separate policies or endorsements can be added to ensure coverage is in place where it is needed.

Coy Sunderman is a risk advisor specializing in risk solutions for construction businesses, oil & gas operations, manufacturers and distributors/wholesales. Coy is a Certified Work Comp Advisory and holds his CIC (Certified Insurance Counselor) designation.

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Sep 19 2013
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Business Insurance, Risk Management

The Importance of Increasing Risk Management Funding

According to a recent report conducted by professional services firm Deloitte, heightened regulatory scrutiny and greater concerns over risk governance have led a large proportion of the world’s financial institutions to increase their risk management spending. The survey on risk management practices which is titled ‘Setting a Higher Bar,’ found that two-thirds of the surveyed financial institutions reported an increase in spending on risk management and compliance in 2012, reflecting a 55 percent increase since 2010.Risk management flow chart on paper

The report went on to indicate that operational risk has been a continuing challenge for many institutions. It attributes the lack of ability to measure operational risk as the key factor that has caused resounding apprehension among organizations with regards operational risk management.

With Risk Management funding on the rise but cautiousness lingering on, it is important to understand why you should invest in operational risk management so that you can look out for your business with a clear conscious and ensure your money is being well spent.

Risk identification

Being pro-active and examining potential hazards, whether they are short or long-term, and how they could negatively impact your business, is crucial in Risk Management but it’s much more than a ‘one-off’ trip. Many Insurers will argue that Risk Management is more of a journey than a destination and in order to ensure your Business process remains ‘loss-free’, you have to persist and ensure the Risk Management process is continuous and consistent. This comes from adequate funding and an investment of both time and energy.

Protection against emerging risks

It has recently emerged that reputation is considered the most difficult risk to manage for businesses. While this may be true, it does not have to be the case. Investing time and effort into Risk Management can help you protect against emerging risks such as reputational risk and Social Media Risk, both of which can be difficult to protect against in our ever-changing world. Adequate training coupled with extensive research can help you mitigate the chances of experiencing a social media blunder or indeed seeing your reputation suffer. This is no cost-free procedure however, and will require continued investment so that you can stay one step ahead of the risks.

Review Process

The Risk Assessment review process is not always regarded a priority for businesses, but without it, you can never fully understand how operational your system is and what kind of results it is delivering. While many insurers will recommend an annual review process as an adequate measure, if you are serious about operational risk management and are determined to see positive results, an ongoing review process should be atop your list of priorities.

By introducing a consistent review process, you will be able to evaluate where you are going wrong with your Risk Management Strategy and what exactly you are doing right. It also helps in managing and mitigating the emerging risks we discussed above, making regular modifications and updates easier to carry out. This too will require ongoing funding to effectively implement but considering the potential damage a loss occurrence could do to your business, it can only be regarded as a modest investment.

Operational Risk Management can be a tricky business, and for many businesses, it is just that. But, it doesn’t need to be. Discarding an apprehensive approach begins with understanding your requirements, establishing the hazards and identifying who may be harmed and how. Ensuring the long-term safety of your Business and your Business process requires a consistent level of funding, effort and attention.

If you are in need of Strategic Rick Management advice, get a free consultation from one of our experts.

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Jul 01 2013
1 Comment
Bond Management, Business Insurance, Employee Benefits, Health Insurance, Risk Management

How Does Risk Management Create Value?

Risk management isn’t just a defensive tactic designed merely to keep something bad from happening. Effective risk management can also be constructive and encourage the creation of something positive. This positivity is a culture of value and self-awareness.

How to create value with risk management

Risk management doesn’t have to be a secondary addition to your business strategy, it can be incorporated into your overall business plan to give you direction and help you make the best decisions.

Balancing risk avoidance activities and responsibilities throughout the company makes it so that everyone is aware of what the risks are and how they are to approach them. Rather than a strategy dictated from up above, risk management becomes more of an open discussion that includes input from multiple areas. Not only is a fully comprehensive view of risk management at work in a company, it’s all-inclusive for management and employees alike.

Risk management allows for risks to become opportunities

Executives and board members are likely to have a much longer list of worries than their average employee would. Especially in the digital information age and with the popularity of social media for example, reputational risk is of real concern to many companies

Managing these types of risks, risks that have many variables, as part of your business strategy allows for large scale projects such as social media monitoring to be broken down into smaller manageable tasks and spread throughout the company. Employees can become more involved in the company’s risk management. It also potentially makes for more effective risk management if employees are encouraged to make suggestions for improvement or development.

Risk management best practice

To best understand how your risk management can bring value to your business, you need to understand how these risks can affect you. Generally they fall into four areas – strategic, operational, financial and compliance. How would your business plan get thrown off? What would loosing the use of a key piece of machinery mean to business? Often times the answers will come from those who would be directly affected by these risks, frontline staff.

Proactively managing these risks not only gives management, but all members of staff piece of mind that risks have been comprehensively assessed.

The value risk management creates can be viewed in many ways. It’s including employees of every level in the protection and management of the company. It’s tying business strategy with risks avoidance and management for efficient planning and strategizing. It’s creating opportunities for everyone to get involved and strengthening the company’s defenses against risk.

If you have risk management questions, click here to ask an expert

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May 10 2013
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Risk Management

New Hazard Communication Requirements

OSHA’s Hazard Communication Standard has been revised to align it with the United Nations’ Globally Harmonized System (GHS) of Classification and Labeling of Chemicals. This update to the Hazard Communication Standard provides a common and coherent approach to classifying chemicals and communicating hazard information on labels and safety data sheets. Chemical manufacturers and importers are now required to provide a label that includes a harmonized signal word, pictogram, and hazard statement for each hazard class and category. Precautionary statements must also be provided. In addition, Safety Data Sheets will now have a specified 16-section format.

By December 1, 2013, all employers with hazardous chemicals in the workplace must conduct new training for workers on the new label elements and safety data sheets format to facilitate recognition and understanding.

Aligning Your Hazard Communication with GHS

In 2003, the United Nations (UN) adopted the Globally Harmonized System of Classification and Labeling of Chemicals (GHS). It includes criteria classifying health, physical and environmental hazards. It also specifies what information should be included on labels of chemicals, as well as safety data sheets. The United States has been working to move its hazard communication rules into compliance with GHS since 2005, with the final rule being issued by the Occupational Health and Safety Administration (OSHA) on March 20, 2012. All workplaces must complete training regarding the new labels and safety data sheet formats by Dec. 1, 2013. Chemical manufacturers must comply with all provisions (namely the universal use of new labels and safety data sheets) no later than June 1, 2015. Hazard communication programs and workplace signs at all establishments must be GHS-compliant by June 1, 2016.

The change to GHS as the standard form of hazard communication affects 40 million workers in more than five million American workplaces. The Environmental Protection Agency (EPA), Federal Department of Transportation and Consumer Product Safety Commission are also considering regulatory changes to align with GHS.

Why the Change?

In an increasingly globalizing world, the conversion to GHS is expected to enhance protection of human health and the environment by providing an internationally comprehensible system for hazard communication. According to the EPA, GHS will help ensure more consistency in the classification and labeling of all chemicals, thereby improving and simplifying hazard communication. This improved communication system will alert the user to the presence of a hazard and the need to minimize exposure and risk, resulting in safer transportation, handling and use of chemicals.

GHS Basics

GHS classifies chemicals according to their health, physical and environmental hazards. It uses pictograms, hazard statements, and the signal words “Danger” and “Warning” to communicate hazard information on product labels and safety data sheets (SDS).

Product Labels

Chemical manufacturers and importers will be required to provide a harmonized signal word, pictogram, and hazard statement for each class and category. Precautionary statements must also be provided. The most important elements of GHS-compliant labels are:

  • Hazard Statements – A phrase assigned to each hazard category; examples include “harmful if swallowed,” “highly flammable liquid and vapor,” etc.
  • Pictograms – A symbol inside a diamond with a red border, denoting a particular hazard class. There are nine pictograms, although pictograms can indicate an entire family of hazards.
  • Precautionary Statement(s) – Phrases that recommend measures that should be taken to minimize or prevent adverse effects resulting from exposure or improper handling. GHS provides guidance on cautionary statements and includes a list of statements that may be used.
  • Product Identifiers – Under GHS, labels for substances should include the identity of the substance. Label mixtures should include the identities of ingredients that are responsible for certain hazards on the label (there are exceptions to this based on confidential business information).
  • Signal Word – The label and SDS should include a signal word to indicate the relative severity of the hazard. “Warning” is used for less severe hazard categories and “Danger for more severe hazard categories. Lower categories of classification, and unclassified products, do not require pictograms or signal words under GHS.
  • Supplier Identification – GHS requires the label to contain the name, address and telephone number of the manufacturer or supplier of the substance.

GHS Safety Data Sheets (SDS)

The SDS are similar to the American National Standards Institute (ANSI) requirements for Material Safety Data Sheets (MSDS), although sections 2 and 3 have been reversed. The SDS should provide a clear description of the data used to identify the hazards. The minimum information required by a GHS-compliant SDS is:

  1. Identification of the substance or mixture and of the supplier
  2. Hazards identification
  3. Composition/information on ingredients
  4. First aid measures
  5. Firefighting measures
  6. Accidental release measures
  7. Handling and storage
  8. Exposure controls/ personal protection
  9. Physical and chemical properties
  10. Stability and reactivity
  11. Toxicological information
  12. Ecological information
  13. Disposal considerations
  14. Transport information
  15. Regulatory information
  16. Other information including information on preparation and revision of the SDS

The conversion from traditional methods of hazard communication to GHS may be difficult to navigate. Contact Texas Associates Insurors for ongoing support on building and maintaining your OSHA compliance program.

Texas Associates Insurors has prepared a number of materials to assist employers in complying with the new updates. In addition, OSHA’s Hazard Communication Web page explains the changes and contains a number of materials including: a new fact sheet (PDF*) that reviews the new training requirements, new QuickCards that review the new pictogram label requirements and abrief (PDF*) on labels and pictograms.

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Mar 29 2013
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Business Insurance, Liability, Risk Management

Employee Cellphone Use While Driving

Cellphone use has become commonplace, and text messaging, e-mailing and conducting business via cellphone have become routine. While the convenience of cellphones can be enormous, problems arise when using a one while driving.

A Nationwide Insurance poll found that 81 percent of cellphone owners admitted to talking on a cellphone while driving.1 While employers may be aware of the obvious benefits of allowing employees to use cellphones to conduct business while driving, they may be unaware of the significant liability risks associated with cellphone use while driving. A National Safety Council survey found that of employers who had a cellphone driving policy, 70 percent saw no decrease in productivity and over 20 percent saw decreases in employee vehicle crashes.2

Currently, there is mounting evidence supporting the dangerous link between cellphone usage and car accidents. According to Johns Hopkins University, as individuals focus on listening and engaging in conversation, the activity in the visual part of the brain decreases, even when using a hands-free device.3 In addition, the University of Utah found that drivers are as impaired on a cellphone as they are while driving under the influence of alcohol.4 The National Highway Traffic Safety Administration found that estimated that 3,000 fatal traffic accidents in 2011 were the result of distracted driving.5

As a result, if you have employees driving on company time, you need to be aware of your cellphone use exposure and take the appropriate steps to mitigate your risks.

Case Studies

In 2004, a Georgia employee making a business call while driving hit and caused serious injury to another driver. The employee’s company agreed to pay $5 million in damages after the court found that the company was liable since the employee was making a business-related call. In a different case, $2 million in damages were awarded to a child’s family after an employee hit and killed her in 2004. The family also sued the employee’s company after phone records revealed that the employee was talking to a client at the time of the crash.

In addition to third-party claims resulting from accidents, employers increasingly face claims by employees for health problems allegedly stemming from cellphone use. Although the science appears contradictory and inconclusive, some employees contend that the radio frequency radiation emitted during cellphone usage may lead to various forms of brain cancer or other illnesses. Employees who use cellphones while on the job have begun to file workers’ compensation claims and lawsuits based on this theory.

Minimizing Employer Liability

While there is no guaranteed defense to liability, developing an appropriate employee cellphone use policy, training employees about the dangers of talking on a cellphone while driving, and enforcing policies with signed written acknowledgments from employees can all help to limit an employer’s potential liability.

In the policy, beyond setting clear-cut rules limiting cellphone use while driving, offer suggestions such as informing clients of driving schedules to avoid calls while on the road, pulling over to place or receive an important call or asking a passenger to handle cellphone usage. Be sure to emphasize that while productivity is certainly important, more important is their safety and the safety of others on the road – safety that is neglected when using a cellphone.

Even with a comprehensive cellphone use policy, courts may still hold employers responsible for any harm caused by employees while on company business, so it is important to ensure that your policy is being upheld and enforced. Be clear about the importance of following the policy, and follow through with consequences if employees are found to be disobeying it.

State Laws

Several states currently ban the use of hand held cellphones while driving, and many states have taken an increasingly active role in addressing the relationship between driver cellphone use and traffic safety (see Texas’ stance on distracted driving laws). These laws are changing frequently, so employers should always be cognizant of their state’s laws and require employees to observe those regulations regarding cellphone use while driving (include the current state law in your policy, and require employees to review and re-sign it whenever the law changes). While state laws do not directly address employer liability, they have the potential to increase employer exposure for cellphone-related accidents. For more information about state requirements, access the Governor’s Highway Safety Association website at: http://www.statehighwaysafety.org.

In addition to updating your company Cellphone/Hand Held Use Policy and training program, employers should also review their insurance policies. For help assessing your company’s risk regarding employee cellphone use or for assistance in developing a Cellphone Use Policy, contact Texas Associates Insurors.

Sources

1 Distracted While Driving Survey, Nationwide Insurance, May 2008

2 National Safety Council membership survey report, September 2009

3 Multitasking: You Can’t Pay Full Attention to Sights, Sounds, John Hopkins University, June 2005

4 Drivers on Cellphones Are as Bad as Drunks, University of Utah, June 2006

5 National Phone Survey on Distracted Driving Attitudes and Behaviors, National Highway Traffic Safety Administration, December 2011

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Feb 15 2013
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Business Insurance, Risk Management

Your Company’s Return to Work Program

Workplace accidents are unfortunate events that can disrupt both the physical and financial well-being of your employees. In the event of a work-related accident, your Return to Work Program will help your employees transition back into productive roles as they recover from an injury.

If an employee is injured as a result of his/her job, the Return to Work program is designed to get them back on their feet and return to their job as soon as possible. Benefits of the program to your employees include:

  • Being able to perform meaningful work despite physical restrictions while recovering
  • Maintaining personal income level
  • Retaining status within the company
  • Avoiding the boredom associated with long periods at home recovering
  • Not missing important company announcements, events, meetings and other goings-on
  • Maintaining body conditioning and helping return to pre-injury strength and condition level
  • Quickening the recovery process

Modified Duty

Modified duty work is an important part of the rehabilitation process that allows your injured employee to maintain a certain level of activity within a physician’s prescribed restrictions. Modified duty work combined with physical or occupational therapy is the best method for moving your employees along on the road to recovery.

In addition, modified duty is crucial to the successful return to the employee’s regular job after an injury. Identify modified duty positions within your organization and share these with your injured employee. These positions should be considered when accommodating temporary work restrictions.

If your employees have been injured on the job, attempt to place them in one of the modified duty positions in your job bank as soon as you receive a Return to Work release form from their doctor. Let them know they will be placed in the position that best falls within their temporary work restrictions.

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