Public Risk November/December 2010

Published by the Public Risk Management Association

www.primacentral.org

Nov/Dec 2010

Doing Damage to Vandalism How Public Entities can fight back Social Media Minding the Gap of Section 508 Compliance

2010: PRIMA Continues to Excel Despite Economic Challenges

Pitfalls and Pratfalls of Implementing ERM A Case Study from the State of Washington

Adjuster & Actuary: Blending Perspectives

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Volume 26, No. 10 | Nov/Dec 2010 | www.primacentral.org

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

Executive Director Lisa Lopinsky, CAE

Contents

President Laura Peterson, JD, MPA Director of Risk and Insurance University of Wyoming Laramie, WY Past President Ron Hayes Risk Manager Calcasieu Parish School Board Lake Charles, LA

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6 Doing Damage to Vandalism How Public Entities Can Fight Back By Joann Robertson, CPCU, ARM, CSP

11 SOCIAL MEDIA Minding the Gap of Section 508 Compliance By Paree Roper

15 2010: PRIMA Continues to Excel Despite Economic Challenges By Jennifer Ackerman, CAE

19 Pitfalls and Pratfalls of Implementing ERM A Case Study from the State of Washington

President-Elect Cindy B. Mallett, AIC, CWCP, ARM-P Risk Manager City of Gainesville Gainesville, GA Directors Betty Coulter Risk Management Director City of Asheville Asheville, NC Matt Hansen, MPA Director, Risk Management Division City & County of San Francisco San Francisco, CA Dan Hurley, CSP, ARM-P, MS Senior Director, Risk Management & Safety Norfolk Public Schools Norfolk, VA John J. Nacht, ARM Risk Management Program Administrator State of Washington, Employment Security Dept. Olympia, WA Dave Parker, ARM-P Risk Manager Pima County Sheriff’s Department Tucson, AZ Marilyn Rivers, CPCU, ARM, AIC Director of Risk and Safety City of Saratoga Springs Saratoga Springs, NY Editor Jennifer Ackerman, CAE Senior Manager, Communications 703.253.1267 • jackerman@primacentral.org Advertising Donna Stigler 888.814.0022 • donna@ahi-services.com

By Sydney Martin Doré

22 Adjuster & Actuary: Blending Perspectives By Mujtaba Datoo and Jody Gray

In Every Issue 4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

Public Risk (ISSN 0891-7183) is published 10 times per year by the Public Risk Management Association, 500 Montgomery Street, #750, 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. Periodical postage paid at Alexandria, VA, and additional mailing offices. POSTMASTER: Send address changes to PRIMA, 500 Montgomery Street, #750, Alexandria, VA 22314. Copyright 2010 Public Risk Management Association Reprints: Contact the Reprint Outsource at 717.394.7350.

November/December 2010 | Public Risk

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Just Announced for 2011!

PRIMA’s Educational Scholarship Fund In an effort to provide members with an opportunity to further their risk management education, PRIMA has established an Educational Scholarship Fund. With the economic challenges that public entities across the country are facing, professional development has taken a hard hit. This fund will support PRIMA public entity members with a scholarship valued at $1,500 to attend the 2011 Annual Conference, the only conference specializing in public sector risk management education. The scholarship will include a complimentary conference registration, four nights lodging and a $250 stipend. The number of scholarships that PRIMA will award in 2011 will be determined once the initial fundraising drive has concluded.

For more information, including application details, visit www.primacentral.org!

Message from PRIMA President Laura Peterson

The Comfort Zone

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s I write this column, I just completed my second week at the University of Wyoming and celebrated another birthday. Being on a college campus, surrounded by youth and enthusiasm, coupled with celebrating the passing of another year, I am reminded I am getting older and, according to our recent member survey, the risk managers who work in PRIMA member entities are getting older as well. As we get older and more experienced, we tend to get increasingly comfortable in our work-day routines, our established risk programs and our place within our organizations. If we are comfortable with things the way they are, then are we doing enough to look at new possibilities for our risk programs? M. Scott Peck said, “The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfortable….For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways or truer answers.” I think M. Scott Peck was onto something. It is common nature to stick to what we know as long as it is working and we aren’t being required to change. This weekend, as I drove visitors through the mountains, we had two choices, 1) the well-traveled, safe road that I had driven before or 2) a smaller, winding, scenic route that I had not yet explored. On our own, I believe any of us in the car would have stayed on the known road travelled successfully many times before. But my friends and I decided to take the scenic, unknown route. We pushed ourselves outside our comfort zone and came out with beautiful pictures and an adventure to talk about. My friends and I reaped the rewards of trying something new. This issue of Public Risk talks about new concepts that risk programs and public entities are trying. As you read

about social networking and enterprise risk management (ERM), think about your own risk management program. Are you considering these new approaches to risk management and communication? If you aren’t, why not? Is it because they truly have no place in your program? Or is it because you are comfortable where you are and ERM or Facebook or Twitter are beyond your comfort zone? If you aren’t considering them, are you willing to sit by and wait for bond rating companies to force you into ERM, or the new generation of employees and constituents of your public entity to force you onto Facebook? Maybe you will investigate ERM and decide it really doesn’t fit in your organization, but at least you will have given it thoughtful consideration and will be knowledgeable about it when asked by outside sources who want to force a change. Maybe you will find that standard models for ERM don’t fit your organization but the concept behind ERM, that of aligning your organizational objectives with your strategies on risk, is important and you have a different way to accomplish it. Maybe neither ERM nor social media is right for your organization, but don’t stop looking for a way to better your program just because it’s comfortable the way it is. What do you really have to lose? Step out of your comfort zone and find your way through the discomfort to your programs’ finest moments. Sincerely,

As we get older and more experienced, we tend to get increasingly comfortable in our work-day routines, our established risk programs and our place within our organizations. If we are comfortable with things the way they are, then are we doing enough to look at new possibilities for our

Laura Peterson, JD, MPA 2010–2011 PRIMA President Director of Risk and Insurance University of Wyoming

risk programs?

November/December 2010 | Public Risk

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News Briefs

News

Briefs Drug War Woes Dampen Mexico’s Bicentennial Party Mexico is celebrating its 200th anniversary as an independent nation and the 100th anniversary of the Mexican revolution. But the celebrations come amid much sadness for some Mexicans as the country is being swept by a wave of drug violence. In Ciudad Juarez, Mexico’s deadliest city, major security concerns are altering the traditional Independence Day festivities, reports NPR. Usually in Juarez, as in other Mexican cities, just before 11 p.m. the mayor proudly steps out onto a balcony at city hall carrying an oversized Mexican flag. He addresses a massive crowd, then shouts at the top of his lungs, three times: “Viva Mexico!” Juarez Mayor Jose Reyes Ferriz has twice marked Independence Day in this traditional fashion. But this year, his last in office, things will be different in an effort to safeguard the public. “We are not going to have music. We are not going to have a massive concentration of the population on the city buildings,” he said. Drug-related violence has battered Juarez for nearly three years. More than 6,000 people have been murdered, and residents live in fear.

Keeping Hospitals Safe The natural question after Dr. David Cohen was shot by the disgruntled son of a patient was how the man was able to bring a handgun into the hospital in the first place. And the answer is something the thousands of people who work at Johns Hopkins Hospital in Baltimore—and most any other big hospital—are all too aware of: there are no metal detectors, and the screening of patients and visitors is generally cursory at best, reports the Baltimore Sun. It shouldn’t come as a surprise. Patients and visitors to hospitals are sick, in pain and under tremendous stress. It is not at all uncommon for them to grow upset, hostile, even overtly threatening, over bad outcomes or a doctor’s refusal to prescribe narcotics. In many cases, the health problems that land patients in hospitals are related to underlying—and untreated—mental health conditions. And health care workers often find themselves alone, in frightening situations, in offices or private rooms, out of the view of security guards. Health care workers are faced with an impossible choice. Either they take the chance that the situation will not escalate and become dangerous, or they leave the room or call for security and risk irreparably damaging the therapeutic relationship with the patient.

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City of Phoenix to Pay Jack Harris’ Legal Fees Phoenix, Ariz., will pay up to $49,000 for Public Safety Manager Jack Harris’ legal defense in a lawsuit that claims he is illegally drawing pension benefits while working for the city, reports The Arizona Republic. The Phoenix City Council voted 5–3 to hire a law firm that specializes in pension law and cover Harris’ legal defense, which he has been paying. Elected officials and the public grappled over the issue, with those against the city paying Harris’ bill saying he is being sued as a private individual and should be responsible for the legal costs. But others say Harris is being sued in his capacity as a public official and it is the city’s policy to provide defense and indemnity for its employees. This summer, Harris requested that Phoenix cover his legal defense in a case brought last October by Judicial Watch, an anti-corruption group based in Washington, D.C. That suit is pending. The suit claims Harris is “double dipping” and violating the Arizona law that prevents public employees from drawing pension benefits while working in the same position from which they retired.

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November/December 2010 | Public Risk

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Doing Damage to Vandalism

Doing Damage to

Vandalism How public entities can fight back

By Joann Robertson, CPCU, ARM, CSP

We all know it when we see it. Spray-painted walls. Broken windows. Dumpster™ fires. Smashed windshields. Deliberately dismantled playground equipment. It’s vandalism and it’s not just a nuisance. It’s costly and dangerous and can be a portent of rising drug use, surging gang activity and more serious crime to come. The targets usually are public buildings and parks left dark and unoccupied during the night, but more and more schools and municipalities are finding ways to shed light on the intentional destruction of public property and on methods used to control it. If there’s a single cause of vandalism, it lies buried in the typical tangled mass of human motivation. Some mistakenly adopt it as a form of artistic expression. Others engage in it out of pure malice, or as a way to retaliate or take revenge for perceived hurt. Still others caught in the act say they were “just bored” and looking for something to do. Graffiti, for example, has been linked to “tagging,” acts committed by juveniles with the primary objective of peer recognition and intimidation. Whatever the immediate or underlying cause, vandalism often serves as a stepping stone to the commission of more serious crimes such as theft or arson and results in significant costs to the community.

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Public Risk | November/December 2010

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A Quality-of-Life Crime Neighborhoods associated with high incidences of vandalism suffer from decreased property values, for instance, as well as an overall reduction in the quality of life that generally derives from a sense of anxiety and the perception that crime is rising. Beyond the psychological costs, vandalism has a real dollarsand-cents effect, too, resulting in increased insurance costs, expensive repairs, clean-up and labor costs, a loss of recreational and educational opportunities, enhanced police patrols and higher taxes. Vandals are active most often at night, on weekends, on school holidays and during nice weather, when people aren’t working or in class. The last week of school and Halloween are especially favored time slots on the vandalism calendar. Its practitioners prefer dark, quiet, concealed places where they will not easily be seen or heard – an alley behind a strip mall, for instance, or unoccupied areas without surveillance, such as bathrooms or vacant buildings. Bored and impatient individuals also are likely to cause damage in waiting areas such as school study halls, waiting rooms, bus stops and train platforms. Vandalism also is common in areas frequented by young people, including shopping plazas, parking lots and school yards. It’s not always reported and incidents frequently may be below an organization’s property insurance deductible. But other times it may result in an insurance claim, especially if damage is done to an expensive item that must be replaced. If vandalism that is rooted in hatred and prejudice, such as cross-burning, the painting of swastikas and damage to church property or other examples of attacks on religion,

sexuality or ethnicity occur, law enforcement authorities must be contacted immediately and photos taken for documentation. By committing these crimes, vandals will be prosecuted based on the laws in their state.

Fighting back Public entities generally have three effective weapons in their anti-vandalism arsenals: noise, time and visibility. If vandals think they may run the risk of being seen or heard, or won’t have enough time to commit an act of destruction, they’re less likely to engage in the crime in the first place. It’s also important to educate community members about how to reasonably assess indications that someone has engaged, or is about to engage, in vandalism. Some of those signs may include: • Paint or marker-dye stains on hands, under fingernails, on clothes or shoes • Blood-shot eyes from tagging at night and exposure to toxic fumes • Tag names written on the underside of the bill of sports caps and visors, or on notebooks and other possessions Attempts should not be made to approach or apprehend suspected vandals. Be observant for good descriptions of the suspects and their vehicles and then notify authorities. When it comes to vandalism, there most definitely is safety in numbers, which is why the best way to control or eradicate vandalism is through a community-wide campaign that involves residents, parents,

November/December 2010 | Public Risk

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Doing Damage to Vandalism

In general, public awareness can

effective anti-vandalism tools av

entities of all kinds … Promptly n

incidents and follow through wit

frequently incidents are reported

can be identified and improved p

teachers, groundskeepers at public properties, neighbors, counselors, retailers and law enforcement authorities. Acting as partners, each group can clarify its role in combating the problem. School districts, for instance, should ensure that their boards of education have a policy or statement denouncing any form of vandalism and that mechanisms are in place to pursue and prosecute offenders to the fullest extent of the law. That position should be broadly publicized. Stores, shops and small businesses also can make an impact by educating employees about state and local laws banning the sale of spray paint to minors. Alert staff to the potential for shoplifting of spray paint, markers and etching tools by minors and protect those items from theft. In addition, post signs at the paint display area stating the penalties for vandalism involving graffiti and hang related signs in checkout areas listing acceptable proofs of age for all purchasers of spray paint. Display spray paint cans, indelible markers and other tools that can be used to vandalize so that they are in clear view of store personnel at all times. For their part, law enforcement officials can help by scheduling monthly meetings with school resource officers, principals, groundskeepers and retailers to brainstorm techniques for controlling vandalism and use the information to improve the effectiveness of police patrols. It also would be useful to participate in student assemblies and teen meetings to explain the legal consequences of vandalism.

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Public Risk | November/December 2010

The Power of Information In general, public awareness can prove to be one of the most effective anti-vandalism tools available to community and civic entities of all kinds. Communities can begin with the creation of neighborhood watch programs and a campaign to encourage neighbors to report noise or loitering. And don’t be reluctant to remind security and police about problem areas. Promptly notify law enforcement about incidents and follow through with consequences; the more frequently incidents are reported, the more quickly patterns can be identified and improved patrols will result. Photograph vandalism to document whether it’s serious, becomes repetitive or appears to be gang-related; what looks like scribble may be helpful information for law enforcement officials. Public entities can include discussions about the consequences of vandalism in community calendars, Web sites, newsletters and handbooks and encourage the use of a dedicated Web site or hotline where incidents can be reported anonymously. It’s also recommended that public agencies and their safety committees and administration routinely discuss incidents of vandalism to increase awareness and even schedule law enforcement assessments of their own safeguards against vandalism. Police, for instance, can review the interior and exterior of public buildings and visit at night to evaluate lighting. In times of tight budgets, agencies also can partner with other public entities to more cost-effectively purchase security services.

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Tips for evaluating vandalism defenses at public properties:

n prove to be one of the most

vailable to community and civic

notify law enforcement about

th consequences. The more

d, the more quickly patterns

patrols will result.

Interior • Add cameras or provide supervisors/security in hallways to stop vandalism of lockers, exit signs and fire extinguishers. • Install “touch-free” fixtures and eliminate paper towels in bathrooms so sinks can’t be plugged and garbage cans can’t be set on fire. • Keep permanent markers secure. • Post a staff member or security person at the main entrance to check in, evaluate and escort visitors including contractors, delivery personnel and parents. • Secure unoccupied areas such as the auditoriums, cafeterias, recreational areas and meeting rooms when they’re not in use. Exterior • Add cameras or provide supervisors/security to reduce exterior vandalism. • Ensure that outdoor cameras can record clearly in low-light settings. • Illuminate poorly lit areas. • Evaluate lighting by driving around at night to ensure areas are well-lit and timers are properly set and working. • Post NO TRESPASSING signs.

And don’t overlook the obvious. Review the location and positioning of cameras on a regular basis, post signs in areas that are under surveillance to discourage vandals and track incidents to understand which locations should receive increased attention. Doing damage to vandalism requires vigilance and an ongoing commitment by the entire community to counter its causes and make clear to perpetrators that the consequences are considerable. In the end, partnership and public awareness are the best defenses against spray paint, property damage and pointless destruction.

• Trim bushes and shrubbery to increase visibility. • Keep all fencing in good repair. • Provide adequate trash receptacles. • Eliminate unauthorized rooftop access. • Provide designated visitor parking to improve visibility of unauthorized personnel. • Anticipate problems with large surfaces that might make an empty canvas to vandals (newly painted walls, portable buildings, handball courts, retaining walls, storage trailers). • Empty Dumpsters™ and garbage cans and keep them away from buildings. • Remove piles of pallets and improve housekeeping to reduce fire hazards. General • Ensure all doors and windows are kept locked and doors are not propped open.

Joann Robertson, CPCU, ARM, CSP, is coordinator of risk management services for the New York Schools Insurance Reciprocal.

• Inspect facilities to ensure prompt repair to vandalized property (boarding up windows only encourages additional breakage). • All types of graffiti should be removed or covered as soon as discovered to prevent copy-cat graffiti. • Place emergency numbers on all phones. • Empower all staff to question unfamiliar individuals. • Incorporate graffiti-resistant paints and products into school design. • Replace burned-out light bulbs and damaged door hardware/locks promptly. • Lock all storage facilities and secure any areas (shops, garages, labs) that may contain chemicals and paints. • Ensure spray paints are stored securely (including athletic field marking paint); keep them in a UL-listed flammable liquids cabinet. • Use proper key control. • Require all visitors to enter one labeled main entrance. • Screen groups who are allowed to use the facilities – require proof of insurance, adequate supervision and do not allow problem groups to return. • Conduct a sweep of facilities at the end of the day to ensure they are properly secured.

November/December 2010 | Public Risk

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SOCIAL MEDIA MINDING THE GAP OF SECTION 508 COMPLIANCE

By Paree Roper

Last spring, I had a seven-hour layover at London’s Heathrow Airport on my way to Manchester, England. Rather than waste the day in airport purgatory, I took the Heathrow Express train into town to get a quick overview of the major sights. A leg of this excursion involved a trip on the London Underground (or the “Tube” as it is known), the oldest operating subway in the world. The Tube is indeed an aged system and many station platforms do not match up with the doors on the subway cars. This happens whenever there is a height difference between the platform and doors or whenever a straight rail car stops at a curved station platform. At these places, London Transport practices good risk management by broadcasting a very authoritative announcement that tells passengers to ‘mind the gap’ between the platform and the rail car when entering or exiting the train. ‘Mind the gap’ has become a well-known phrase that symbolizes the Tube and it is seen on T-shirts, mugs and many other products sold by the transit agency. It is also a very good phrase for public sector risk managers to remember when figuring out ways of managing the risks of social media and networking sites. An August article in Public Risk gave an overview of social media and some of the risks and rewards of using these tools. As stated in that article, there is a large “upside” to using social media where public entities can open greater channels of communication with those they serve. The downside is that a public entity may have good intentions for using social media, but may overlook important ‘gaps’ between what is offered online, expectations of the public and legal requirements that could apply. One ‘gap’ in this case could be compliance with Section 508 of the Rehabilitation Act of 1973 (29USC 794d). This article will take a

look at the act as well as some best practices and resources that will allow an entity to comply with its provisions.

Section 508-Why should local governments care? Section 508 (29U.S.C §794d) is an amendment to the Rehabilitation Act of 1973 that requires federal agencies to make their electronic and information technologies available to people with disabilities. Enacted in 1986, Section 508 states that “when federal agencies develop, procure, maintain or use electronic and information technology, federal employees with disabilities have access to and use of information and data that is comparable to the access and use by federal employees who are not individuals with disabilities, unless a undue burden would be impose on the agency.” Section 508 also states that “individuals with disabilities, who are members of the public seeking information or services from a federal agency, have access to and use of information and data that is comparable to that provided to the public who are not individuals with disabilities, unless an undue burden would be imposed on the agency.” Although the scope of Section 508 applies to all federal agencies, it has a significant impact on state and local governments in the following ways: • Some local programs that receive federal funding are required to provide qualified individuals with disabilities equal access to programs, activities and services. Access to electronic and information technology can be included in this group. • Many states have their own requirements for accessibility to electronic and information technologies (see additional resources section at the end of the article). Most of these laws, policies and operating procedures are based on text from Section 508 and their provisions cover state agencies, commissions, universities and other designated authorities.

November/December 2010 | Public Risk

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Social Media

State and local governments have definitely taken advantage of the technological changes that have occurred in order to provide enhanced services to citizens. Many transactions that used to be done in person can now be done online with a few keystrokes. Social media has become an integral part of communicating with citizens and has replaced face-to-face contact in some instances.

• Citizens with disabilities have higher expectations concerning accessibility. With changes in expectations, advocacy by persons with disabilities and the promises of connectivity that social media brings, local governments will also have this issue as a potential exposure. In 2009, the U.S. Department of Education, the Small Business Administration and the Social Security Administration all had administrative complaints registered by high profile groups such as the National Federation of the Blind. These complaints stated that their respective Web sites were inaccessible to blind people who use text-to-speech screen access technology or Braille displays in order to access information on the Internet. Private sector companies such as Target have been sued for similar reasons. By adhering to Section 508 standards, this exposure can be addressed in a systematic way and could place public entities ahead of this trend. State and local governments have definitely taken advantage of the technological changes that have occurred in order to provide enhanced services to citizens. Many transactions that used to be done in person can now be done online with a few keystrokes. Social media has become an integral part of communicating with citizens and has replaced face-toface contact in some instances. Persons with disabilities can use these functions as well, but may encounter considerable barriers that prevent some from full access. For example, the U.S. Department of Justice Civil Rights Division cites a photograph of a mayor on a city’s Web site that has no identifying text. Screen readers cannot interpret photos unless there is an accompanying text, so a sight-impaired person would have no way of distinguishing whether this item was a photo, logo, a link to another Web site or a piece of artwork. By adding a line of code that says, “Photo of Mayor Jenkins,” the reader has a fuller sense of the material on the page.

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Public Risk | November/December 2010

The United States Access Board is a federal agency that works toward providing accessibility to persons with disabilities. The Board has developed technical standards that provide criteria unique to different types of technologies. This is a good starting point for developing a compliance plan, for these standards cover: • Software applications and operating systems. Many of these specifications are geared toward usability for persons with visual impairments and focuses on alternate keyboard navigation and ways of dealing with animated displays and flash content. • Web-based information or applications. These criteria address hardware such as screen readers that translate items on a computer screen into audible information. This section also addresses the usability of plug-ins, multimedia presentations, applets and electronic forms. • Telecommunication products. These specifications focus on the hearing-impaired and examine compatibility with hearing aids, cochlear implants assistive listening devices and TTYs (teletypewriters). • Video and multimedia product. These standards address video programs, narrated slide production and computer-generated presentations. • Self-contained, closed products such as information kiosks, calculators and fax machines. Criteria for this area focus on the fact that these items have embedded software where there is no easy way to attach or install assistive technology. Items of this sort would also include copiers and printers. • Desktop and portable computers. These standards examine keyboards and mechanically operated controls, touch screens, ports and connectors. With these categories in mind, let’s take a look at some best practices that can be used to help ensure compliance with the law and accessibility for everyone.

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Additional Resources • Overview of States with Initiatives for Accessible Electronic and Information Technology (E & IT) http://accessibility.gtri.gatech.edu/sitid/ stateLawAtGlance.php • Georgia Institute of Technology This Web site can be accessed from the PRIMA Cybrary-use keyword ‘initiative.’ • The United States Access Board www.access-board.gov 800.872.2253 (voice) 800.993.2822 (TTY) This Web site can be accessed from the PRIMA Cybrary-use keyword ‘access.’

Blueprints and Best Practices Earlier in this article, there was a reference to the Department of Justice and its Civil Rights Division. Their Web site has outlined a voluntary action plan for accessible Web sites that gives a basic blueprint (and a few best practices) on how to initiate Section 508 compliance. There are six major points in this plan: • Establish a policy that your Web pages will be accessible and create a process for implementation • Ensure that all new and modified Web pages and content are accessible: › Check the HTML (hypertext markup language) of all new Web pages. Make sure that accessible elements are used, including alt tags, long descriptions and captions, as needed. › If images are used, including photos, graphics, scanned images, or image maps, make sure to include alt tags and/or long descriptions for each. › If you use online forms and tables, make those elements accessible. › When posting documents on the Web site, always provide them in HTML or a textbased formula (even if you are also providing them in another format, such as Portable Document Format (PDF)). • Develop a plan for making your existing Web content more accessible. Describe your plan on an accessible Web page. Encourage input on improvements, including which pages should be given high priority for change. Let citizens know about the standards or guidelines that are being used. Consider making the more popular Web pages a priority. Author’s note: social media sites would be a good place to try this. • Ensure that in-house staff and contractors responsible for Web page and content development are properly trained. • Provide a way for visitors to request accessible information or services by posting a telephone number or email address on your home page. Establish procedures to assure a quick response to users with disabilities who are trying to obtain information or services in this way. • Periodically enlist disability groups to test your pages for ease of use; use this information to increase accessibility.

• United States Access Board Guide for Web Developers, Section 508 standards www.access-board.gov/sec508/guide/1194.22.htm This Web site can be accessed from the PRIMA Cybrary-use keyword ‘access’ • United States Department of Justice-Civil Rights Division, Disability Rights Section; Web page: Accessibility of State and Local Government Web sites to People with Disabilities. Contains voluntary action plan mentioned in article. http://www.ada.gov/Web sites2.htm This Web site can be accessed from the PRIMA Cybrary-use keyword ‘disability.’

Section 508 compliance is but one ‘gap’ that is to be minded when dealing with social media (and other Web-based communications). By taking the cue from London Transport and making the necessary accommodations, your entity will have a built-in mechanism that will provide greater accessibility and more effective communication for all. Paree Roper is PRIMA’s industry specialist.

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To see whether a risk poses a threat, don’t we have to see the big picture?

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PRIMA Continues to Excel Despite Economic Challenges By Jennifer Ackerman, CAE

Like most of your entities, PRIMA has faced a challenging year due to the nation’s economic climate. Even in these tough economic times, PRIMA has continued to provide new products and services to keep you ahead of the risk management curve. Here are just a few of the things your Association has done for you this year:

Advocacy PRIMA’s External Affairs committee has been hard at work in 2010 monitoring legislation and agency statutes that will have a direct effect on public risk management. In March, the committee responded to an OSHA request on key issues affecting the agency and how they could improve services. In November, PRIMA launched a new bi-monthly e-newsletter called Risk Rules. Guided by the External Affairs committee and staff, this electronic update keeps PRIMA members abreast of regulatory and legislative issues on the horizon that could effect how you do your job. The e-newsletter includes helpful links to agency Web sites and news articles that focus on risk-related issues at both the federal and state level.

Education and Training In 2010, PRIMA continued its popular Webinar series. Each of the six Webinars boasted outstanding attendance and garnered rave reviews from participants on topics such as Protecting Our Children: Keeping Communities and Schools Safe, Risk Management 101 and the Anatomy of a Lawsuit. In November, PRIMA also hosted its first free webinar on contractual risk transfer, with several hundred PRIMA-member attendees. In late 2010, PRIMA announced the creation of its first Educational Scholarship Fund. The fund supports PRIMA government members with a $1,500 scholarship to attend PRIMA’s 2011 Annual Conference in Portland, Ore. Scholarship recipients will have the opportunity to attend dozens of conference workshops, meet and learn from vendors and suppliers and network with public sector risk management professionals from across the country. The Educational Scholarship Fund is being generously funded by members of PRIMA’s vendor community.

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2010: PRIMA Continues to Excel Despite Economic Challenges

Annual Conference This has been an exciting year for public risk management. In the coming year, PRIMA will continue to provide you with the tools you need to do your job and keep you at the top of the risk management game.

In June, nearly 1,000 risk professionals from around the world attended PRIMA’s Annual Conference in Orlando. This year’s conference theme, “Risk Management: It’s Quite the Ride,” focused on the ups and downs of risk management. Attendees had the opportunity to attend more than 50 educational sessions and a special pre-conference workshop on business presentation skills. Along with high-quality programs, this year’s conference featured a trade show with more than 100 exhibitors. During PRIMA’s Awards Luncheon, PRIMA honored the 2010 Public Risk Manager of the Year, Michael G. Pennacchio. Pennacchio, risk manager for Incline Village General Improvement District in Nevada, was chosen as this year’s Public Risk Manager of the Year by a panel of his peers for his innovative risk management programs. Several public entities were also honored as part of PRIMA’s prestigious awards program including: • Product Achievement Winner: Getting to School Safely: Traffic Safety DVD, Denver Public Schools, Denver, Colo. • Program Achievement Winner: City of Bryan Healthy Lifestyles Program, City of Bryan, Bryan, Texas • Pool Achievement Winner: Public Entity Pool, Cities and Villages Mutual Insurance Company (CVIMC), Brookfield, Wis.

Two years ago at the PRIMA Annual Conference in Anaheim, we unveiled the PRIMA Cybrary, our online resource library. Our recent member survey indicates that the PRIMA Cybrary is one of the top member benefits PRIMA offers. The PRIMA Cybrary currently houses more than 2,500 documents! We have quadrupled the number of risk management resources available in just two years, including RFPs, annual reports, job descriptions and tool kits in addition to resources provided by the federal government. PRIMA members are encouraged to use this resource as a starting point for all risk management-related projects. Most of the documents in the PRIMA Cybrary have been contributed by your risk management peers.

This year, PRIMA created new products and services to help risk managers communicate to their peers in a number of ways.

In late 2009, PRIMA members began to receive a new weekly e-newsletter called RiskWatch. RiskWatch delivers handpicked, high-quality news articles relating to the public risk management industry directly to your email inbox every Thursday. In addition, RiskWatch provides PRIMA members with valuable association-related news. This is a benefit that members can share with up to two other members of their entity and continues to be ranked as one of the Association’s top news vehicles.

In June, PRIMA launched a newly revised Risk Manager’s Briefing Kit, which is available on www.primacentral. org. The purpose of the Risk Manager’s Briefing Kit is to assist members in the task of raising awareness about

Also in 2010, PRIMA launched a new online Job Bank that is a comprehensive, one-stop shop for public and private sector risk management positions. Not only can members view risk management jobs across the country,

News and Information

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risk management for decision-makers and managers. The kit provides tools that educate and inform about risk management’s impact and the importance of having a strong risk management program in place. It provides information on key risk management concepts that can be used with a variety of audiences ranging from employees to elected officials.

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but they can post their resume in the Job Bank’s resume database for free! The Association continued to grow its most popular resource: the PRIMAtalk listserv. PRIMA members ranked PRIMAtalk as one of the most valuable member benefits and if you do not participate in PRIMAtalk, you are missing out on access to hundreds of risk management practitioners just like yourself. Members post questions about real-life issues they are experiencing or questions they have about a situation in their entity. Other members chime in with advice about what has worked for them in the same situation. It is many members’ go-to resource for a quick answer or detailed explanation. Odds are, if you have a problem, someone else has had the same problem and PRIMAtalk is a great forum to get answers. In 2010, PRIMA conducted a comprehensive member needs assessment. The results of this survey will help determine future tools and resources that will be developed for members. Thanks to all of the members that participated in this initiative.

Chapters On the local level, PRIMA continues to support its chapters. PRIMA developed a member needs survey that chapters can use to gauge member satisfaction in their individual chapters. It’s a great way for PRIMA chapters to reach out to their members in a streamlined, professional manner and get feedback at their fingertips through PRIMA’s survey tool. PRIMA rolled out a directors and officers liability insurance program late last year, where the chapters have the opportunity to purchase D&O insurance under an umbrella policy provided by PRIMA. This has provided a substantial cost savings for the chapters.

via drawing for an all-expenses-paid trip to PRIMA’s 2011 Annual Conference in Portland, Ore. It’s not too late participate! Contact Jessica Konrath at jkonrath@primacentral.org or 703.253.1270 for details. PRIMA members approved a bylaw change this year, affecting who can serve on the Association’s Leadership Development committee. This change allows the key contact from any member entity to serve on the committee that interviews and recommends the slate of candidates to serve on PRIMA’s board of directors. In an effort of engage younger risk managers, in 2010 PRIMA created the Future Leaders Task Force. Through a series of conference calls, this task force addressed ways the Association could reach out to the next generation of risk managers; what types of education they would need to excel; how social networking is impacting the risk management community and what motivates them to get involved.

Dedicated Leadership None of the programs PRIMA offers could happen without the trust and support of its board of directors. This year, PRIMA members welcomed a new president, Laura Peterson, JD, MPA, University of Wyoming, and a new president-elect, Cindy Mallett, AIC, CWCP, ARM-P, City of Gainesville, Ga. PRIMA members also elected the following members to three-year terms as directors:

PRIMA’S MEMBER GET A MEMBER CAMPAIGN Been thinking of joining PRIMA? There’s no better time than now with PRIMA’s Member Get a Member Campaign!

• •

Betty Coulter City of Asheville, N.C. Matt Hansen, MPA City and County of San Francisco, Calif.

Simply fill out the attached membership application and indicate who referred you to the Public Risk Management Association. You will get 10% off your first year dues AND help your risk management peer earn valuable incentives! Membership applications and payment must be postmarked by March 31, 2011, to receive the discount.

Why Join PRIMA?

RISK MANAGEMENT:

Save Money! PRIMA members save an average of $1,300 per individual per government entity by gaining access to membersonly resources such as the PRIMA Cybrary and the association’s listserv, PRIMAtalk, as well as financial discounts to PRIMA conferences, workshops, Webinars and tutorials.

Networking: Your PRIMA membership lets you interact with other risk management practitioners at PRIMA conferences and seminars as well as via PRIMAtalk, giving you great opportunities to make strong connections with other professionals within your field. Professional Development: PRIMA keeps you up-to-date with invaluable educational resources and opportunities. Whether through PRIMA’s RiskWatch e-newsletter, the ARM series and RMPE online tutorials or our Webinar series, PRIMA makes sure that you are getting the most up-to-date information about what is going in the ever-changing risk management industry.

June 6 – 9, 2010 | Orlando, FL For more information, visit www.primacentral.org.

nce PRIM A’s 31st Annual Confere

PRIMA’s Annual Conference: With more than 50 educational sessions addressing topics areas such as employee benefits/human resources, enterprise risk management, legal and regulatory, management and administration, you will be sure to come back to your office with at least a handful of ideas that will embellish your risk management program.

PRIMA Cybrary: PRIMA’s online library puts more than 2,500 risk management-related documents at your fingertips 24-hours-a-day, seven days a week.

Public Risk Magazine: PRIMA’s 10-time-per-year magazine is the flagship publication of the Association. This publication and its archives provide risk managers with timely, focused information in an easy-to-read format.

PRIMA also offered each of its 37 chapters a complimentary membership to award to a chapter member who is not currently a member of the Association. This partnership provided PRIMA’s chapters with an excellent opportunity to provide their members with the benefits of membership at the national level.

Membership In 2010, PRIMA membership remained stable with more than 1,400 members, but like most associations across the country, membership retention has been challenging. This year, PRIMA launched a Member Get a Member campaign, where PRIMA members become the recruiters. Until March 2011, members who recruit new PRIMA members will receive discounts on memberships and even a free conference registration. A grand prize will be awarded

Each of these elected officers was sworn in during PRIMA’s Annual Conference.

PRIMAtalk listserv: An information service and networking tool! This member-only listserv puts more than 500 industry specialists at the fingertips of PRIMA members.

4 Visit www.primacentral.org for a full list of member benefits. 3

Who should attend: Public risk managers Human resource practitioners Employee benefits administrators

PRIMA would also like to thank the chairs and members of each of its standing committees: Education, External Affairs, Conference Planning and Chapter Relations. Thanks also to PRIMA’s Future Leaders and PRIMA Institute task forces for their hard work this year!

PRIM A 2010

WebInAR SeRIeS Health and safety managers Risk financing and claims managers Pooling executives LookIng foR A coSt-effectIVe WAy to tRAIn youR StAff WhILe AVoIdIng

the fRuStRAtIon of budget cutS And tRAVeL exPenSeS?

the Public Risk Management Association’s Webinar series is designed to help risk management professionals like you excel in the field without leaving your office.

SerieS SponSor:

Visit www.primacentral.org to register.

This has been an exciting year for public risk management. In the coming year, PRIMA will continue to provide you with the tools you need to do your job and keep you at the top of the risk management game. For more information on any of the products or services mentioned in this article, visit www.primacentral.org.

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Spr e ad t h e W o rd and W i n !

PRIMA’s Member Get a Member Campaign PRIMA’s Member Get a Member Campaign lets you earn valuable incentives while you spread the word about PRIMA’s great member benefits. Help us recruit other public entities to join the ONLY association devoted to risk management in the public sector and you could receive: • Recruit one new member and receive 30% off your next year’s membership dues. • Recruit two new members and receive 50% off your next year’s membership dues.

• Recruit three new members and receive complimentary next year’s membership. • Recruit four or more new members and receive one complimentary registration to PRIMA’s 2011 Annual Conference in Portland, Oregon.

If you recruit four or more members, you also will be entered into a drawing for an all-expenses paid trip to Portland for PRIMA’s 2011 Annual Conference, including transportation and hotel accommodations!

How do you get started? Visit www.primacentral.org and click on the Membership link under About PRIMA. Find the special Member Get a Member application and distribute to your fellow public entity peers. When they enter your name in the referral box, you get the credit and the discount! In addition, each new member recruited through this campaign will receive a 10% discount off of their first year’s membership dues!

Don’t Delay! To qualify for the campaign incentives and the Grand Prize, new members must join PRIMA by March 31, 2011!

Help us grow your Association…spread the word and win!

Pitfalls and Pratfalls of Implementing ERM A Case Study from the State of Washington

What is enterprise risk management? A holistic approach to identifying, defining, quantifying and treading all of the risks facing an organization, whether insurable or not. – Glossary of Insurance and Risk Management Terms

By Sydney Martin Doré

I admit it. I’m a fan of enterprise risk management (ERM). The very first time I heard about it, I thought, “This makes sense!” Although I had been working in loss prevention for a while, I had always hated the fact that it seemed we only had time for negative ‘events’ and spent most of our time trying to mitigate things that had already happened. ERM finally brought together the swirling concepts of loss prevention, risk reduction, appetite and prediction together into a sharply defined picture and I loved it. The light bulb came on with a flash and made me realize that ERM was a unified concept I could use, not only in my own work, but as a framework to explain risk management to anyone in a clear, simple way they could immediately understand and use. In an instant, I was a believer. A few months later, I got a once-in-a-lifetime chance to work in the governor’s risk management office to help implement ERM at other state agencies and I jumped on it! When we started working on this challenge, there were 165 very diverse state agencies in Washington state, although the number varies from year to year. Some were very small, almost tiny, with less than 20 people operating as a regulatory board or commission. Others, like my home agency, were edging close to 20,000 employees. And their missions were also diverse; some agencies only dealt with one thing, like vehicle licensing or state printing, while others housed myriad divisions with varied purposes and methods of operating. These differences meant that our first challenge was to devise a simple way to provide ERM training in an accessible, usable way to people from many different agencies with widely different skills, experience and frankly, interest. As you all know, some

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Pitfalls and Pratfalls of Implementing ERM

approaches to ERM require a fairly high level of risk management experience but we needed a way to talk about ERM with people who had very little risk management background. And we wanted our version of ERM to meet some amazing criteria. It had to be easy to explain to many different audiences, flexible, scalable, memorable and a good fit with management practices for state agencies. No small task. Our team was small and we needed to carefully marshal our resources so the ERM plan we put together had to concentrate on the essentials. We started with purchased ERM training for agency executives to share the concepts and advantages of ERM training with the top people in our agencies. The training turned out to be a great kick-off. It was fast paced, informative, fun and a great vehicle for introducing ERM to the agency community. Unfortunately, it was also very, very expensive. ‘Step two’ had to be an in-house training plan that we could do ourselves and offer free to agencies. To make that happen, we got to work boiling ERM background, philosophy, vocabulary and techniques down, down, down into its basic essence and what finally emerged was the Seven-Step ERM Method that would work for agencies regardless of their size, business functions or experience with risk management. You know there are many ways to talk about ERM and some of them are quite complex. Because we knew that most of the people we would be training would bring a social service orientation, not a financial or insurance background, we charted a very simple ERM path:  Clearly state the goal.  List everything that could keep you from meeting the goal (the ‘risks’).  Evaluate each risk: • Choose a likelihood rating from 1–5. • Choose an impact rating from 1–5. • Multiply together and ‘map.’  Prioritize (pick the most severe risks).

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 Treat/Mitigate: • Avoid • Accept and Monitor • Transfer • Reduce the Likelihood. • Reduce the Impact.  Make a Risk Register that includes: • Treatment plans. • Measures of success.  Communicate Results: • Gather and share ‘best practices.’ • Review and refine. We used this simple path as a platform to talk about basic risk management concepts, as well. Since the people we worked with were program managers, not risk managers, we needed to cover a lot of basic risk management in the training before we even got to the “Seven Steps.” To do that, we always opened the training with a quick game of ‘21’ (using chocolate we handed out to everyone as poker chips) to demonstrate differing risk appetites, generate discussion about what “risk” means and get people talking about risk in their personal and professional lives. After that, we would do a quick risk management “history lesson” where we defined traditional (or transactional) risk management practice and talked about the growth and principles of enterprise risk management practice, as well as the risks and benefits of each. Once we actually started explaining the method, the steps gave us plenty of opportunity to explain the other things they needed to know: how to write a goal statement, why anonymous voting works best, crafting effective success measures, mitigation techniques and even a bit about using surveys and online voting. At the end of our training time, everyone got a chance to practice, first on a silly, personal goal like cleaning closets or saving for a vacation, then on a real goal statement about a problem facing the group. This

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gave everyone who attended a chance to practice and made sure that every session ended with real, practical results! We trained hundreds of people in ERM, but we didn’t stop there; we also developed simple tools and tracking methods to chart our progress. These included an online version of the risk register (Illustration 1), tools and a framework for agencies to use in government management accountability and performance (GMAP) reporting and even a customized maturity model just for Washington agencies. Illustration 1 GOAL:

To treat a risk, you can:

Treatment must reflect the:

• Avoid

• Risk appetite of your group

• Accept and Monitor

• Amount of control you have

• Reduce the Likelihood/Impact

• Values of the group, and

• Transfer the risk

• Be measurable, and time-limited

RISKS:

HEAT MAP

1 Very Little

5 Almost Always

(5)

4 Frequent

(4)

3 Often

(3)

2 Once or Twice

(2)

1 Hardly Ever

(1)

Likelihood

Risk 1 ... Risk 2 ... Risk 3 ...

While the reporting framework linked ERM implementation to the overall goal of reducing deaths, serious injuries and other substantial loss in the state, the tools we developed, including the maturity model, helped agencies track their progress in managing risk. Using a maturity model tool is a sound business practice of ERM and our Washington tool, still in use, measures ERM maturity in five areas annually: fundamentals of risk management, executive leadership, ERM integration into agency culture, applying ERM principles and ERM embedded into agency strategic business operations. One hundred agencies have been using this tool for several years now and reporting their progress and their plans to reach maturity in this area. In addition to basic and advanced training and measurement and reporting tools, we provided other ERM resources including quarterly risk “forums” on topics as varied as e-discovery, public disclosure law and reducing employment liability risk, a risk management Web site, an online risk management manual, ‘Risk Management Basics’ (http://www.ofm.wa.gov/rmd/publications/rmbmanual.pdf ) and ongoing, regular meetings for agency risk managers.

All of this work really did pay off, raising awareness of ERM and increasing agency skill levels in this area. The free training customized to agency needs, the simplified ‘plain-talked’ ERM method we developed and the ongoing dialogue along with the new resources like the Web site and manual worked together extremely well.

All of this work really

Not so successful? Well, you have to admit that the vocabulary of ERM is not exactly mainstream; it was tough to get people to make “COSO-speak” the norm and while I hear more people talk about “enterprises” and “mitigation,” it would have been easier if we could have started with 2 3 4 5 Minor Major Critical Fatal more familiar terms.

agency skill levels in

(10)

(15)

(20)

(25)

And there is always a struggle to get non-risk managers to move beyond (6) (9) (12) (15) their definition of risk management as a safety (4) (6) (8) (10) program or an insurance/ workers’ comp program (2) (3) (4) (5) into a broader application Your Group of risk management as a Impact Score Score Color (L x I) (Avg.) set of principles and tools they could apply to better reach their program goals. Add that to the reluctance most people have to talk about or focus on risk, and their limited definition of the term, and you have a topic that doesn’t come up much unless people are educated to bring it up. (8)

(12)

(16)

(20)

did pay off, raising awareness of ERM and increasing

this area. The free training customized to agency needs, the simplified ‘plaintalked’ ERM method we developed and the on-going dialogue along with the new resources like the Web site and manual worked together extremely well.

Finally, of course, budget matters. In times like these, people fall back on old habits to manage the crisis and it is hard to change course in a storm. If you have been around for a while, though, you know that every storm passes and I believe ERM will prevail here. It is easy to explain and easy to learn. It brings focus to what is important and helps us put scarce resources where they will do the most good. It fosters a ‘no-blame’ culture and teaches that risk can be measured and managed. It helps us look at goals instead of just talking about things after something goes wrong and it provides a framework for dealing realistically with problems that can help us make bold, proactive decisions that fit the amount of resources we actually have available. Government will always need that. Sydney Martin Dore is economic services administration enterprise risk manager for the Washington State Department of Social and Health Services.

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Adjuster & Actuary: Blending Perspectives

Adjuster and Actuary Blending Perspectives

By Mujtaba Datoo and Jody Gray

Public risk managers have long understood the important roles adjusters and actuaries play in the success of their insurance programs. While both of these professionals work in insurance, upon closer inspection of their responsibilities, we see that they have very different perspectives on your program. Adjusters aggressively manage each individual claim to achieve the best-possible outcome; while actuaries take aggregate claims information and compute the ultimate financial impact a program’s risks have on the public entity’s bottom line. The adjuster’s role is similar to that of an artist; through years of ongoing practice and continually applying their subjective assessment to claims, adjusters eventually become highly skilled in their claims management craft. On the other hand, the actuary employs a scientific and objective discipline that uses mathematics and statistics to assess risk. In this article, we take you through a side-by-side comparison of the typical adjuster  and actuary  perspective on key elements of your insurance program—including claims, reserves, the overall program and data. In the end, you’ll see how powerful it is to blend these perspectives in order to achieve stronger program performance.

 The Adjuster on CLAIMS When an adjuster handles a claim, the focus is on providing superior service to both the claimant and public entity. For example, if it’s a workers’ comp claim, adjusters make sure that injured employees are directed to quality medical providers, so they receive prompt, quality care and can return to work as soon as possible. When new claims are first reported, adjusters are concerned about performing prompt and thorough investigations. They want to understand the “story” behind each claim and get all the facts. What happened? Who was involved? What type of medical treatment is required? Knowing the facts can be crucial to positively influencing the claim’s outcome. As management of the claim continues, the adjuster engages in continuous quality control, ensuring best practices are consistently applied and the right tools and expert resources are utilized to manage costs. Adjusters must also comply with

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statutory and regulatory requirements. Today, in workers’ comp, as much as 60 to 70 percent of an adjuster’s time may be spent on fulfilling mandatory claim requirements.

 The Actuary on CLAIMS What the claims adjuster does in terms of managing claims becomes the foundation for the actuary’s estimates and projections. While the adjuster looks at the microelements of a claim, the actuary looks at the big picture. By analyzing claims in aggregate, the actuary can ultimately determine the financial liabilities a public entity has assumed under its insurance program and the money the entity must set aside to cover these liabilities. If you imagine plotting a public entity’s claims on a graph, there may be thousands of dots, representing thousands of claims. Unlike adjusters, actuaries are not so concerned about the individual story or claimant behind each dot. Instead, they look at the picture as a whole. They analyze the spread of dots across the grid and fit a curve to this distribution. With this information, actuaries can identify development patterns, which they then use to estimate what the ultimate costs of the claims will be.

 The Adjuster on RESERVES As claims come in, adjusters set reserves, or in simpler terms, they try to establish a financial budget for a claim—or an estimate of what that claim will ultimately cost. Let’s say an adjuster is setting a reserve on a workers’ comp claim. In order to do this, the adjuster collects as much information as possible from the injured worker, the employer and the physician. Typically, reserves are broken down by category, such as medical, indemnity and other expenses and each category is further broken down by sub-category. For example with medical expenses, adjusters try to establish the services and procedures that may be required, such as surgery or physical therapy. As claims develop, adjusters may receive more information, such as a modified diagnosis or treatment plan. Based on updated information, adjusters may need to increase or decrease reserves. Even though reserving is a statutory-guided process, there’s also an art to it; adjusters use subjective judgment and perform qualitative assessment. They set reserves based on their background and experience, as well as the different nuances they read in the case. If the same claim were given to a group of adjusters, every adjuster would look at the claim and set the reserve a little differently. There are some aspects to reserving, such as calculating temporary disability, which are a little more systematic. Guidelines may say that an injured worker who experienced

a given type of injury will be out on temporary disability for a certain number of weeks. However, even these guidelines are based on averages and individual cases vary. Adjusters use these references, but they ultimately apply their own judgment. For example, an adjuster may deduce that a claimant who is 72-years-old or someone who is having performance issues at work may be out for a slightly longer period. The savvy adjuster picks up on these subtleties and sets reserves accordingly.

 The Actuary on RESERVES Actuaries rely on an adjuster’s judgment to estimate the cost of an individual claim. From the actuary’s perspective, setting reserves is one of the most critical functions an adjuster performs—as critical actuarial assumptions are based on these reserves. Similar to their respective perspectives on claims, adjusters look at reserves on an individual basis, while actuaries analyze reserves in total. Overall, if claims are under-reserved, a public entity may be at risk of not setting aside enough money to cover its liabilities and as a result, the entity may experience financial hardship or even insolvency. If claims are generally over-reserved, the public entity may set aside too much money, which could have been used for other purposes. To avoid either scenario, actuaries analyze reserves to understand how reserves typically develop over time. For example with some cases, reserves decrease and with others, reserves increase. From adjuster to adjuster, reserves vary, but if the group as a whole follows a consistent reserving philosophy, the variance or delta is minimal and actuaries can anticipate the additional amount of development that is likely to occur and base their financial projections on those trends. While actuaries rely on adjuster reserves for projections, they also perform diagnostic tests to assess reserving consistency from year to year to ensure estimates are reasonable.

 The Adjuster on YOUR PROGRAM When adjusters think of your insurance program, their perspective is still at the claims level. Due to the nature of their jobs, adjusters typically don’t have an opportunity to grasp the public entity’s total cost of risk. Adjusters may get an intuitive sense for trends. For example, they may notice an unusually high

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Adjuster & Actuary: Blending Perspectives

By bringing these two groups together, both professionals become better informed about the public entity’s program, including the key objectives, loss development trends, risk management initiatives and total costs of risk. They also gain a greater understanding of how each profession can better impact the public entity’s bottom line.

number of “slip and fall” incidents are being reported, but in general, they don’t have the opportunity to analyze and breakdown loss trends.

they’re on par with their peers, or if they’re experiencing a higher or lower rate, frequency, or severity (average cost) of claims.

In approaching your program, what matters most to adjusters is performing the best-possible job on each and every claim, ensuring that they’re being responsive to claimant and client needs. On a claim-by-claim basis, adjusters support a public entity’s unique goals and objectives; consistently carry out the entity’s specific best practices and claims-handling instructions and ultimately strive to resolve claims as quickly and cost-effectively as possible.

The actuarial study also enables the actuary to identify important trends and make other recommendations that could benefit the program as a whole. For example, the study can pinpoint what’s driving program costs, so public entities can implement targeted loss control initiatives. Depending on the entity’s loss history, the actuary may recommend an adjustment in retained risk—for example, by either increasing or decreasing the self-insured retention. The actuary may also suggest the entity use a loss portfolio transfer to shift liabilities to an insurer. All of these considerations help public entities to optimize their program’s performance over time.

Adjusters also value the day-to-day partnerships and relationships they’ve established with their public entity clients. As such, they strive to provide a high level of service and satisfaction to these contacts, as well as fostering timely, proactive communication on critical claims issues.

 The Actuary on YOUR PROGRAM Actuaries look at a client’s program from several perspectives. First and foremost, actuaries must consider compliance. Public entities have government accounting standards to which they must adhere. Toward this end, actuaries help public entities to assess and meet the financial obligations of their insurance programs. Each year, actuaries develop an in-depth actuarial study, which helps to determine the right amount of money a public entity should set aside for a given year. This amount covers a portion of the program’s anticipated liabilities, administrative costs and other expenses. Investment income is also taken into consideration, as it offsets some of the costs. The actuarial study will quantify the program’s total cost of risk. For example, a workers’ compensation program may cost $2.70 per $100 of payroll. A public entity can use this measurement to benchmark its performance against other public entity programs and determine if

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 The Adjuster on DATA Today, claim systems require vast amounts of data. Adjusters collect this information and often can’t move on until certain fields are populated. It’s challenging for adjusters to assimilate data as it comes in via mail, fax and email. All of this information must be captured and centralized—both for documentation and for use in claims decisions. Adjusters are also concerned about cleansing data to ensure integrity and transferring data to the right stakeholders at the right time. As a result, many adjusters view data entry, collection and management as a complication that gets in the way of performing their “real” job—or what they perceive to be high-value areas, such as communicating with claimants and clients.

 The Actuary on DATA To actuaries, data is king. To the extent that the data is not accurate or reliable, everything else that is built upon this information in terms of estimates, projections and assumptions are likewise on shaky ground. It’s the old adage: garbage in, garbage out.

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Calendar of Events The Public Risk Management Association (PRIMA) hosts or sponsors a wide variety of educational programs for public risk practitioners. These meetings and events provide an optimum forum for public risk professionals to acquire new knowledge or skills, exchange ideas and expand peer networks.

There are many diagnostic tests that actuaries perform to ensure data integrity. One of them is the reconciliation of loss runs to the actuarial study. Depending on the size of an entity, this review may occur every quarter, every six months or once a year. The loss runs enable actuaries to check for consistency and reasonability of changes from year to year.

Adjuster & Actuary: Blending Perspectives In this article, we’ve seen that adjusters and actuaries have different, but complementary viewpoints and a public entity can experience improved results if these two groups come together to blend their perspectives. However, what typically happens is a public entity will hire a third-party administrator (TPA) to manage claims and they’ll hire an actuarial firm to perform an actuarial study—but rarely do the two professions meet. As a result, many adjusters do not understand what actuaries do and actuaries do not understand the nuances involved in claims management—a scenario that is not conducive to optimal claims outcomes or program results. Today, many public entities have begun to organize cross-training sessions prior to initiating the actuarial study. This provides an opportunity for both groups to interact and get to know the other’s roles and responsibilities. The result: adjusters gain a better understanding of actuarial science and come to see the important role they play in setting accurate case reserves. At the same time, actuaries learn more about the art involved in adjusting and reserving. By bringing these two groups together, both professionals become better informed about the public entity’s program, including the key objectives, loss development trends, risk management initiatives and total costs of risk. They also gain a greater understanding of how each profession can better impact the public entity’s bottom line.

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

Webinars 2010 November 17: FREE for Members! Winning Strategies for Contractual Risk Transfer

PRIMA Annual Conferences June 5–8, 2011 PRIMA 2011 Annual Conference Portland, OR Portland Convention Center June 3–6, 2012 PRIMA 2012 Annual Conference Nashville, TN Opryland Hotel June 2–5, 2013 PRIMA 2013 Annual Conference Tampa, FL Tampa Convention Center

In the end, the entity will cultivate a bit of the artist and scientist in both professions, optimally leveraging a subjective and analytical approach, which helps to bring about improved claim-by-claim results, more credible actuarial findings and overall stronger program performance. Mujtaba Datoo is an actuarial practice leader for Aon Global Risk Consulting / ARM Tech. Jody Gray, ARM, is the president of York Public Entity.

November/December 2010 | Public Risk

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Public Risk Management Association

Your

Risk Management Journey Begins Here

Are you taking advantage of all that PRIMA has to offer? Professional Development

Networking

• PRIMA Annual Conference • Online education opportunities including PRIMA’s Webinar Series and the industry’s only Associate in Risk Management and Risk Management for Public Entities online tutorials.

• Leadership Opportunities: Get Involved! Join a committee, task force or even become a director on PRIMA’s board and provide input in what PRIMA does and how we do it. • PRIMA Chapters: Make contacts on your local level, share what you know, and learn from experts and innovators in meetings, workshops, and seminars in your area. • Online Membership Directory: A members-only resource where you can locate and contact PRIMA members in various risk management fields.

Information Resources • PRIMA Cybrary • PRIMA Job Bank • PRIMAtalk: Member-only listserv that provides access to more than 500 industry specialists. • RiskWatch: Weekly e-news service for public risk managers

AND MUCH MORE!!!!

For more information on any of PRIMA’s member benefits, visit our Web site: www.primacentral.org.

Advertiser Index

Advertiser Index Aon eSolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outside Back Cover Genesis Underwriting Management Company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 10 Munich Reinsurance America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 14 States Self-Insurers Risk Retention Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover

Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program underbudget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

Go Online and Get Out of the Classroom! If you are agent/broker, business executive, risk manager, or an operational risk staff member, the in-depth knowledge you receive with an ARM designation will greatly benefit you and your entity. The Associate in Risk Management (ARM) designation requires completion of the 3-part ARM series: ARM 54–Risk Assessment; ARM 55–Risk Control; and ARM 56–Risk Financing. Prepare for these exams with the Public Risk Management Association's online tutorials—proven beneficial tools in the studying process. Upon purchase, you have 365 days of studying time. The tutorials fit your individual schedule, whether you are at work, at home, or on travel; they are available 24/7. Check out the PRIMA Online Programs section of our Web site, www.primacentral.org, and register today!

November/December 2010 | Public Risk

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Member Spotlight

Reach for the Stars, But Watch Your Step! Each month, Public Risk features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession? If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members. To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

28

L

ike many school districts, the Garland (Texas) Independent School District (ISD) was experiencing a high rate of employee injuries. Each year, Garland ISD professional employees averaged 160 to 175 injuries costing the district more than $500,000. Typical injuries reported include slips, trips and falls, lifting and moving, twisting and repetitive motion injuries as well as cuts and burns. With more than 7,500 employees located at 85 sites within a 100-mile area, reducing injuries was a challenge. “The question we kept asking ourselves was, ‘How do we keep our safety program current when the same types of injuries keep coming up?,” said Alan Smith, risk manager for Garland ISD. “We wanted to create a program that would be fun and memorable.” Garland ISD’s risk management department settled on a Star Trek theme for its 2009-2010 program. “The wide popularity of the Star Trek movie and television series gave the safety program visual appeal and caught the attention of our target audience,” said Smith. Reach for the Stars with Safety participants received a Star Trek-themed safety flyer each month to distribute to their department. The flyers covered areas of general safety, fire prevention, chemical safety, housekeeping and more. Each department only had to distribute the flyer

Public Risk | November/December 2010

and complete a brief monthly safety report to earn points in the program. Departments earned bonus points for having no injuries, establishing student safety patrols, holding safety meetings and coming up with their own ideas to promote safety. Risk management tallied each department’s points at the end of the school year and provided the departments with achievement awards based on their totals. Garland ISD’s risk management department offered three levels of awards including Award of Achievement, Award of Merit, and the highest award, Award of Honor. While these awards carried no monetary value, they came with bragging rights for the department’s receiving them. “We have received nothing but positive feedback on the program. Star Trek was definitely a very popular theme,” said Smith. “We didn’t know how many people were Trekkies until we unveiled this program!” Garland’s Reach for the Stars program was recently awarded Honorable Mention during PRIMA’s 2010 Achievement Awards presentation at its Annual Conference in Orlando. For more information, contact Alan Smith at awsmith@ garlandisd.net.

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