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PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION MAY/JUNE 2016

TENNESSEE RISK MANAGER BECOMES PRIMA’S NEW PRESIDENT

Meet Terri Evans PAGE 6

ALSO IN THIS ISSUE

PROFESSIONAL SERVICES CONTRACTS: The Public Risk Management Challenge PAGE 12

ACTIVE PREPAREDNESS AGAINST “ACTIVE ASSAILANTS” PAGE 16

SERVICE MODEL You Have a Choice in How Your Workers’ Compensation Claims are Administered PAGE 22

OREGON CITIES & COUNTIES EXPLORING ENTERPRISE RISK MANAGEMENT PAGE 26

PRIMA ANNUAL CONFERENCE PREVIEW PAGE 30

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MAY/JUNE 2016 | Volume 32, No. 5 | www.primacentral.org

CONTENTS

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration. PRESIDENT Dean Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ PAST PRESIDENT Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX PRESIDENT-ELECT Terri Evans Risk Manager City of Kingsport Kingsport, TN DIRECTORS Lori J. Gray Risk Manager County of Prince William Woodbridge, VA

TENNESSEE RISK MANAGER BECOMES PRIMA’S NEW PRESIDENT

Meet Terri Evans By Jennifer Ackerman

THE PUBLIC RISK MANAGEMENT CHALLENGE By Joe Jarret

16 Active Preparedness Against “Active Assailants” By Ben Tucker

22 Service Model: YOU HAVE A CHOICE IN HOW YOUR WORKERS’ COMPENSATION CLAIMS ARE ADMINISTERED By Glenn Backus

26 Oregon Cities & Counties Exploring Enterprise Risk Management By Scott Moss, CIS P/C Trust Director 30 PRIMA Annual Conference Preview

IN EVERY ISSUE

Scott Kramer Risk Manager Montgomery County Commission Montgomery, AL Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Scott Moss, MPA, CPCU, ARM-E, ALCM P/C Trust Director CIS Salem, OR Tracy Seiler, ARM-P Director of Risk Management Services Texas Association of Counties Austin, TX

12 Professional Services Contracts:

Jani J. Jennings, ARM Insurance & Safety Coordinator City of Bellevue Bellevue, NE

By Jennifer Ackerman

4 NEWS BRIEFS | 31 ADVERTISER INDEX | 32 MEMBER SPOTLIGHT

NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Risk Management Association Alexandria, VA EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com REPRINTS The YGS Group reprints@theygsgroup.com • 800.290.5460

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year. Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine. POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314. Copyright 2016 Public Risk Management Association

MAY/JUNE 2016 | PUBLIC RISK

RISK & INSURANCE

CLAIMS

SAFETY

ANALYTICS

We’re Ventiv Technology. Our name may be new but we have a 40 year history of helping public entities solve their risk, claims and safety problems. For risk managers, that means containing costs and improving claims administration while achieving efficiency gains. We’ve helped more than 100 of your public-entity peers – including many of the nation’s largest - with software solutions that deliver strong return on investment by: > Improving claims administration efficiency, claims outcomes and expenses > Improving organization oversight with better exposure management, improved data analysis, cost allocation and enhancing reporting & analytics > Reducing overall liability and workers’ compensation costs by automating fraud detection, medical bill review and return-to-work process. > Complying with demanding state and federal regulations, including electronic data interchange, MMSEA and CMS reporting, data security and injury reporting. To learn more, visit us at booth 110 at the 2016 PRIMA conference or online at ventivtech.com

HELLO my name is

MESSAGE FROM PRIMA PRESIDENT DEAN COUGHENOUR, ARM

A Perfect Perspective

REALLY hope that you join us in Atlanta for the PRIMA Annual Conference! The value of what you will learn, the ability to re-energize and to rekindle your risk management passion and to re-engage in your organization is not only critical to your positive perception, but most importantly, critical to your ability to positively impact all those that you encounter. This is my last opportunity to share with you as your PRIMA president. I thought about that fact quite a bit and wanted to talk about “perspective.” Every day we approach situations, the day in general, our relationships with others and our job, from our own perspective. The great thing is we get to choose what that perspective is. Four years ago, I was sitting in a doctor’s office at Loma Linda Hospital in California. This was the new proton therapy, non-invasive radiation, and I was sure it would be a walk in the park. The doctor looked at my records, the same identical records as the three doctors I had seen before. He was reading from them aloud when he just stopped talking mid-sentence. After a long pause he put his head in his hands and began shaking his head from side to side and said, “I’m sorry. You have a cancer that is aggressive and advanced. I am sorry.” He had a hard time just looking me in the eye! For me, it was as if you had just dumped a 40-ton load on my back while I was under water. I couldn’t breathe, I couldn’t think, I couldn’t get my head around what he had just said and quite frankly, I was overwhelmed with emotion. I went to the airport that afternoon to fly back home and found a place in the airport to sit in a corner and cry. Then and there I had a pity party, just for poor, poor Dean. On the flight home I got to thinking, I have a choice! I can accept the “perspective” of the doctor or I can “choose” my own. A month later, I went back to start my four month treatment. I went to

“… remember, the power of PRIMA has been and always will be, YOU. The knowledge that you bring, your willingness to

share and your perception of perfect, brings amazing outcomes for both yourself and your entity.” the same doctor, looked him in the eye, and said, “So, we are going to cure this cancer! Either you are on board with me or I will find someone who is!” He smiled and said, “Yes Dean, I am on board and we will cure this cancer.” Less than four years later, the cancer is cured. You see, I had a choice in my perspective and I chose a positive and embracing one. I took it as an opportunity to be positive not only for myself but for those around me who were struggling with their own perspective. Today when people ask me how it is going, it is likely that you will hear me say, “PERFECT!!” Perfect is a range, not a specific point or destination but a perspective. We all have struggles: jobs, families, fellow employees, finances and health. But that is LIFE. Once you are in the “range” of what is perfect, it’s all perfect. The cool thing is that we, you and I, get to choose our perspective of how we react to the events of the day. Perfect? Don’t wait for the perfect moment, take the moment and make it perfect! That is what this moment was supposed to be. When you wake up, are you thinking of the obligation in front of you for the day, or the opportunity to interact with people and your ability to make a difference? As risk managers, we are in the absolute perfect position to make a positive impact on the people we touch by having the vision and professional knowledge of how to prevent the NEXT injury or accident. For the City of Flagstaff, I know that historically one in every three serious injuries is career-altering and one in six serious injuries is career-ending. I am in the perfect position, as

risk consultant, to choose a perspective to help all of the City of Flagstaff’s 800 risk managers, (all our employees are risk managers), work together to reduce that number. And so are you for your entity. The simple fact that you are reading this article is an indication of your commitment to your profession and to improve the results you achieve for your entity. You chose what your perspective will be: obligation or opportunity? It is up to you, but what greater goal in life can there be, but to help improve the lives of others and their perspective on the day? In closing, I would like to thank you for this wonderful journey as your PRIMA president. It has been my sincere honor. But remember, the power of PRIMA has been and always will be, YOU. The knowledge that you bring, your willingness to share and your perception of perfect, brings amazing outcomes for both yourself and your entity. Thank you for what you do in truly making a difference in people’s lives. Make it a PERFECT day. 

Dean Coughenour, ARM 2015–2016 PRIMA President Risk Manager City of Flagstaff Flagstaff, AZ MAY/JUNE 2016 | PUBLIC RISK

NEWS BRIEFS

NEWS Briefs

MORE STATES DEPLOY DRONES TO MONITOR TRAFFIC, CLEAR ACCIDENTS State transportation departments are increasingly studying the use of drones for everything from inspecting bridges to clearing car accidents, reports Claims Journal. Michigan transportation officials are set to begin a two-year study. Minnesota has tested a drone to help conduct safety inspections of bridges. Vermont is using federal grant dollars to study the use of drones to monitor river flooding and figure out how much material is needed to fix roads. And in Massachusetts, a group has also been looking at the pros and cons of drone use, from potential threats to their possible use surveying construction projects. The states are among 33 that have studied or used drones, helped develop drone polices, or aided in drone research.

The Michigan study is part of a longer review. In 2014, state transportation officials there conducted a study with the Michigan Tech Research Institute that found drones potentially useful for a range of transportation tasks, from assessing bridge decks and monitoring traffic to processing thermal data and inspecting confined spaces. The first study determined that drones are safe, reliable, less expensive and help keep workers out of harm’s way, said Steven Cook, a Michigan Department of Transportation engineer.

PUBLIC RISK | MAY/JUNE 2016

“A traditional bridge inspection for example typically involves setting up work zones, detouring traffic and using heavy equipment,” Cook said in a statement. “(Drones) can get in and get out quickly.” Michigan officials estimate that a standard bridge deck inspection takes eight hours, a crew of four people and heavy equipment at a cost of about $4,600. The same inspection with a drone

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takes two people just two hours at an estimated cost of about $250. At the University of Vermont, researchers using federal grant money are developing programs to let drones estimate how much fill it will take to repair a damaged roadway by feeding images collected from above the site through a computer program.

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That’s according to a new survey by the American Association of State Highway and Transportation Officials, which represents departments of transportation in all 50 states, Washington, D.C., and Puerto Rico.

“A traditional bridge inspection for example typically involves setting up work zones, detouring traffic and using heavy equipment, … (Drones) can get in and get out quickly.

Steven Cook, a Michigan Department of Transportation engineer

WEBSITE SEEKS TO MAKE GOVERNMENT DATA EASIER TO SIFT THROUGH For years, the federal government, states and some cities have enthusiastically made vast troves of data open to the public. Acres of paper records on demographics, public health, traffic patterns, energy consumption, family incomes and many other topics have been digitized and posted on the web. This abundance of data can be a gold mine for discovery and insights, but finding the nuggets can be arduous, requiring special skills. The New York Times reports that a project coming out of the M.I.T. Media Lab seeks to ease that challenge and to make the value of government data available to a wider audience. The project, called Data USA, bills itself as “the most comprehensive visualization of U.S. public data.” It is free, and its software code is open source, meaning that developers can build custom applications by adding other data. Cesar A. Hidalgo, an assistant professor of media arts and sciences at the M.I.T. Media Lab who led the development of Data USA, said the website was devised to “transform data into stories.” Those stories are typically presented as graphics, charts and written summaries. The media lab worked with the consulting and auditing firm Deloitte, which provided funding and expertise on how people use government data sets in business and for research. Type “New York” into the Data USA search box, and a drop-down menu presents choices — the city, the metropolitan area, the state and other options. Select the city, and the page displays an aerial shot of Manhattan with three basic statistics: population (8.49 million), median household income ($52,996) and median age (35.8). Lower on the page are six icons for related subject categories, including economy, demographics and education. If you click on demographics, one of the so-called data stories appears, based largely on data from the American Community Survey of the United States Census Bureau.

WELFARE DRUG TESTING COMING SOON TO WEST VIRGINIA A pilot program requiring drug screenings for public assistance applicants will soon start in West Virginia, reports the Bluefield Daily Telegraph. Gov. Earl Ray Tomblin signed off on the proposal, paving the way for the statewide, three-year testing program. Once the program is approved by the federal Department of Health and Human Services and initiated, anyone applying for Temporary Assistance for Needy Families will be screened. That screening requires a series of questions that determine if there is a “reasonable suspicion” of drug use, a determination made by a caseworker.

“We will direct the benefits to make sure that they are going to who needs them,” he said, adding that the person who is using drugs should be taken out of the picture and any money they would have received would most likely have been used to support the drug habit. “This is not a punitive program,” he said. “It just identifies those who need help and then gives them help.” Del. Marty Gearheart has been a proponent of the bill as well. “I think it’s a step in the right direction as far as dealing with the drug problem,” he said after the governor signed the bill. “It does still provide for the children, and that’s a win-win.”

If so, the applicant will then be tested and, if drug use is found, substance abuse treatment will be required, including counseling and job skills programs. Subsequent failures result in temporary and then permanent bans on assistance for that individual.

Gearheart had earlier praised Del. John Shott and Del. Dr. Joe Ellington for their work on the bill, and said what is best for the children is at the heart of the program.

State Senate President Bill Cole (R-Mercer) supports the legislation.

“Children are a big part of the bill and that is the major concern,” he said. “It is fair and compassionate. It really benefits no one if the public is putting money into drug abuse.”

“We passed the legislation and I think it’s a good thing,” he said. “But it is not punitive. It will help people who need help ... giving them an opportunity to receive help.”

At least 13 states have public assistance drug testing.

Cole also said the children in the family will receive help regardless of the outcome of the drug screenings and tests.

Even when it is approved on the federal level and then implemented, it would still be a pilot program with a three-year window of approval, Gearheart said.

MAY/JUNE 2016 | PUBLIC RISK

TENNESSEE RISK MANAGER BECOMES PRIMA’S NEW PRESIDENT

Meet Terri Evans

PUBLIC RISK | MAY/JUNE 2016

BY JENNIFER ACKERMAN

HEN TERRI EVANS JOINED PRIMA MORE THAN 20 YEARS AGO, she had no idea that in 2016 she would be helming the 1,000-plus member organization. In June, Evans prepares to become PRIMA’s 38th president. Evans steps into the role of president after serving on many PRIMA committees as well as holding leadership positions with her local Tennessee chapter.

“I became interested in serving as PRIMA’s president because I have a desire to give back to the profession I have served for 30 years,” said Evans. “As I am coming closer to the end of my career, I believe in developing the next generation and hope to move PRIMA closer to its goal of engaging ‘new’ risk managers.” “My selection to lead PRIMA is one of the greatest honors of my life, and I am sincerely grateful for the opportunity,” she continued. “I want to make sure that PRIMA is the premier organization to provide public sector risk management educational offerings. But, I can’t do this alone. The members of the board of directors are dedicated individuals whose only focus is the continual improvement of PRIMA, but the input and participation of the membership is crucial to our success.” Evans has been the risk manager for the City of Kingsport, Tenn., since January 2001. She supervises a staff of four with a budget of approximately $11 million. Prior to 2001, she held several other positions within the city, dating back to 1984. Since joining PRIMA, Evans has made valuable contributions to its membership committee and conference planning committee. She currently chairs PRIMA’s finance and audit committee. As she prepares for her June 8 inauguration, Evans discusses her thoughts on the public risk management profession and her new role with PRIMA.

HOW DID YOU BECOME A RISK MANAGER?

I was originally hired with the City of Kingsport in the Parks and Recreation department. I had worked with one of our assistant city managers on a number of occasions and she encouraged me to apply for a promotion to the position of health benefits coordinator in the risk management department. I was fortunate enough to receive the new position and my risk management career began! I was responsible for the self-funded health insurance program for the city government and the school system. At that time, I had no knowledge of health insurance, let alone what it meant to self-fund a program! Since there were few resources available in the mid-1980s for benefits administration, I asked questions of our reinsurance carrier, our third-party administrator and our benefits consultant and basically taught myself what I needed to know at the time about health benefits and self-insurance. I’ve found that those of us who have been in risk management for a number of years and do not have an insurance background are largely self-taught. When the city decided to purchase a fully insured health program, I moved into the workers’ compensation and liability programs as a risk management representative. Again, I learned from my predecessors and supervisors, along with our administrators and specifically the Tennessee Municipal League Risk Management Pool, who has administered our liability program for more than 30 years. Attendance at various PRIMA

national and state chapter meetings and trainings has been crucial in the success of our programs and my personal knowledge as it gave me the knowledge and skills I needed to succeed. In 2001, I was promoted to risk manager, with a staff of one person, which was cut to a half-time position soon thereafter. Since that time, I have been able to demonstrate a need and financial savings to increase my staff to four, including a position to administer our health insurance program when the decision was made to once again self-fund in 2003.

HOW LONG HAVE YOU BEEN INVOLVED WITH PRIMA?

I have been involved with PRIMA at both the state and national level for approximately 20 years. Restrictions in travel and training budgets made my participation in the early years sporadic at best, but over the years as I was able to implement programs with the information I learned through PRIMA, demonstrating the value to our organization. For example, I received training on cost allocation at a PRIMA conference that helped me develop a program to allocate expenses and revenues under our self-funded workers’ compensation and liability programs. The benefit of sharing what I’d learned helped individual departments understand the global impact of their departmental accidents on their budget’s bottom line. Over the years, PRIMA has evolved into my “go to” resource for questions and how to handle unique programs that are started in my locale, such as a high ropes course on our 3,500 acre

MAY/JUNE 2016 | PUBLIC RISK

TENNESSEE RISK MANAGER BECOMES PRIMA’S NEW PRESIDENT: MEET TERRI EVANS

WHAT IS THE ONE THING PRIMA OFFERS THAT ITS MEMBERS DO NOT TAKE ENOUGH ADVANTAGE OF?

welcome and understand that we are all in this together… the networking and information resources that PRIMA offers are outstanding…

nature preserve or a community arts project of hand-carved animals for a public carousel.

WHAT IS THE BIGGEST BENEFIT OF BEING INVOLVED WITH PRIMA?

The networking and informational resources PRIMA offers give the most bang for your buck, and these resources keep growing! From the reintroduction of the new and improved PRIMA Institute (PI) a few years ago to the blog posts, PRIMA Cybrary and the PRIMA Community, our newest online resource, members are able to find more information in a fraction of the time, which is a huge benefit.

WHAT ARE YOUR GOALS FOR THE TERM OF YOUR PRESIDENCY? I want to make sure all members, new and old, feel welcome and understand that we are all in this together. As noted previously, the networking and information resources that PRIMA offers are outstanding, and it a great place to not only vet new ideas, but also a place where you find examples of successful programs so that you don’t have to re-invent the wheel. As you may recall, PRIMA and PERI also recently conducted a risk management needs

“

I want to make sure all members, new and old, feel

PUBLIC RISK | MAY/JUNE 2016

Terri Evans, PRIMA’s new president

assessment survey to find out where the gaps in risk management education lie. The results will guide PRIMA’s new programming, which is underway. I want to roll out as many of those programs as we can during my presidency.

WHAT ARE SOME OF THE BEST THINGS PRIMA OFFERS ITS MEMBERS? There are so many! With the wide variety of programs available, we have something for everyone. The first one that comes to mind is our enterprise risk management training that can be taught at your location or you can attend courses at various locations. I am a big fan of PI, which is an intensive, weeklong course that covers from risk management basics through advanced risk principles. If you haven’t logged on to the PRIMA Community, which includes PRIMAtalk, you’re missing out on a resource where members can communicate with one another about any risk subject imaginable, asking how others do things and sharing documents/programs/policies. PRIMA has really ramped up its blog posts this year, with recent and hot topic subjects being posted every couple of weeks. The wealth of resources PRIMA provides really can’t be measured.

I believe Enterprise Risk Management (ERM) is the future of risk management, whether or not an entity attains ISO 31000 certification. PRIMA is the only organization providing ISO 31000/ERM training to members written and presented by public risk managers, specifically for public risk managers. While the concepts can seem daunting and overwhelming, in reality, we perform many of these functions as part of our day-to-day operations. We simply don’t do them in a formal manner, and we often do not include all of the necessary players in our decision making process. How many times have you found out about a new program when it is near completion, or even after it has been implemented? This means that we scramble on the back end to make sure our entity has the necessary insurance or safety measures in place after they have started. Wouldn’t it be great if we could be included in the conversation from the beginning? That’s what ERM is all about!

WHAT SKILLS DO RISK MANAGERS NEED TODAY THAT THEY DID NOT NEED IN THE PAST?

I would say adaptable communication skills. We have all heard how the workforce differs by generation, and may have received training in how each generation learns/listens. The ability to incorporate all those learning/listening styles into a presentation style that can cross generational learning and listening practices can be a bit daunting. As a risk manager, you have to be able to step back and look at the specific situation from another person’s point of view. You need to be empathetic yet strong, decisive yet yielding, and listen with an open mind. Risk managers often deal with people when they are unhappy, and it is up to us to make sure the interaction is a positive one.

WHAT CAN PRIMA DO TO SUPPORT THE NEW CHALLENGES RISK MANAGERS FACE? The PRIMA Annual Conference always offers cutting edge leadership training, as well as information on the latest technologies and trends, presented by leaders in the field. I

strongly encourage all PRIMA members and non-members to attend the conference and take advantage of the learning and networking opportunities. You will meet some really great people there, and you will learn a lot—some of which will support what you are already doing and some of which will give you a new perspective on an old problem. PRIMA offers PI, which I believe is the best introduction and refresher course that public risk managers could ever hope to find. It will be held in Pittsburgh, PA, the week of October 24, 2016. PRIMAtalk is another resource where you can pick the brains of veterans in the field.

WHAT PRIMA BENEFITS HAVE YOU TAKEN ADVANTAGE OF? WHAT HAS BEEN MOST HELPFUL?

I believe I have participated in almost everything PRIMA has to offer! I just love the new PRIMA Community. I can ask a question and get responses from all over the country, often within 24 hours, which is just another example of how PRIMA members are a supportive and giving group of folks. PI is a fantastic experience, even for one who has been in the field as long as I have. The podcasts and Webinars are extremely informative, and our PRIMA conference is second to none!

leadership and constituency. Kingsport was no different. While we were able to fund some large capital projects due to the lowered interest rates, making borrowing more affordable than it has been in years, a stagnant revenue source made day-to-day operations difficult to maintain. During that time frame, we also had a change in both our Mayor and our City Manager positions. The leadership training I have received through PRIMA over the years, along with the available statistical data, insurance trending information and cutting edge programming ideas, has allowed me to effectively communicate the importance of risk management. I also knew that there are times when staying the course is the best action to take. While my ideas are not always popular, I continue to talk the talk and walk the walk with anyone who will listen!

WHAT CAN PRIMA MEMBERS DO TO GET THE MOST OUT OF

THEIR PRIMA MEMBERSHIP?

Participate! Volunteer for a committee or task force. Moderate a session at the conference. Offer to man the “new bee” booth and make first timers feel welcome. Ask and answer questions on PRIMAtalk. As with anything, the more you put in, the more you will get out.

WHERE DO YOU SEE YOURSELF IN FIVE YEARS?

If my life has taught me anything, it is that the only thing you can count on is change. Often, change is unexpected and life-altering, but it ultimately leads to a richer, better life. I have a vision of my future, but I am astute enough to realize it will probably not be anything like what I think. And, that’s half the fun of life—you never know what’s around the next corner! Terri Evans will be sworn in at PRIMA’s membership luncheon on Wednesday, June 8, in Atlanta, Ga.

WHAT ARE THE BIGGEST CHALLENGES RISK MANAGERS FACE IN THE NEXT YEAR? IN THE NEXT FIVE YEARS?

YOU HOLD THE KEY TO SUCCESS IN THE PUBLIC ENTITY MARKET

WHAT IS THE BIGGEST CHALLENGE YOUR OWN ENTITY HAS FACED IN THE LAST 5 YEARS? HOW DID YOU DEAL WITH IT?

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I think technology advances will keep us on our toes. Where will wearable technology go? How will we respond—or lead the way? Can we take advantage without becoming Big Brother? How are we going to handle the skyrocketing cost of healthcare? What about designer drugs? Who can pay for that? Lots of exciting changes and challenges coming down the pike.

With the downturn of the economy, all public entities faced real problems to provide the services and programs desired by their

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MAY/JUNE 2016 | PUBLIC RISK

Stop by booth #238 at the Annual PRIMA Conference in Atlanta to learn more.

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PUBLIC RISK | MAY/JUNE 2016

Professional Services Contracts: THE PUBLIC RISK MANAGEMENT CHALLENGE BY JOE JARRET

HE SCENARIO REPLICATES ITSELF AMONG PUBLIC ENTITIES ACROSS THE U.S. WITH REGULAR FREQUENCY. A need arises that calls for an expertise that is either unavailable in-house, or cannot ethically be provided by current staff. Such circumstances give rise to the need for a contract to provide professional or management consulting services. Professional services most commonly come in the form of administrative, design, feasibility studies, legal, or technical advice. These are customized services consisting of specialized intellectual or creative expertise based on personal

skills or ideas of an individual(s) which are provided for a fee. In most cases, these services are of a specific project nature, and are not a continuing, on-going responsibility of the public entity. Professional service agreements may be with partnerships, firms or corporations as well as individuals. Some of the more common reasons a public entity would require external professionals include: • Limited or one-time use of specialized or creative skills is needed; • The provider has unique areas of expertise; • The purchase provides rapid access to the latest technology and the supplier has experience with its application; • The supplier has access to unique problemsolving alternatives. • There exists an ethical conflict of interest precluding in-house staff to provide the service.

CONTRACTING RISKS

Because of the liability exposures a poorly drafted contract can generate, the risk manager should be involved in the earliest stages of the process to ensure the prospective provider is the best fit for the entity. Although some contracts can be complex, the dynamics that govern their formation and the performance of the parties is quite simple: both sides want to receive that which

they contracted. Like the risks inherent in other contracts to which the government is a party, proper levels of indemnity and the employment of traditional risk transfer or risk avoidance measures are essential elements to effective professional services contract negotiations. Consequently, the risk manager should ensure that the following takes place prior to sealing the deal:  Thorough screening and vetting of prospective contractors;  Proven safety requirements for bid specifications and contracts;  Contractual risk transfer through indemnification/hold harmless clauses; and  Insurance requirements.

ONE SIZE DOES NOT FIT ALL Because of the public sector’s reliance of standard form contracts, the risk manager

MAY/JUNE 2016 | PUBLIC RISK

PROFESSIONAL SERVICES CONTRACTS: THE PUBLIC RISK MANAGEMENT CHALLENGE

should insure her/his entity avoids the temptation to use “one-size-fits all” professional services contracts due to the unique risks posed by various providers. For instance, using the same contract to hire a landscaping service as you would to engage a physician for the purpose of providing indigent health care, can put one’s entity at risk due to the divergent exposures either of the aforementioned could conceivably generate. Consequently, the risk manager should ensure the following questions are asked and satisfactorily answered: • What kind of service is the entity contracting for? • What are the potential risks and liabilities associated with the professional service? • What ethical concerns could arise? • What level of competitive solicitation should be used? As to the latter point, some entities are required to use a more stringent Request for Proposal (RFP) process, while others have the flexibility to merely solicit Requests for Qualifications (RFQs). Generally, an RFP is a solicitation document used in negotiated procurements to communicate an entity’s requirements to prospective contractors and to solicit proposals or offers from them. An RFQ, on the other hand, although also used to communicate an entity’s requirements, merely seeks quotations submitted in response to it, and as such, are not offers per se. Often, an RFQ is generated in an effort to determine the level of expertise that exists for a given need. Some entities prefer to keep the professional services contract process as minimalist as possible by simply creating a brief document that defines the scope of services and sets a fee. Others prefer a more comprehensive, and arguably, less risky approach that combines RFP and RFQ particulars by utilizing a selection process as follows: • Develop a Request for Qualifications (RFQ) • Advertise RFQs • Evaluate RFQ submittals received • Select qualified firms for ‘Short List’ • Send Request for Proposals (RFP) to firms on ‘Short List’ • Interview firms who respond to the RFP • Select most qualified finalist • Identify scope of work, tasks, and milestones • Estimate person-hours required for each task • Select compensation method(s)

PUBLIC RISK | MAY/JUNE 2016

• Negotiate contract with finalist • If agreement on price not reached, may negotiate with next most qualified firm. • Write contract and secure necessary reviews and approvals.1 In those instances where the third-party provider insists on using their standard form contract, close scrutiny of the instrument is in order. Often, third-party providers use standard or boilerplate language that, while acceptable in the private sector, has no business in a public sector agreement. For instance, a private provider may insist on certain indemnification or hold-harmless language. It may insist upon governing laws or a venue (in the event a conflict arises) in a state or region other than where your entity is located. It may insist on mandatory, binding arbitration or mediation, or refusing to participate in any form of alternative dispute resolution. Finally, it may attempt to keep from public scrutiny the services it intends to provide, contrary to your state’s open records laws.

SCOPE OF SERVICES

Disagreements regarding the scope, quality, and level of service are common in professional service contracts. To maintain a positive relationship, it is critical that the parties have a clear understanding of scope so that the extent of work involved and respective obligations are clearly understood. The scope of services is a detailed description of everything your entity expects of the provider. It should be as precise and complete as possible. It should leave no ambiguity or question as to whether or not some duty or deliverable item is to be performed. The risk manager should insure that a detailed scope of service description be included in the contract. Where necessary, attach exhibits or other explanatory documentation to clarify the exact expectations of your entity. Negotiating a clear scope of services is one of the best ways to insure your entity receives the services contracted. For instance, the scope of services should outline with all specificity: • Services that the provider is expected to perform for the agreed-to fee • Services the provider may be called upon to perform for an additional fee • Services the provider will not be expected to perform • Services that will be performed by a third party if applicable

It is equally important to insure that there exists clear terms and conditions in the event of a breach of the contract. No one wins when the parties end up in a costly dispute that could have been avoided by agreeing, with specificity, how disputes are to be resolved. Such lawsuits merely serve to discredit your entity and inflame the ire of taxpayers. Along this same line, particular attention should be made to deadlines for each deliverable in the contract, as well as the options for cure in the event the deadlines are not met. It is generally advisable to avoid catastrophic enforcement provision—such as contract termination—unless the agreement cannot be salvaged. Rather, it’s better to explore reasonable ways in which the alleged breach can be cured and the performance brought back online. Because some jobs require an expertise not readily available, your entity is best served when the contract and the working relationship with the provider can be preserved.

A WORD ABOUT POLITICS

Organizational culture is important if professional services contracts are to be effectively planned, negotiated, managed and controlled. As with most public sector culture issues, the absence of politics makes for a smoother contracting experience. It is not at all uncommon for elected and some appointed officials to “suggest” that the best provider for the task at hand just so happens to be a friend, relative or business partner. Every effort should be exerted to ensure the selection process is executed in an apolitical manner. Every contract has risks that must be reviewed by the risk manager from the perspective of protecting the entity from financial loss. Issues such as the level of insurance coverage required, indemnity, hold harmless agreements and the like are all within the risk manager’s wheelhouse. By including the risk manager at the beginning stages of contract negotiations, the entity enjoys both the service contracted for and the protections it deserves. Joe Jarret is an attorney, federal and state mediator and former public risk manager. FOOTNOTES 1 Contracting for Services: Guidelines for Local Governments in Washington State, Copyright © 2013 by the Municipal Research and Services Center of Washington, used with permission.

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PUBLIC RISK | MAY/JUNE 2016

Active Preparedness Against

“ACTIVE ASSAILANTS” BY BEN TUCKER

ALAMAZOO. SAN BERNARDINO. ROSEBURG. BOULDER. CHARLESTON. These are just a handful of communities that have found themselves the setting of a mass shooting.

For many, such recent events have seemingly picked up pace, occurring all too frequently. Others will cite statistics that show no significant uptick and find such occurrences to be miniscule in comparison to other crime statistics. Despite this ongoing debate, there is far less debate that communities and their local agencies need to boost their preparedness; just in case they indeed find themselves the backdrop for a future incident.

MAY/JUNE 2016 | PUBLIC RISK

ACTIVE PREPAREDNESS AGAINST “ACTIVE ASSAIL ANTS”

According to the U.S. Federal Bureau of Investigation’s (FBI) A Study of Active Shooter Incidents in the United States between 2000 and 2013, no city, county, state or place of education and employment is immune to the risk. The 2014 FBI report noted that there were 160 incidents between 2000–2013 alone, killing 486 individuals. Active shooter incidents, according to the report, occurred in small and large towns, in urban and rural areas, in 40 of 50 states and the District of Columbia. Interestingly, the FBI’s study also found that in 21, or 13.1 percent, of the cited 160 incidents that occurred, unarmed citizens made a choice to face the danger of an active shooter to stop them. In those instances, the citizens safely and successfully disrupted the shootings. Unarmed principals, teachers, other school staff and students confronted the shooters to end the threat in 11 of those 21 incidents. And, in the other 10 incidents, citizens, working or shopping in the vicinity of the active shooter, effectively restrained shooters until police could arrive. In another 6 incidents, armed off-duty police officers, citizens, and security guards risked their lives to successfully end the threat, presumably saving lives.

QUICK ACTION

What responders have learned, and is further supported by the FBI’s findings, is that inaction is not sufficient to prevent or stop an active shooter. In fact, this lesson can be attributed to response to the 1999 incident at Columbine High School near Denver, Colo. At that time, it was a customary tactic for police to contain the situation and wait for Special Weapons and Tactics (SWAT) teams to arrive and respond. But that takes time and what has been proven over and over is that active assailant incidents occur within minutes, not long periods of time, and therefore, require decisive action. As a result of what was learned in Columbine’s response, police procedures changed drastically. Today, police no longer wait for SWAT teams to arrive, but move in quickly to subdue the shooters. More communities are preparing not only their employees but their residents to help combat active shooter threats by providing various training and exercises. A January 6, 2016, New York Times story reported about Douglasville, Ga.’s recent town hall meeting titled, “Active Shooter: A Citizen’s Guide to Planning for Survival.” While most of the community’s town hall meetings draw about a half of dozen people, this particular program packed the room with more than 80. Rooms in many communities and workplaces are packed for similar programs.

“

OTHER COMMUNITY CONSIDERATIONS

Active assailant training is not the only consideration that communities are taking into account as part of their preparedness. The scope of liability exposure from an “active assailant” or mass shooting is vast and includes financial, reputational and emotional liabilities. These horrific events in cities and schools worldwide have prompted public entities to reconsider the type of risks to which their communities and institutions could be exposed. Of course, the ongoing challenge is to address what the possible repercussions could be and put in place plans for responding to such an event. Further, economic pressures affect public entities and play a significant role in how public entities address risk management challenges. Today, many public entities self-insure and buy excess insurance to cover unexpected or catastrophic events. For example, as a result of the San Bernardino shootings, it’s been reported that the city incurred up to $1 million in unforeseen expenses including deployment of more police officers on extended shifts. Additionally, county and city offices (including the Department of Public Health) were closed for the week after the shooting. Five days after the shootings, the county’s 20,000 employees returned to work, most working remotely. The Inland Regional Center was closed until

The scope of liability exposure from an “active assailant” or mass shooting is vast and includes financial, reputational and emotional liabilities. These horrific events in cities and schools worldwide have prompted public entities to reconsider the type of risks to which their communities and institutions could be exposed.

“

PUBLIC RISK | MAY/JUNE 2016

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ACTIVE PREPAREDNESS AGAINST “ACTIVE ASSAIL ANTS”

January 4, 2016. Its two main buildings have reopened with heightened security, though the building where the attack took place remains closed. And in some cases, an incident can result in the destruction of the facility altogether so that it does not provide a reminder of the incident on a daily basis. Sandy Hook Elementary School was closed indefinitely after the shooting there. Students returned to classes at a nearby middle school. The facility offered was an unused one, refurbished with desks and equipment brought in from the Sandy Hook School. Eventually, the Sandy Hook School was demolished and a new $57 million school (financed by the town’s residents) is being constructed on the Sandy Hook elementary school site. It will open late in 2016. In addition to recovering from physical and emotional wounds, survivors of a mass shooting have another challenge: paying off steep medical bills. Most of those killed or injured in the San Bernardino attack were county employees who were attending the December 2 training and holiday party at the Inland Regional Center. They are eligible for workers’ compensation because the shooting occurred while they were on the job. The state’s victim compensation fund is being tapped for expenses not covered by regular health insurance. The county also had a basic life insurance policy covering employees’ funeral and burial expenses, physical injuries as well as counseling for emotional trauma. When an active assailant incident occurs in an educational setting—such as the events at Virginia Tech, Sandy Hook and Columbine—most victims are students, which could mean that there is little or no health insurance, dependent upon the parents’ coverages. After the Sandy Hook incident, U.S. citizens donated nearly $11 million dollars that is being used for mental health counseling and the victims’ families’ expenses.

CHANGING IMMUNITY

Lawsuits commonly occur in the wake of shootings. After the Columbine massacre, parents of killed and injured students brought 17 lawsuits against the Colorado school district, law enforcement officials and the parents of the two shooters. The homeowner’s insurance policies for the parents of the two Columbine shooters

PUBLIC RISK | MAY/JUNE 2016

were used to reimburse the victims and injured in the Columbine attack. Similarly, on January 13, 2016, the wife of one of the slain victims filed four claims against San Bernardino County and dozens of unidentified individuals, seeking negligence damages totaling $58 million. While in the past state laws gave public schools immunity from student injury suits, several states are changing those laws. For instance, in June 2015, Colorado passed the Claire Davis Safety Act, named after a victim of an incident at Arapahoe High School in December 2013. The law allows lawsuits against schools in cases of student injuries and deaths that could have been prevented. Under the new law, lawsuits would be limited to $350,000 per victim or $900,000 per incident when there are serious injuries or deaths from violence and the school is found guilty of negligence.

HEIGHTENED RISK MANAGEMENT

Risk managers are trained to identify risks, come up with strategies to guard against or mitigate risks and then to execute the strategies. Whether the risk is related to property or liability, the risk needs to be identified first before it can be analyzed, controlled or financed. How do you predict and/ or prepare for something as unpredictable as an “active assailant” or mass shooting? Of course, one option is to transfer risks. Because “active assailants” or mass shootings are a relatively new risk, insurance coverage may vary considerably. One relatively new product—Active Assailant Coverage—has become available in recent months. It is designed to mitigate the financial and reputational risks associated with a mass shooting event, even those that are terrorist-related. There are a number of scenarios where general liability (GL), workers’ compensation and/ or property policies may not fully address the exposures from an active assailant event. In certain scenarios, GL policies may have substantial deductibles, and implicitly are intended to respond to legal liability. In the absence of legal liability, risk managers will have limited risk transfer tools available to them to address a variety aspects of such an event—for instance, reputational risks, which could involve expenses from increasing security following an event, hiring a public relations consultancy, or helping their

staff with job retraining expenses. Active assailant policies may also provide coverage to general members of the public to pay for counselling, or if an educational establishment, pay additional medical expenses on behalf of the students. Neither general liability nor workers’ compensation coverage can address time element exposures—and by its nature, property insurance requires physical loss or damage to be triggered for coverage. Public entities may also control hospitals, colleges, airports, stadiums, which generate revenue. Revenue may be adversely impacted by a prolonged or inopportune venue shutdown. The financial exposure to active assailant events is unlikely to be addressed if there is bodily injury in the absence of physical loss or damage, or substantial physical loss or damage including business interruption greater than property policy deductible. Active assailant insurance includes coverage for “time element,” either resulting from physical loss or damage and/or bodily injury, and which includes a determination by authorities that the insured’s operations have to cease at their current location. For instance, after some tragic incidents, it’s determined that the property cannot be returned to its normal use. Time element coverage can also be extended to include ingress/ egress and civil and military authority coverage, which occurs when access and/or use of facilities is either impaired or prohibited for a period of time. There are also new product enhancements being introduced such as enhanced extra expense coverage, which may include expenditures related to public relations assistance, relocation, counseling and/ or psychiatric care, medical expenses, additional security and job retraining. While the threat of an “active assailant” or mass shooting cannot be eliminated, risk transfer insurance solutions, loss mitigation programs, and crisis management planning tools can be used to better protect employees, customers, students and others during and following an “active assailant” or mass shooting event. In the end, it’s better to be prepared. The consequences for the community are long-lasting and require a long-term approach to that focuses on re-building community trust. Ben Tucker is XL Catlin’s Head of US Terrorism & Political Violence, Crisis Management.

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SERVICE MODEL:

You Have a Choice in How Your Workers’ Compensation Claims are Administered BY GLENN BACKUS

PUBLIC RISK | MAY/JUNE 2016

any of you may remember a commercial from a large hamburger chain with the slogan, “Any way you want it.” The premise was that you could create your hamburger according

to your individual tastes. The joke at the time was you can have it any way you want it, as long as you asked for hamburger buns, mayonnaise, pickles, tomatoes and lettuce. Remembering this slog caused me to ask myself the following question: do we (TPAs) fall into the same trap by promising our clients a service model that meets each entity’s individual needs but only as long as it looks like the model we have on our shelf?

A risk manager from ABC City told me years ago, “Glenn—no offense but it’s all about the adjuster. If I have a competent adjuster, I really don’t care who the TPA is.” At first I did take offense. I thought to myself, “This guy doesn’t know what he’s talking about. The adjuster is nothing without my company and my company is the best in the industry.” However, the more I thought about his statement, the more I came to realize that he was right.

This particular risk manager challenged me to come up with a service model that met his needs. He upped the ante when he stated, “No, don’t even try because what I want doesn’t exist.” He wanted a multiline adjuster staffed on site. He wanted an adjuster that was reminiscent of the 70’s and 80’s, when adjusters personally delivered the first indemnity check, personally investigated auto accidents, and regularly interacted with city department heads. In other words, he wanted a field adjuster, not a desk adjuster (or, as more eloquently portrayed by the risk manager, paper pusher). Each individual insured has its own unique needs and risk management philosophy, rejecting the idea that when comes to service models, one size fits all. The basic service that most good TPAs offer is administering the entity’s workers’ compensation, property and liability claims in the most expeditious way possible, at the lowest possible cost, meeting all state, federal and insurance carrier reporting requirements—we’ll call this the technical side of the equation. This basic service is typically delivered out of a large regional office using a team of adjusters and support personnel.

MAY/JUNE 2016 | PUBLIC RISK

SERVICE MODEL: YOU HAVE A CHOICE IN HOW YOUR WORKERS’ COMPENSATION CLAIMS ARE ADMINISTERED

In addition to the technical side, insureds want open and frequent communication with their adjusters while having a say in how their claims are administered (consistency at the adjuster position is a definite plus). We’ll call this the service side of the equation. Is it possible to deliver a technically competent model while delivering exceptional service—solving both sides of the equation? Let’s explore the various models offered in the industry today to answer this question.

DEDICATED VS. DESIGNATED CLAIMS TEAM

Let’s start by defining a dedicated claims team: for the purposes of this discussion, we’ll define dedicated as exclusively administering claims for one insured (a single entity, pool or group, captive, etc.). We’ll define a designated claims team as staff that may administer claims for a number of unrelated insureds. Typically, dedicated staff will usually offer a higher level and more consistent service than designated. How? Dedicated staff has the luxury of working with one insured, which allows the staff to become intimately familiar with the insured. This intimate knowledge includes the jobs the workers perform, the return-to-work program, the loss control/loss prevention programs, risk management’s philosophy, etc. Dedicated staff can also be available for impromptu meetings at the insureds request. Dedicated staff affords the insured the benefits of self-administration without the overhead and exposure of owning the claims unit. It also carries the downside of limited backup when staff does turnover or is out for an extended period of time due to vacation or sickness. Designated staff often has to know all the insureds for which he/she works and has to serve many masters. If multiple insureds are coupled with high caseloads and multiple jurisdictions, this can result in higher turnover and lower overall service. Designated staff often work together in teams to deliver service to the insured, which may limit accountability but solves the problem of limited backup inherent with dedicated units. When deciding between dedicated versus designated staff, the insured must be large enough to support the cost associated with dedicated, exclusive staff. Smaller insureds who do not wish to join a pool may form a

PUBLIC RISK | MAY/JUNE 2016

purchasing agreement or establish an interlocal with like-minded or insureds within close proximity to share in the cost of a dedicated, exclusive adjuster. This approach gives smaller insureds more control and better service at a lower cost. Some TPAs may also allow staffing the adjuster on-site.

ON-SITE VS. TRADITIONAL

Entities that are large enough to support dedicated staff may have the option of staffing their dedicated unit on site. While an on-site staffing model enhances communication, it also must be weighed against furnishing the office space and the philosophy of preferring to keep claims offsite (at a distance to avoid animosity that may arise). Dedicated staff can also reside in a traditional TPA office near the insured. Designated staff models typically offer staffing out of traditional TPA offices only. The team approach utilizing designated adjusters isn’t conducive to on-site staffing models.

HYBRID

Large entities may obtain added flexibility with a hybrid approach: staffing one or more dedicated staff on site or in a TPA office near the insured and using designated staff in other offices. This model is best utilized by large pools, self-insured funds, or private employers with operations in multiple states.

BUNDLED VS. UNBUNDLED

Many TPAs will sell the benefits associated with a bundled package: purchasing claims administration along with ancillary services such as managed care, investigation, subrogation, etc. from one TPA. The integration of these services can deliver better service and cost savings; however, it can also create additional sources of revenue for a TPA. Insureds should always retain the option of unbundling any ancillary service at their request, even if a bundled service model is chosen.

CLAIM REVIEWS

Regardless of the service model chosen, it is vital to the success of a claims program that the insured and adjusting staff meet regularly to review high-severity claims. Initially, the reviews should be conducted in person, either at the insureds office or the TPA’s. Once the insured has

a comfort level with the claims staff, then some of the claim reviews may be conducted telephonically. Of course, if the claims team is staffed on site, in-person claim reviews make perfect sense.

INTEGRATION

Many insureds will argue that the most successful claim operations are those that are fully integrated into their risk management program. All parties—safety and loss control, risk management, the insured’s agent/broker, the insurance carrier, etc.—must work closely together to meet the insured’s risk management’s goals. The insured must not allow silos that stifle communication and effective collaboration. All the pieces working together can form a picture-perfect puzzle!

CASELOADS

I’d be remiss if I didn’t mention caseloads. While the exact number remains open to debate, workers’ compensation adjusters are most effective at a caseload of approximately 135 lost time claims or 250 medical only claims. The insured should require a cap on the number of open claims assigned to their adjuster, and then should directly monitor the caseloads through access to the claim system. The insured should also understand the trade-off between price and caseloads: the lower the caseload, the more the insured should be prepared to pay. The insured should also consider the number of jurisdictions, number of insureds and other factors that impact the number of claims an adjuster can effectively administer. What approach did ABC City take to solve its claims administration needs? The TPA found the multi-line, field adjuster that the risk manager didn’t think existed anymore (in fact, with a twist of irony that field adjuster is now ABC City’s risk manager). Eventually, the TPA staffed two adjusters and a support person on-site in ABC City’s risk management department to administer its workers’ compensation, property and liability claims. The City substantially reduced the overall spend on their claims while significantly improving the service they are delivering to their injured employees and department heads. The rest, as the saying goes, is history! Glenn Backus is the president of Alternative Service Concepts.

Oregon Cities & Counties Exploring

ENTERPRISE RISK MANAGEMENT Enterprise Risk Management (ERM) Looks at Opportunities as Well as Risks—and Sets the Standard for Risk Management in Today’s World BY SCOTT MOSS

PUBLIC RISK | MAY/JUNE 2016

ome 35 years ago, I wrote my first paper about risk management. I was a freshman in college and risk management was then a new profession with brand new text books. The profession of risk management stole the best concepts and principles from other professions: marketing, management, finance, insurance, and safety. Robbing from other professions has worked well for risk management for more than 40 years, but now it may not be good enough. Today, risk management is awakening to a new day and a new way! Risk management can now stand on its own two feet, and move forward with our own principles, frameworks, and processes.

One way we at CIS are contributing to the future of risk management is to introduce our members to this new way in risk management, known around the world as Enterprise Risk Management (ERM), ISO 31000. At its core, ERM focuses on how uncertainty impacts organizational objectives. Uncertainty can benefit or threaten a city, and ERM provides the framework and processes for city officials to determine how to help uncertainty be seen as a benefit. ISO 31000 is an international standard developed by top risk managers from around the world. ISO (the International Organization for Standardization) establishes worldwide standards and guidance. ISO 31000 is designed to be flexible enough to apply to the largest of cities as well as to the smallest. It is the standard of risk management now used by public entities around the world. For the first time ever, all U.S. and international companies and public entities have guidelines and rules to follow for how to apply risk management principles, frameworks, and processes. These guidelines are revolutionizing the risk management world. ISO 31000 provides a logical and structured process that enables a city to consider risks in all decisions, settings, and activities. ISO 31000 consists of three major sections: Principles, Framework, and Process. The Principles include 11 attributes that every city

and city risk management function should strive to obtain. Principles include creating value and enhancing opportunities in risks, while reducing threats in risks. Framework provides for commitment to risk management and continual improvement. Process are methods a city undertakes to handle uncertainty in city operations and decisions.

A REAL-LIFE, REAL-TIME EXAMPLE

Here’s an example of ERM at work. Drones are definitely in the news; we see them everywhere. We imagine Amazon delivering packages from drones on our doorstep. There’s even a startup that the Oregon city is helping that plans to plant a million trees by drone. Currently, CIS excludes drones from coverage. However, the CIS Board of Trustees wanted to address this coverage so CIS’ management and claims team used ERM to consider the opportunities and threats with offering coverage for drones. The CIS Board enjoys the comfort of knowing that staff considered how drone coverage fit into CIS’ mission, and its strategic plan—knowing that staff assessed the uncertainties, and developed a plan to enhance opportunities and reduce threats. After following a thorough review utilizing the ISO 31000 ERM process, the CIS Board of Trustees has directed staff to cover drones as another aspect of its comprehensive coverages for cities and counties. After weighing the opportunities and the risks, the Board determined that providing this extra level of service to members was worth the risk.

GET STARTED IN YOUR CITY! Here are some implementation tips:

 Enroll in the PRIMA ISO 31000 classes. They are excellent and instructive on how to utilize ISO 31000 in your city.  Know your strategic plans and objectives. The focus of ERM is to assess uncertainties that will impact those strategic plans and objectives. It also is important to identify all the stakeholders associated with the objectives.  Develop an ERM team made up of city officials and your insurance agent.  Prepare a risk management policy with the commitment from your city council to consider how uncertainty will enhance or threaten your objectives. One city has staff identify “opportunities and threats” associated with all city council decisions.  The ERM team meets regularly to assess risks and apply ISO 31000 Principles, Framework and Process.  Uncertainties are identified and treated in all major decisions.  Once a risk is identified, it is prioritized and a risk owner is assigned to enhance the risk or reduce it. ISO 31000 is destined to be the future of risk management for public entities. Now is the time to start surfing the waves of change. Scott Moss is the P/C Trust Director for CIS. CIS is a municipal insurance pool sponsored by the League of Oregon Cities (LOC) and the Association of Oregon Counties (AOC).

MAY/JUNE 2016 | PUBLIC RISK

Everyone else is doing it. Why aren’t you?

Join PRIMA’s 2016 Enterprise Risk Management training and learn how to add value to your risk management program by implementing an enterprise-wide approach to risk. PRIMA developed this training program to teach attendees how to apply the framework of the ISO/ANSI/ASSE 31000 Standard. Participants will learn the basics of the standard as well as how to fully integrate the framework in their organization’s risk management program.

Visit primacentral.org/ermtraining for 2016 training locations and dates.

WE’VE GOT RISK MANAGEMENT ON OUR MIND.

DO YOU? I

BY JENNIFER ACKERMAN

N JUNE, more than 1,000 public risk professionals will gather in Atlanta for PRIMA’s 2016 Annual

Conference. This annual event is the ONLY conference dedicated to risk management in the public sector. What’s on tap for this year’s conference?

THE LONG AND SHORT OF IT

This year’s educational sessions fit your learning style. Want more in-depth information on a topic? PRIMA’s conference has 2.5 hour sessions that provide detailed information on marijuana laws in the U.S., for example. For quick “bites” of learning, PRIMA introduces 30-minute “cram” sessions. These quick learning labs give you enough information to make a difference when you head back to the office.

ENTER THE WORLD OF COCA-COLA

Every year, PRIMA offers a memorable, oneof-a-kind social event to cap the second day of the conference. This year, we’ll enter the World of Coca-Cola as we can grab a drink and tour

the museum before getting down to a live band. Attendees will even get to taste Coke products from around the world. It’s always the highlight of the conference!

EYE-OPENING GENERAL SESSIONS

Each morning kicks off with engaging general sessions from speakers who understand risk managers and the challenges of their jobs. This year’s sessions include Kelvin Coleman, a cybersecurity expert from the Department of Homeland Security. As always, PRIMA’s conference will offer engaging topics from industry experts. It’s the can’t-miss event for public entity risk practitioners.

2016 ANNUAL CONFERENCE SPONSORS Thank you to our generous sponsors for their continued support of public sector risk managers.

PUBLIC RISK | MAY/JUNE 2016

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Genesis Underwriting Management Company. . . . . . . . . . . Inside Front Cover Ventiv Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 2 Midlands Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9 York. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 10 One Beacon Government Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 11 Travelers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 15 Duff & Phelps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 19 Munich Reinsurance America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 21 Tokio Marine HCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 25 Berkley Public Entity Managers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 29 States Self-Insurers Risk Retention Group, Inc.. . . . . . . . . . . . . Inside Back Cover Old Republic Insurance Group. . . . . . . . . . . . . . . . . . . . . . . . Outside Back Cover HAS YOUR ENTITY LAUNCHED A SUCCESSFUL PROGRAM? An innovative solution to a common problem? A money-saving idea that kept a program under-budget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

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CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-todate schedule, visit www.primacentral.org.

WEBINARS 2016 • May 18 – Recreation and Risk: It’s All Fun and Games Until… • June 15 – ERM: Risk Maps and Registers • July 13 – Risk, HR and Legal Interactions for the New Risk Professional • August 17 – ERM & Pools • September 14 – Implementing an Effective Return to Work Program • October 19 – Cyber Threats Faced by Public Entities • November 2 – ERM: Mandate & Commitment in 60 Minutes • December 14 – Communicating ERM Progress

PRIMA ANNUAL CONFERENCES June 5–8, 2016 PRIMA 2016 Annual Conference Atlanta, GA Hyatt Regency Atlanta June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center June 3–6, 2018 PRIMA 2018 Annual Conference Indianapolis, IN Indiana Convention Center

Keep up with what’s happening at PRIMA and connect with your risk management peers!

PRIMA INSTITUTE 2016 October 24–28, 2016 Pittsburgh, PA

Visit us at www.facebook.com/primacentral. MAY/JUNE 2016 | PUBLIC RISK

TITLE MEMBER SPOTLIGHT

California Pool Commits to Excellence

n 2014, the Association of California Water Agencies Joint Powers Insurance Authority (ACWA JPIA) was dealing with an issue all pools face: how to reduce the frequency and severity of liability, property and workers’ compensation losses. With more than 300 public water agencies under its umbrella, ACWA JPIA created a program that would challenge its member agencies to renew their commitment to reducing costs and improving operational benefits through a safety. The result was the JPIA Commitment to Excellence (C2E) Program.

Foundational to the C2E Program is a Best Practices guide, which identifies loss reduction as well as administrative and operational enhancement opportunities to the pool’s member agencies.

According to John Haaf, risk management manager for ACWA JPIA, the program’s focus is the following highest risk exposures to the pool:

Members who sign a C2E agreement, which shows their commitment to joining ACWA JPIA in a loss-reduction partnership, receive a certificate displaying their commitment and recognition at the ACWA JPIA bi-annual membership conference. “As a pooling organization, the success of an individual member’s risk management program benefits all members,” said Robin Flint, ACWA JPIA’s senior risk management consultant. “Each time a workplace is made safer, risk transferred or a best practice put in place, the results strengthen ACWA JPIA’s overall results, helping us to provide affordable, stable rates and tailored programs.”

• Vehicle operations • Construction • Infrastructure • Employment practices • Ergonomics and falls

• Member buy-in to continual improvement and loss prevention • Direct loss reduction savings to the individual member and the pool in general • Increased level of member service • Decrease in loss trends will lead to lower cost for excess insurance. • Operational and administrative enhancements from best practices implementation The C2E program is easily transferred to other pools or entities. For more information, contact John Haaf at jhaaf@acwajpia.com or Robin Flint at rflint@acwajpia.com. 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.

Each time a workplace is made safer, risk transferred or a

“

“Associated with each C2E best practice are supporting resources ACWA JPIA departments make available at low or no cost to our members.” said Haaf. “The risk management department visits each member at least once each year, and more frequently as needs or desires require. During these visits, the staff concentrates on helping our members understand and implement C2E best practices. ”

Flint points out some of the tangible and intangible benefits of the program:

best practice put in place, the results strengthen ACWA JPIA’s overall results, helping us to provide affordable, stable rates and tailored programs.

Robin Flint, senior risk management consultant for ACWA/JPIA

PUBLIC RISK | MAY/JUNE 2016

MEMBER-OWNER,

WE ALWAYS HAVE A SEAT AT THE TABLE. DAUPHIN COUNTY HAS FOUND A

REAL PARTNER

IN THE

STATES PROGRAM.” SCOTT BURFORD deputy chief clerk /chief of staff

dauphin county, pa

MEMBER-OWNER

“AS A

STATES OFFERS YOU: • A BROADLY INTERPRETED EXCESS LIABILITY COVERAGE FORM THAT IS SECOND TO NONE IN THE INDUSTRY. • PREMIUM STABILITY AND SOUND FINANCIAL RESULTS FOR OUR PARTNER MEMBERS – MEMBER PREMIUMS ARE INVESTMENTS IN THEIR OWN COMPANY. • EXCELLENT CLAIMS AND LOSS CONTROL SUPPORT, INCLUDING ON-SITE. • SPECIALIZED PUBLIC ENTITY-ORIENTED SERVICES FROM EXPERIENCED, SERVICE-DRIVEN PROFESSIONALS.

FOR INFORMATION CONTACT: STATES SELF-INSURERS RISK RETENTION GROUP, INC. AT 1-800-640-0345, EXTENSION 3310, OR VISIT OUR WEBSITE AT WWW.STATESRRG.COM

PRO

TER

SUPPOR UD

Booth 233

FP 1 RIM A 2 0

BITCO Insurance Companies1 Old Republic Aerospace2

Specialized Offerings and Public Entity Expertise. Old Republic Insurance Group offers a full suite of risk management and insurance solutions, and Third Party Administration (TPA) services, with specialized offerings and expertise to meet the unique needs of public sector clients.

Old Republic Specialty Insurance3 PMA Management Corp.

For more information, visit: www.oldrepublicinsurancegroup.com

Insurance contracts are underwritten and issued by: 1. BITCO General Insurance Corporation and BITCO National Insurance Company; 2. Old Republic Insurance Company; 3. Pennsylvania Manufacturersâ€™ Association Insurance Company, Manufacturers Alliance Insurance Company, Pennsylvania Manufacturers Indemnity Company.