Risk Management Bulletin

The disastrous Japanese earthquake/tsunami of March 2011 drowned thousands of people – but the toll would have been far higher without the nation’s comprehensive warning system, which combined radio broadcasts, text messages, and sirens with firefighters’ door-to-door calls.

Every business needs an effective emergency communications notification system that has low-tech and high tech elements. Here’s an overview of the advantages and disadvantages that each type offers:

Low-tech systems can be effective, but have serious limitations. Although calling trees are valuable for mass communications, they’re slow, subject to errors, and breakdowns. Sirens and alarms provide immediate warning and can alert everyone who’s in a dangerous area; however, they can’t provide much information and have a limited range. Intercom systems are reasonably fast and can communicate detailed information, but usually operate in only one building.

High-tech systems provide automated mass notification of detailed warnings rapidly and accurately to a wide range of devices, including phones (land line and cell) and computers (e-mail and instant messaging) through multiple communication networks. High-tech systems can also target messages to individual groups, such as first responders. However, they don’t offer a panacea. For one thing, cell phones might be turned off. Although communication with cell phones is available by voice mail or text messaging, these systems are vulnerable to a general outage of communication networks. Their “call capacity” might be a serious limitation, especially for larger firms.

For most businesses, a warning system that blends low tech (alarms and sirens) with high tech (automated notification) can provide effective communication when an emergency strikes.

When choosing a system, you should also weigh such factors as cost and ease of use.

Our risk management experts would be happy to offer you their advice.

If not, you have a problem. For the past several years, more and more states and cities have limited or banned driver use of cell phones. Warns the Web site DrivingLaws.org, “Although employer responsibility isn’t specifically defined in the cell phone legislation, there have been an increasing number of lawsuits relating to employer responsibility regarding mobile cell-phone use [by] employees.”

With motor vehicle accidents the leading cause of work-related injuries, using cell phones behind the wheel ups the ante for litigation in case of death, injury, or other third-party claims. What’s more, drivers injured while phoning on company time will generally be eligible for Workers Compensation.

The first step is to create and implement a cell-phone use policy for employees driving company vehicles. Although this won’t protect you completely from legal responsibility, it demonstrates your forethought and responsibility.

This plan should include guidelines for:

• Training. Provide instruction manuals so employees know the features of their phones.
• Safety. Remind employees not to dial or talk when driving conditions are hazardous, keep conversations short, tell the other person that the employee is calling while driving, and turn off phones whenever they pump gas or use jumper cables.
• Making calls. Discourage cell-phone use behind the wheel and require drivers to pull over and stop when dialing.
• Voice mail/caller ID. Make sure drivers’ phones have these features so they can screen calls behind the wheel.
• Accident/injury reports. Require employees to report any accidents or injuries resulting from cell-phone use while driving.
• Discipline. Punish workers who violate these rules or local or state laws about using cell phones behind the wheel.

We’d be happy to help you develop a comprehensive policy for drivers’ use of cell phones. Just give us a call.

In addition to providing a safe environment and workplace for employees, your business has a legal obligation to protect the safety of the public on your premises. This all-encompassing term usually includes customers, delivery persons, subcontractors, anyone defined as “”handicapped” under the Americans With Disability Act, infants and children – and even trespassers and robbers.

To meet this challenging responsibility, safety experts recommend following these guidelines:

1. Keep the public away from areas that pose safety dangers. Make manufacturing areas off-limits to visitors. Some facilities might be inappropriate and unsafe for particular publics; for example, amusement parks restrict the size of persons permitted on certain rides.
2. Warn the public about dangers. Mark restricted areas with signs. Make sure that elevators carry warnings against use in emergencies. Post occupancy limits, emergency exits, and procedures in meeting rooms and public areas.
3. Control the movement of the public. Have clear queues, thoroughfares and lines for service marked – and prohibit access to these areas.
4. Provide emergency response and safety information. Post guidelines on what to do in the event of fire, earthquake, or other disasters.
5. Train employees to work with the public. Make sure your workers know how deal with the needs, actions, and frustrations of visitors – and can explain and enforce public safety rules. Teach them to identify and respond appropriately to potentially dangerous actions and activities.
6. Modify public areas for increased safety. Provide guardrails, fences, and other barriers where they’re needed. Be sure to analyze and correct potential dangers in locations with vehicular traffic (such as driveways, and parking lots).

We’d be happy to work with you in developing, standards to keep your workplace safe for employees and the public alike. Just give us a call at any time.

Ambrose Bierce’s Devil’s Dictionary defines “litigation” as “a machine that you go into as a pig and come out of as a sausage.” Although litigation is often distasteful, it’s a reality of doing business – and a source of risk that can range from bothersome to devastating. Mediation helps manage this risk by providing some control over the process and outcome of litigation through a voluntary procedure in which a neutral helps the disputing parties resolve their conflict. (Arbitration, in contrast, involves having a third party make a decision that is usually binding).

The mediation process begins with a joint session in which the parties present their positions. The mediator will then meet separately with each party to explore their arguments, learn their need, and help them come to a mutually acceptable agreement.

Mediators report that they settle 85% to 95% of disputes, often within a few hours or at most a day or two. The process works primarily because it places control where it should be – in the hands of the parties involved, bypassing the artificiality, expense, and delays of litigation.

Taking a commercial dispute to trial involves handing over an important business decision to a jury or a judge who might not understand the issues, probably don’t care about them, and certainly have no accountability for the decision. In mediation, the decision makers are the parties themselves.

Risk management in a litigation context involves assessing the risk and the cost of winning or losing. Mediation invariably reduces the exposure to risk and cost – and thus offers the opportunity to create a win-win situation for both parties.

What’s not to like?

More and more companies are restricting employee use of personal cell phone cameras on the job for fear that these ubiquitous devices might create legal headaches, lead to job-related claims, and/or compromise company trade secrets.

For example, employees might take inappropriate photos or videos of co-workers without their permission, leading to accusations of sexual harassment or invasion of privacy. Even if the picture-taking doesn’t create legal problems having these images posted online might well embarrass the employees depicted or make them uncomfortable.

Soured relationships in the workplace can also create problems. A disgruntled employee might want to embarrass a boss or gather evidence for filing a legal claim. All sorts of types of images – from a supervisor getting upset with an employee to overall working conditions – could easily become fodder in an employment dispute.

What’s more, if your company has patented products and closely-protected manufacturing processes, any information leaked to a competitor might be extremely damaging.

The best way to deal with this risk is to develop a written policy that controls employee use of cell phone cameras at work, with clear penalties for violations. Determine which workers need cameras as part of their jobs (for example, truck drivers who might have to photograph an accident for insurance purposes). Make sure that employees permitted to use camera phones at work give you the right to review all images and delete any work-related images. You should also prohibit employees from posting work-related photos on line.

The key to success lies in keeping your workers informed about this policy and enforcing it consistently.

To learn more, feel free to get in touch with our agency’s risk management specialists.

Unfortunately, many small businesses ignore business continuity planning – perhaps because this seems so simple that they just don’t need to do it. Here are five basic (and cost-effective) steps you need to take before disaster strikes:

1. Define who’s in charge. Because you might be unavailable after a disaster – injured, ill, on vacation, etc. – designate an order of succession to avoid confusion and unclear responsibility during the recovery process.
2. Avoid a communication breakdown. Normal communication infrastructure might be disabled after a disaster, so make sure you have alternatives for employees, customers, clients, key suppliers, and subcontractors. At a minimum, have phone numbers (landline and cellular), and e-mail addresses. Don’t rely on outdated, unreliable methods such as phone communication trees. Use a voicemail system supported by a vendor with communication equipment offsite. Don’t forget to consider backup power needs.
3. Perform data backups. Be sure to make duplicate copies of data regularly, with one copy at a location that’s easy and inexpensive to access.
4. Have a Plan B. if your facility is destroyed or access is denied by civil authorities, can you conduct certain business operations from home or a local hotel? For example, what steps can you take to replace computers and retrieve data?
5. Make sure you have enough insurance. In a worst-case disaster scenario (major fire, windstorm, civil disorder, etc.), you might well lose your business assets and face a period of downtime – zero cash flow. Insurance can keep you afloat until you’re back on your feet.

We stand ready to help design a comprehensive, cost effective program that can make your business less risky

Large corporations often use “alternative risk financing” – assuming some of their own risks, in addition to buying insurance – as a way to improve cash flow and lower their total costs. However, this technique can offer substantial benefits for medium-sized companies that face significant potential risks from one line of insurance, such as Workers Comp, General Liability, or Auto Liability.

Basic alternative risk financing methods include:

• Guaranteed cost insurance – the company pays a premium based either on a rate, such as payroll or property values, or a flat amount.
• Incurred loss retrospective rating plans (“retro) – use a standard premium adjusted after policy expiration based on loss experience.
• Large-deductible plans – the organization assumes a substantial (often $50,000 to $250,000) per-accident or per-occurrence deductible.
• Self-insurance – the firm retains its loss obligations and pays them as they become due.
• Captive insurance – this variation on self-insurance pre-funds risks through an insurance subsidiary (“captive”) usually owned by the parent company.

Because each of these methods has advantages and disadvantages, your choice should depend on the situation and needs of your business. For example, a guaranteed cost plan minimizes the upside risk, but won’t help your cash flow; while a captive usually costs the least to finance, but can be expensive to administer.

Whichever alternative risk financing option you choose, make sure your accounting and human resources departments educate managers on their responsibilities in daily hands-on administration of the program. The more widespread their “buy-in,” the stronger your bottom line.

We’d be happy to help you select and develop an alternative risk financing program that’s tailored to your needs. Just give us a call.

Spring is here – and that means it’s time to make sure you’re prepared deal with potential threats to your business from tornadoes and thunderstorms. The planning process should focus on keeping your employees safe, so make sure to explain it to them and do reviews at regular intervals.

Tornadoes

Although a brief warning period usually precedes a tornado, you probably won’t have time for measures to save the facility – which means employee survival must be your top priority. If there’s a tornado watch, have someone listen to the Weather Channel, NOAA Weather Radio, or a local radio station. In the event of a tornado alert, first post an observer; then have employees proceed to the lowest level of the building ( preferably underground), without taking the elevator, get under sturdy tables, stay away from windows, and cover their faces.

If you have employees working outside, develop special safety instructions for them. In case of a tornado watch, make sure that these workers stay informed; when the tornado is about to occur, have them get indoors and take shelter.

Thunderstorms and Lightning

In addition to spawning tornadoes, thunderstorms can cause flash floods, produce damaging hail, create strong winds – and discharge lightning.

Chances are that your business facilities are built, or can be designed, to withstand significant damage from thunderstorms, wind, rain, hail, and – to a lesser extent – lightning. When it comes to machinery, make sure all important electrical devices are connected to surge protectors, and have UPS (Uninterruptable Power Supply) units for critical equipment. In addition, power down and disconnect all electrical machinery before a severe thunderstorm strikes.

For guidelines on developing, and implementing a weather safety program for your business, please get in touch with us at any time.

Given the dramatic impact of social media on the speed and delivery of news and information, it makes sense to make this fast-growing technology part of your risk management program.

More and more reputational crises, such as the recent stranding of the Carnival Triumph cruise ship, are born on social networking platforms and can grow exponentially if mishandled. Consider how Apple Inc. responded to consumer displeasure with the iPhone 4 shortly after its 2010 introduction. Negative comments about the product spread quickly over social media channels, but were largely ignored by Apple executives until mainstream news outlets began reporting on its flaws.

Failing to actively engage social media users in conversations about crisis or business practice of your company means losing an invaluable opportunity to protect your reputation. Otherwise, you risk having other people tell your story.

Social media participation gives you a way to enhance this reputation through regular interaction with customers, business partners and the public. Using this tool to develop relationships and help people, rather than just sell products and services, can create some valuable allies.

Encouraging your employees to participate in social media offers a great way to use them as advocates for your company. A 2012 poll of more than 1,000 registered voters by Hill+Knowlton Strategies found that a corporation’s employees are the second-most trusted source of information about its business practices, second only to friends and family members.

Once employees have gone through safety training, make sure that they use what they’ve learned. When every worker knows and chooses the safe way on a daily basis, you’ll have a workplace with less chance of accidents and injuries.

This four-step approach to job safety will pay dividends:

1. Team up to solve problems and improve safety. Create employee teams in every department to gather information on potential hazards, analyze problems, develop and test solutions, and implement and monitor results. Being part of a team makes workers feel that they share responsibility, which keeps your safety message top of mind.
2. Talk up safety every day. Update employees on information that affects their safety. Provide ongoing feedback, praising safe performance, correcting unsafe behavior, and pointing out areas for improvement. Make sure that communication flows both ways. Urge workers to offer suggestions, identify problems, and pose questions – for example, through a safety suggestion system.
3. Encourage employees to become hazard detectives — and reporters. Make every worker responsible for finding hazards. Create an effective system for reporting problems, and respond promptly to correct hazards that employees identify. This is harder than it sounds because it means that management has to listen when workers discuss safety concerns.
4. Create a “want-to” safety culture. Encourage your workers to do the safe thing, not because they have to, but because they want to avoid injuries. Remind them of how many safety-related decisions they make every day – and how one bad decision is all it takes to get hurt.

For professional advice on creating or updating your workplace safety program, just give us a call.