Risk Management Bulletin

Employees who don’t learn the safe way to work are accidents waiting to happen — and that means that workplace safety training should play an integral role in your company’s risk management program.

Repetition is essential to this process. Make sure that your trainers repeat essential work safety concepts, information, and terms several times. Look at it this way: At any moment during a training session, some trainees probably aren’t going to be paying full attention — and if they don’t hear something, they’re not going to do it when they get back on the job. What’s more, many people might need to hear, see, or experience things at least twice before they understand.

Repetition is also important when it comes to practical applications of safety information. Employees need the opportunity to practice what they’ve learned until it’s locked into their heads and their performance is flawless. So when a safety procedure involves a practical act, be sure that the trainers give a demonstration, repeat it a few times until everybody catches on, and provide feedback while trainees practice.

You’ll also need repetition to make sure that workers don’t forget what they’re supposed to have learned. Training industry leader Bob Pike says that people can remember 90% of what they’ve learned one hour after training, 50% after a day, 25% after two days, and only 10% 30 days later. According to Pike, full retention of subject matter requires no fewer than six repetitions! That means plenty of follow-up and refresher training — especially for more complex material. Other experts recommend spacing safety reinforcement training so that employees can practice new procedures and skills or use new information on the job supported by coaching before they go back to the classroom for review and additional training.

Many companies protect their vehicle fleet or pricey mobile equipment by using such traditional theft prevention techniques as removing fuses, hiding fuel shut-off switches, disengaging or removing components, or providing locking devices. Unfortunately, these precautions probably won’t stop professional thieves or those equipped with a mobile crane and a flatbed truck.

Vehicle tracking technology can help. Some systems use GPS satellite technology that provides 24/7 online customer monitoring with full-color maps. Others employ cellular phone technology. A few firms combine GPS and cellular systems, which combine the best features of each and provide backup. Tracking systems offer automatic notification if a unit is moved without authorization. Stolen vehicles are frequently recovered within one to two hours, significantly reducing the likelihood of damage to them.

Two reputable companies that offer vehicle-tracking systems are LoJack (Westwood, MA) and the Clifford Alarms unit of Directed Electronics Inc. (Vista, CA).

More and more businesses with substantial equipment values or sizable vehicle fleets are installing these devices. Some insurance companies require them. Reducing loss frequency and severity of business vehicles and contractors’ equipment will help both owners and insurers – a classic win-win scenario. For more information on using these systems, please get in touch with our agency’s risk management professionals.

Tens of thousands of laptop computers were stolen in airports alone last year. These portable, high return, easy-to-sell computers remain a prime target for thieves, who also stake out hotels and car rental depots for distracted travelers. Other mobile electronic devices (notebooks, tablets, and smartphones) are just as vulnerable.

If one of your employees falls victim to theft of a mobile device, the injury to your company could be severe: the cost of replacing the device and software, plus the exposure of confidential data, customer files, and trade secrets. To help avoid this danger, follow these basic guidelines from www.corporatetravelsafety.com:

1. List the serial numbers and software of all mobile devices, plus the employees assigned to use them. Fewer than 10% of stolen devices can be recovered by serial number because most people don’t record it.
2. Train employees, to always keep their device in sight and in front of them when traveling – never at their side or in a luggage cart.
3. If employees don’t need to use the laptop, provide them with a removable hard drive that can be packed separately.
4. Have them carry laptops in a nondescript bag that doesn’t look like a computer case.
5. Provide employees with a laptop lock, which they can use in hotels where there’s no safe.

If these precautions fail, our agency’s service team stands ready to insure the portable electronic devices that employees use for business purposes and your company’s liability for the confidential data these gadgets store. Feel free to give us a call.

Probably less than you think.

Three in four U.S. companies don’t have Cyber Risk or Network Security insurance, according to a study by Towers Watson & Co. What’s more, many small and midsized businesses that do carry these policies have left themselves vulnerable to costly losses by failing to develop proactive data security and crisis response plans.

A data security plan begins with the human element. Training employees – particularly those who regularly deal with proprietary information in-house or stored on portable electronic devices – offers a cost-effective approach. A study by NetDiligence found that more than one in four liability data breach claims were due to lost equipment and other staff errors.

To help keep confidential information safe, managers should:

1. Identify those employees who could create the largest exposures for the company in case of lost or misplaced data and make sure that they’re diligent in protecting this data.
2. Make compliance with data security procedures a part of worker performance review.

If you should suffer a data security breach, you’ll need a crisis response plan, with responsibilities assigned ahead of time. The risk management and legal departments will deal with coverage-related issues such as cross-policy response and claims processing, while IT managers and auditors investigate the source and extent of the breach. Planning should also include guidelines for contacting law enforcement, and forensic investigators, as well as communicating with providers and business partners to address continuity issues.

The plan should designate personnel to handle media inquiries and public statements, interact with providers, and notify affected customers, using dedicated and updated contact lists.

We can help you create comprehensive, cost-effective protection for your confidential information by combining insurance coverage with risk management techniques.

A comprehensive disaster plan plays an essential role in risk management – and the planning process should include a thorough review of your company’s insurance program.

This analysis should answer these ten basic questions:

1. Are policy coverage limits and deductibles appropriate?
2. What types of disasters (perils) are covered and what perils are specifically excluded?
3. Will insurance cover losses due to interruption of power or other critical services, major suppliers or buyers, disruption of transportation services, or a government prohibition of employees or customers entering the premises due to property damage caused by an insured peril?
4. Does coverage factor in inflation, improvements, and building code changes?
5. Is coverage written for “replacement cost” or “actual value” (cost less depreciation)?
6. Does Business Interruption insurance cover loss of income, payroll expenses, and the cost of temporary relocation?
7. Will implementing a comprehensive and effective Business Continuation Plan lead to reduced premiums?
8. Will insurance protect management against litigation alleging poor continuity planning?
9. Is policy documentation (serial numbers, dates of purchase, costs, receipts, photographs, etc.) detailed and up to date?
10. Are the original of all insurance policies kept in a fireproof cabinet or a secure off-premises location with copies readily available?

Our agency’s risk management specialists would be happy to help you take this quiz – and work with you on crafting an effective insurance program that will help your business stay in business after disaster strikes. Just give us a call.

Fraud costs businesses uncounted billions a year. Consider these conclusions from a 2011 worldwide survey by the Association of Certified Fraud Examiners:

• Survey participants estimated that the typical organization loses 5% of its revenues to fraud each year.
• The median loss caused by the occupational fraud cases in the survey came to $140,000. More than one-fifth of these cases caused losses of at least $1 million.
• The most common method of fraud was check tampering, followed by skimming (the theft of unrecorded sales), billing manipulations and expense reimbursements.

In fact, small businesses are usually more vulnerable to embezzlement than Fortune 500 corporations. “Small companies are more prone to becoming victims of embezzlement because they don’t have internal controls and have oversights by outside auditors,” says accountant and former IRS agent Gary Iskowitz.

One reason small companies take a bigger hit is because the scams are harder to detect and last longer, sometimes several years, experts say. Despite their vulnerability, many of these businesses don’t take basic precautions to deter fraud. “There’s a reluctance to think about this, compared to larger companies. The attitude is, ‘I’ve got too many other things to think about as a business owner,'” said Rich Simitian, Southern California managing partner for accounting firm Grant Thornton.

Most of the fraudsters aren’t hardened criminals but rather longtime, often trusted workers who rise through the ranks and take on major responsibilities. Employee theft usually starts small and then escalates over time, often triggered by the worker’s personal financial problems.

To learn how you can develop a comprehensive program to help protect your business from these “inside jobs,” feel free to get in touch with our risk management specialists.

Any business owner knows that sound risk management provides a foundation on which to stack all other operation strategies — and a great way to reduce accidents and injuries and lower your Workers Comp premiums.

Because this is such an important topic, here are the seven essential benefits of a risk management program, according to The National Alliance for Insurance Education & Research:

1. Reduced cost of accidents
2. Providing adequate protection
3. Economy of operations
4. Integration of safety plans
5. Reduced risk of criminal liability
6. Ability to plan and budget more effectively
7. A clearer focus on the big picture

If you hire someone to oversee risk management, the Alliance recommends that they:

• Develop and communicate risk-management policies
• Prepare recommendations and reports
• Conduct risk-identification surveys
• Analyze and measure exposures
• Review leases and contracts
• Coordinate compliance with regulations
• Implement risk-control programs
• Investigate accidents
• Manage claims and litigation
• Arrange risk financing (including insurance); establish retention programs
• Determine and allocate cost of risk
• Monitor results

Our agency would be happy to review your risk management program at your earliest convenience and recommend precautions that can help keep Comp premiums under control.

You might not be aware of a risk management issue lurking on your premises. Mold flourishes in wet conditions with poor ventilation if there’s organic material present in the environment. These conditions can exist in hidden or little-used areas of a building, such as behind walls, in ventilation systems, on support structures, or in basements, according to loss control specialists.

Mold can lead to costly property damage or serious injury. The New York City Health Department notes that indoor exposure for humans requires that mold or fungus materials be released into the air and inhaled, exposed to the skin, or ingested. Some of the 100,000 mold species give off spores that cause allergies. Certain mold species produce “mycotoxins,” which many health experts believe can lead to asthma, headaches, memory loss, and seizures.

Insurance trade groups have questioned whether there’s a relationship between mold and injuries. However, courts have allowed damage awards in mold-related cases — and defendants and insurers have settled injury claims, driving up insurance premiums.

It makes sense to have the surfaces and air of your premises inspected for potential sources of mold. Government regulators and businesses throughout the nation are following the New York City Health Department’s “Guidelines on Assessment and Remediation of Fungi in Indoor Environments.” These standards stress that “the underlying cause of water accumulation must be rectified” or mold growth will recur.

If you have any questions about keeping your workplace free from mold, please feel to give us a call.

Let’s say one of your employees gets into an accident while driving for company business and causes bodily injury that results in a lawsuit — and suppose your driver had multiple traffic violations — and you had no idea about his or her driving history. In a worst-case scenario, you might well be facing a catastrophic loss!

Because time is money, it’s tempting to get your employees behind the wheel and on the road to start making money. However, it’s far better to manage this risk proactively by getting updated Motor Vehicle Reports (MVRs) on every employee who drives regularly during working hours. We’d recommend that you:

• Make providing an MVR a condition of employment for any potential hire who might be driving on company time and check their record before hiring them.
• Set your standards for acceptability.
• Have the employee sign an MVR consent form.

It makes sense to check your drivers’ MVRs on a regular basis. For example, one company has all drivers order their records from the state every six months and give them to their managers for review (the company reimburses them for the expense). This practice encourages drivers to take an active role in thinking about their safety record — much like a report card. As with any type of risk management, employee activity works better than passivity.

Our agency would be happy to help you implement a comprehensive MVR review program.

This is one case when a few ounces of prevention can be worth a ton (or more) of cure.

You work hard to create a safe workplace for your workers. However, if you examine your accident records for the past few years, you’ll probably find that unsafe acts, rather than unsafe conditions, caused most of these mishaps.

Complacency on the job can injure and kill — and it spreads like a disease from one worker to another. One employee sees a co-worker taking a shortcut and figures, “If they can do it, why can’t I?” You can’t afford to let complacency take over in your workplace!

Unless your employees keep thinking about what could go wrong every day, all day, while they work, they’re not going to be completely safe. Train them to think ahead as they approach each task and consider:

• What they’re working with.
• What they’ll be doing.
• What could go wrong.

Encourage employees to examine the substances, equipment, procedures, and situations on their job for possible hazards. Remind them that to be safe, they need to focus on their work, physically and mentally, no matter how many times they might have done the same job. Stress that accidents occur in the blink of an eye — all it takes is a single second of inattention, or a moment of carelessness.

Use safety meetings and other training opportunities to get across the message that complacency can be just as dangerous as any other workplace hazard. Use a strong commitment to training and awareness to create a safety culture that replaces complacency with an emphasis on alertness, planning, hazard identification, problem solving, and accident prevention.