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The Rough Notes Company Inc.



February 25
10:23 2020

Risk Management



How do you maintain focus on risk management when everything is (seemingly) good?

When I was 12 years old, a friend and I left the shore of Burt Lake, a 12,000-acre lake in northern Michigan, in a 12-foot flat-bottom boat with one paddle and no life jackets. We planned to stay in shallow water close to the beach, where it was safe.

Unfortunately, the wind switched, and we started to drift—just a little at first, so we hardly noticed. Then came the disturbing realization that we were rapidly being blown offshore and were a quarter mile from the beach in a lake known for its three- to four-foot waves.

The more we paddled, the further from shore we found ourselves. We were terrified. Fortunately for us, our dads saw what was happening and came after us with a motorboat and towed us back to shore.

I think about this story often because it illustrates how human beings drift, especially when we feel safe and things are going well. Then all of a sudden—BOOM!—we are in trouble.

This is what usually happens with business owners when it comes to managing risk. For a time, everything is going great; more business is coming in, profits are up, no safety incidents or injuries have occurred, and the company is basking in a minimum workers comp mod.

[I]t’s easiest to get everyone on board to manage risk after a large claim, terrible accident, fatality, or when the workers comp mod blows up.

But then something changes. Maybe management isn’t as focused on health and safety as they were in the past because of how good the lagging indicators looked. Perhaps a new risk has crept into the workplace. Maybe it’s recreational marijuana, robots, a new plant setup, inexperienced and poorly trained workers, or an aging workforce. Maybe it’s a change in middle management in the finance, HR, and/or operations departments, or supervisors slowly losing focus. This is what drift looks like; it’s slow at first, as lagging indicators are still good, but leading indicators spell trouble ahead.

It’s been my experience when working with business owners that it’s easiest to get everyone on board to manage risk after a large claim, terrible accident, fatality, or when the workers comp mod blows up. It’s more challenging to keep everyone focused when it doesn’t seem like there is any trouble.

In May 2019, employees of an electrical contractor in Michigan were performing construction activities in a substation. A 53-year-old journeyman electrician was working on an uninsulated aerial work platform, removing insulated grounding jumper cables, when he was electrocuted. According to the OSHA investigation, the worker was attempting to remove a grounding lead from an electrical transmission line. He used his gloved hands rather than the hot stick that had been provided. He received a fatal electrical shock through his gloves.

A hot stick is a tool used by electricians who deal with high-voltage electricity. It is an insulated pole usually made of fiberglass that measures between five and 10 feet and even up to about 40 feet in length. Different tools can be attached to the end of the pole so workers can perform a variety of tasks.

Hot sticks most often are used when the installation is live or hot. Most electrical work on high-voltage networks is done while the power is still active, making equipment like this critical for safety purposes. Working “hot” prevents electricity users from being disconnected while routine maintenance is taking place.

We may never know why a well-trained 53-year-old lineman didn’t use the hot stick, a critical safety tool when doing this work. OSHA issued seven serious violations and fined the employer $49,000. Is this what drift looks like?

How do we help our clients avoid drift when it comes to managing risk?

Stick to the five-step risk management process. I call it RiskManagement365 for managing risk 365 days a year. The steps are (1) Identify Risk, (2) Analyze Data (3) Control Risk, (4) Transfer/Finance Risk, and (5) Measure Results. This is a circular process that never ends unless your client drifts.

Consider this example of drift: Your client identifies the risk of a semi-trailer moving while being loaded, but it doesn’t use the required wheel chocks—those wedge-shaped blocks placed in front of the rear wheels of the trailer to prevent it from moving away from the dock while the trailer is being loaded. Nothing bad happens while unloading. The drivers aren’t required to use the chocks. Soon the chocks disappear from the dock. Then one day a warehouse worker is running a load into a truck with a forklift when the trailer suddenly moves. The forklift falls between the dock and the trailer and the employee is seriously injured, never to work again.

What happens if a bolt manufacturer lets inferior-quality steel get through because its quality control was allowed to drift? Maybe nothing goes wrong at first, but everyone will know if an engine falls off a plane because the bolts failed, which is likely what happened to American Airlines flight 191 in 1979 when it crashed on takeoff at O’Hare International Airport, killing 258 passengers, 13 crew, and two people on the ground. One of the victims, Jeffrey Nordhaus, was the dear son of my good friend George Nordhaus, founder of the USA Insurance Network and a well-known insurance marketing expert.

As risk advisors, we owe it to our clients to lead their risk management efforts and warn them about the dangers of risk management drift and how to avoid it.

The author

Randy Boss is a Certified Risk Architect at Ottawa Kent in Jenison, Michigan. As a Risk Architect, he designs, builds and implements risk management and insurance plans for middle market companies in the areas of safety, work comp, human resources, property/casualty, and benefits. He has over 40 years’ experience and has been at Ottawa Kent for 37 years. He is the co-founder of, web apps for agents to share with employers. Randy can be reached at

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