Partner with HR to help identify, analyze and control risk
When we think of all the things that can go wrong in running a business—things such as damage to property from fire or tornado, product liability, or even a serious auto accident—the risk in human resources is often overlooked. If not, it’s given low priority. All too often, employers react to incidents instead of being proactive to avoid or minimize the impact should the unexpected occur.
As risk advisors, we need to bring this possibility to our clients’ attention.
The human resources risk is in the alphabet soup of the federal regulations that employers are required to comply with 24/7—such as ADA, FMLA, COBRA, HIPAA, and OSHA. The government agencies that regulate them are DOL, EEOC, OSHA, and EPA, just to name a few. Complying with these agencies’ regulations presents a formidable challenge for companies and their HR departments.
HR needs to have up-to-date knowledge about the role it playsin risk management, as well as knowledge of the business and how to protect it.
Imagine that an employee performing maintenance on a machine gets his hand caught when it starts without warning. As a result, he is unable to work for several weeks. And to make it worse, his spouse was just diagnosed with cancer. This scenario unleashes a barrage of federal laws that HR needs to comply with, particularly the regulations previously mentioned.
In this case, the employee was left on the group health plan because the employer felt sorryfor him, even though they were not working. The health insurance company was reviewing the spouse’s $500,000 cancer claim and discovered the employee with the coverage was not eligible because he was not an “active full-time employee.” The insurer denied future coverage and requested that the employee reimburse it for what had already been paid. The employer became the insurer in this case because it did not offer FMLA and COBRA and had to cover this claim.
According to the Society for Human Resource Management (SHRM), critical responsibilities for HR professionals include developing and implementing programs and policies that mitigate risk and support organizational success in the use of technology, fiduciary responsibility, fraud prevention, workplace safety, and workplace violence. It also is their responsibility to audit risk management activities.
Human resources risk is an area where a trusted insurance and risk advisor can partner with HR to help identify, analyze and control risk.
Managing HR risk requires knowledge of:
- business recovery planning
- data management protection
- substance abuse prevention
- emergency response planning
- health and safety practices
- kidnapping and ransom prevention
- safety auditing techniques and OSHA compliance
- workplace incident investigation
- workplace violence prevention techniques.
A misstep in any one of these areas can deliver a devastating blow to a business. If severe enough, it could lead to closure. I can think of at least three businesses in Michigan that no longer exist because they had a severe workplace accident, had to pay large OSHA fines, lost customers and finally ended up in bankruptcy. As risk advisors, we need to warn the companies we work with that this can happen to them if they don’t pay attention.
When I engage with new clients, I ask them if they have a safety committee. If not, I help them start one. At the first safety committee meeting, I start by showing a picture of a young lady who lost her arms in a tragic workplace accident and tell them the story of how it happened.
On the morning of November 5, 2003, Kristi Fries, who worked at Mavrick Metal Stamping in Mancelona, Michigan, reached into a 110-ton stamping press to remove a part. Her unzipped sweatshirt triggered the machine’s controls, causing the press to slam down and crush her arms, both of which had to be amputated between the wrist and the elbow. Fries later said it was her first time using the machine and that she had never been warned about the risk of wearing loose clothing while operating it or that the machine had previously malfunctioned.
In fact, the potential danger of the machine was so widely known that the regular operator wore his button-down shirt backward to make sure he had no loose clothing in front that could trigger the machine. Sadly, no one thought to bring this potential danger to Fries’s attention.
After everyone on the committee hears the story, they realize safety is serious, and we get to work on making sure they and their co-workers go home healthy and safe every day.
HR needs to have up-to-date knowledge about the role it plays in risk management. It also needs knowledge of the business and how to protect it. As agents and brokers, we should be a resource for them by providing the tools and advice to identify, analyze, and control their risk
We need to do more than just sell them insurance. Businesses will thank us for helping them address their HR risks, and they’re much more likely to become clients for life.
Randy Boss, CRM, CRA, MWCA, SHRM-SCP, 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 of experience and has been at Ottawa Kent for 36 years. He is the co-founder of OSHAlogs.com, an OSHA compliance and injury management platform. You can reach Randy at email@example.com.