Risk Management

By Randy Boss, CRA, CRM, MWCA, SHRM-SCP

RISK MANAGEMENT ON THE GROUND

Talk with employees to identify risks of which management may not be aware

Insurance is the fourth step in a five-step process that involves identifying, analyzing and controlling risk, then financing risk, and finally monitoring the results. It’s a circular process that never ends.

It’s unfortunate that many agents focus so much on the fourth step—financing risk with insurance. This insurance-only method isn’t the best choice for them or their clients because they never get an opportunity to understand what’s really going on in the business—until something terrible happens. They never get to identify risk; therefore, any solution to control risk is a shot in the dark. In the medical profession this would be considered malpractice because a physician should never recommend treatment before examining the patient.

A concept in the U.S. military is called “The Ground Truth.” It means that generals sitting in offices create plans, but it’s the soldiers on the battlefield who know up close and personally the challenges and threats. As agents, we need to talk with the soldiers—or in our case, the clients.

Let’s do the clients we serve a favor by asking for an opportunity to learn “the ground truth” about their business. It’s not only good risk management but it’s also the right thing to do.

Over recent years, as part of the first step of risk management, I interviewed some of my clients’ employees, and I was amazed by the risks I discovered. While interviewing a warehouse employee, I learned about a forklift driver who was legally blind. His co-worker was concerned that he would injure or kill himself or others and also worried that the guy would lose the job he desperately needed to provide for himself and his family. We told management about the situation, and they assigned him to a position where his impaired vision was not a deterrent to his performance. The driver was relieved because he no longer needed to deal with stress, and his co-workers finally felt safe at work.

In another situation we interviewed an employee in a woodworking shop who expressed a concern that wood material could fall on workers as the forklift was loading the rack from the other side. Based on that concern, a strong safety net was installed. As it turned out, a few weeks later a large sheet of wood material did fall. Fortunately, the net caught it, saving the employees below from incurring fatal or other severe injuries.

Many serious accidents could be prevented by knowing the ground truth from those who do the work. In February of this year, a 26-year-old maintenance supervisor was using a tire-changing hand tool to replace a truck trailer tire when the tire exploded. He sustained severe trauma to his face and head and was pronounced dead at the scene. Will the exclusive remedy in workers compensation insurance be enough to protect his employer, given that it is well documented that using a tire cage while inflating a tire could have saved this worker’s life?

An expert witness recently testified at a trial by stating: “I have been in the heavy equipment industry for more than 40 years. I have designed numerous products for several automotive and outdoor power equipment companies, as well as some for my own companies. Every product I’ve designed, mostly light vehicles and trucks, has had wheels and tires that I have designed and at times manufactured. I am very familiar with tire and rim specifications for trucks. Failures do occur when the tires are installed according to the manufacturer’s guidelines, usually due to a point of weakness in the tire or rim. At such high pressures, even a small weakness can produce a catastrophic failure, and explosions of highly pressurized truck tires can be particularly violent.”

It’s sad that a simple tire cage costing less than $500 could have saved the maintenance supervisor’s life and those of many like him. In too many instances like this, the worker on the ground knows about a risk but wasn’t asked. Executives who are not exposed to a particular hazard make decisions about the safety of workers on the ground. They may be hyper-focused on the price of an insurance policy without considering the cost they could incur if something goes wrong. No amount of insurance can replace a worker’s ability to earn a living or stay alive.

Too often, client and prospect discussions focus on the price of insurance. Instead, why not discuss the cost of identifying, analyzing and controlling risk before turning to insurance as the only solution? What is the cost to a business if an employee is injured or killed? What is the cost to a family if Mom or Dad can’t work or will never again come home from work? This is why it’s critical to get out of the executive suite and learn the ground truth.

A question I ask clients and prospects is: “What risk issues are you are concerned about?” I want to see what employers believe are the risks faced by them, their employees, and their business. This is a great way to start the risk management process. Let’s do the clients we serve a favor by asking for an opportunity to learn “the ground truth” about their business. It’s not only good risk management but it’s also the right thing to do.

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 of experience and has been at Ottawa Kent for 37 years. He is the co-founder of emergeapps.com, web apps for insurance agents to share with employers. Randy can be reached at rboss@ottawakent.com.