With offices returning to a more normal work environment risk managers will face a variety of new and existing casualty exposures that should be mitigated through a strong risk control program.
Now is the time for risk managers to make certain their risk control program, including a robust management system, is in place. First, risk managers need to assess their current processes and ensure they are prepared for the new challenges that returning to work post-pandemic places on an organization, including:
- A robust management system that is fully integrated into operational processes, employee and driver selection, equipment procurement, task design, and the overall risk management strategy.
- A well-designed loss prevention program that focuses on risk avoidance, exposure control and mitigation along with injury prevention and claim cost reduction strategies.
- Experienced and successful risk professionals who understand the relationship between injury prevention and the avoidance of claim costs.
Risk managers should be able to articulate the causes of loss across workers’ compensation, automobile liability and general liability exposures, how their organizations are actively engaged in injury mitigation strategies, and how their claims management strategy can mitigate costs after an incident.
Successful risk managers improve their overall risk profile by maintaining relationships and collaborating on strategies with their operational management counterparts in maintaining risk control and injury/vehicle crash reduction programs that help them take control of their risk. In addition, measuring the impact of these strategies through the use of data and analytics can help the organization prioritize resources.
Data Is Critical to Understanding Loss
The organization's operational and safety team plays a vital role in collecting data to develop trends and insights and mitigate risks. Data helps risk managers appropriately establish and support safety programs and process improvements targeted at major workplace safety and health issues, such as ergonomics, fall prevention and motor vehicle crash prevention.
Loss prevention programs should be established to evaluate and quantify a range of risks, as well as convey improvements in risk reduction and improved claim costs over time. Every organization will have a different risk profile depending on their industries and locations. For example, U.S. loss prevention programs that focus on ergonomics and fall prevention strategies, which are the two loss-leading areas of injury in most workers' compensation claims, can be more effective and should be an area of emphasis for pre- and post-loss efforts.
Effective Risk Control and Prevention Programs Promote a Culture of Safety
Data-driven loss prevention programs' performance should be visible to all stakeholders. Indeed, each has a role to play in preventing accidents and promoting workplace safety. This knowledge fosters and maintains a culture of safety – doing what is smart/effective for the workers and business.
Injury prevention and safety is about an organization doing what it can do to help protect its workforce by keeping employees free from exposure and hazards that can lead to injuries, and more engaged, motivated and productive employees. In this way, all departments and employees begin to care about the organization's financial health and the health of the workforce. While the use of virtual care has skyrocketed, maintaining the momentum and capturing its full potential will require increased collaboration among plan sponsors, payers and healthcare providers to more fully integrate virtual care into the design of health plans and delivery of healthcare services, supported by aligned financial incentives. Risk control and safety must be a broader part of the conversation beyond risk managers and the C-suite.
Achieving a safe workplace takes effort from every employee. Managing, controlling and preventing risk can produce financial results that help an organization efficiently use its resources in volatile times and lower its loss costs. Those are positive results but protecting people who are the core asset of an organization should be the primary goal of risk management programs. That's where the long-term value of loss prevention can be generated.
Risk Control and Prevention Can Drive Financial Performance
Traditionally, some risk managers have found it difficult to pinpoint what elements of their risk program were under their direct control. However, analysis has revealed that roughly 70% to 80% of a typical organization's risk costs are a result of retained losses. Retained loss costs are absorbed directly by the business and typically are in the form of deductibles or self-insured retentions and can be pertinent to financial results.
A deeper understanding of the characteristics of losses can lead to a significant impact on an organization's financial performance. Prevention programs reinforced by the knowledge of the data, analytics and resulting insights are powerful in informing the direction of operational improvements and focused safety initiatives to reduce incidents and the associated costs. Often, this requires data capture not typically completed in a traditional claims reporting system. Still, with a few additional elements consistently and systemically captured, the data can direct the organization to specific prevention strategies and measurement of improvement. These elements can include the occupation, task and specific location of the incident, types of motor vehicle crashed and the contributing factors to those incidents.
Pre-loss programs become more critical in tougher insurance markets
In an uncertain economy where costs are under more scrutiny, risk managers can unlock hidden value by improving their loss prevention programs through better data collection. Businesses that can tell a compelling, data-driven story about their loss history and what those losses are projected to be in the future have a decisive advantage when it is time to renew insurance coverage. A thoughtful loss history using accurate and current data along with articulation of the prevention strategies will help ensure competitive pricing and policy terms and conditions, even in challenging market environments.