Category Archives: Risk Management

New Study Shows Scope of Workplace Bullying

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In a new study, the Workplace Bullying Institute found that 27% of Americans have suffered abusive conduct at work and another 21% have witnessed it. Overall, 72% are aware that workplace bullying happens.

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Bullying was defined as either repeated mistreatment or “abusive conduct.” Only 4% of workers responded that they did not believe workplace bullying occurred.

The study found that 69% of the bullies were men and they targeted women 57% of the time. The 31% of bullies who are female, however, overwhelmingly bullied other women—68% compared to 32% who mistreated men in the workplace. Identifying the perpetrators also shed light on how corporate power dynamics play a role in abusive workplace behavior. The majority of bullying came from the top (56%), while only a third came from other coworkers.

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“Sadly, what stops bullying the most is requiring the target to lose her or his job,” said Gary Namie, director of the Workplace Bullying Institute. According to the survey, in 61% of cases, the bullying only stops when the target quits, is fired or forced out.

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Employer reactions are failing employees—and may open many companies to costs from turnover or even legal liability:

Workplace bullying employer responses

Check out the infographic below for more insight into workplace bullying:

Workplace Bullying Survey

Health Care Reform and Workers Compensation

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Since its passage in 2010, the Affordable Care Act (ACA), commonly referred to as health care reform, has been the subject of intense political debate and a source of anxiety for many employers. Although most employers have focused on the law’s health benefit requirements, the ACA is also expected to impact how they manage their workers compensation costs in the following ways:

Workers’ Health

Proponents of the ACA say that it will lead to a healthier society. Advocates say that because more people will have access to health care, there will be a reduction in comorbidities. There is, however, no significant evidence to support this contention. For example, data from the Centers for Disease Control and Prevention indicate that heart disease remains the leading cause of death in the United States and that the percentage of Americans with a high body mass index has steadily climbed over the last 50 years—two trends that are not confined to the uninsured population.

Cost Shifting

Employers have long been concerned that injuries from non-work-related causes will be shifted to workers compensation. Doing so is tempting because of workers compensation’s combination of higher reimbursement rates for medical providers and lack of deductibles and co-payments for employees.  Some have speculated that the greater access to health insurance promised by the ACA will reduce this shift to workers comp.

It has become clear, however, that the law will not result in all Americans having health insurance coverage. With the ACA requiring that employers offer coverage to all employees working 30 or more hours per week starting in 2015, one-in-10 large companies are planning to cut back on hours for at least a portion of their workforce, according to “Mercer’s National Survey of Employer-Sponsored Health Plans” 2013.

Access to Care

Probably the most predictable outcome of the ACA is that it will increase the number of individuals in the U.S. with health insurance coverage. Despite the potential benefits, this could put additional stress on a health care system that is already short on doctors.

This is particularly troubling as it relates to specialists and the potential for delays in obtaining diagnostic tests and scheduling elective surgeries and other procedures. Longer periods of disability and complications as a result of such delays would ultimately drive workers’ compensation costs up.

With this added pressure on a limited number of medical providers, it becomes more important than ever for employers to develop medical networks that focus on quality of care and outcomes—even if it means paying more on a fee-for-service basis.

Standards of Care

Traditionally, the health care industry’s focus has been on volume; more patient admissions, tests, and procedures translated to higher revenues. Post-reform, however, the industry has shifted its focus to improving standards of care and achieving better patient outcomes.

If this transition results in less emphasis on costly procedures, which often produce questionable results, workers’ compensation costs could be reduced.

Although it remains to be seen whether the standards of care developed under the ACA for group health care would be enforced under workers compensation, this is a promising development for employers.

Are Drone Cargo Ships the Next Step in Supply Chain Automation?

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Rolls Royce Drone Ships

Ahoy, robots!

The $375 billion shipping industry, which carries 90% of world trade, is next in line for drones to take over—at least, that’s what Rolls-Royce Holdings is betting on. The London-based engine manufacturer’s Blue Ocean development team has already set up a virtual-reality prototype in its Norwegian office that simulates 360-degree views from a vessel’s bridge.

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The company hopes these advanced camera systems will eventually allow captains in control centers on land to direct crewless ships. The E.U. is funding a $4.8 million study on the technology, and researchers are preparing a prototype for simulated sea trials next year.

“A growing number of vessels are already equipped with cameras that can see at night and through fog and snow—better than the human eye, and more ships are fitted with systems to transmit large volumes of data,” said one Rolls-Royce spokesperson. “Given that the technology is in place, is now the time to move some operations ashore? Is it better to have a crew of 20 sailing in a gale in the North Sea, or say five people in a control room on shore?”

Crew costs of $3,299 a day account for about 44% of total operating expenses for a large container ship, industry accountant and consultant Moore Stephens LLP told Bloomberg News. By loading more cargo and replacing the bridge and other systems that support the crew, such as electricity, air conditioning, water and sewage, ships can cut costs and boost revenue, claims Oskar Levander, Rolls-Royce’s vice president of innovation in marine engineering and technology. The ships would be 5% lighter before loading cargo and would burn 12% to 15% less fuel, he reported.

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Unmanned ships would require captains to operate them remotely and people to repair and unload them in port, but the lack of crew at sea could change the landscape of piracy. Without people to take hostage, the risks would greatly reduce—as would the need for for kidnap and ransom insurance premiums. The material being transported, however, could be even more vulnerable without a human line of defense.

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Further, the remote operating system opens the door to digital hijacking from hackers or cybercriminals.

Currently, human error—most notably tied to fatigue—causes most maritime accidents, according to Allianz. But, as the 600,000-member International Transport Workers’ Federation is quick to point out, humans are also the first line of defense in a field plagued by unpredictable conditions. “The human element is one of the first lines of defense in the event of machinery failure and the kind of unexpected and sudden changes of conditions in which the world’s seas specialize,” Dave Heindel, chairman of the ITF’s seafarers’ section, told Bloomberg Businessweek.

Drone cargo ships would represent the latest part of a rapidly automating supply chain. As Wired pointed out, as customers’ desire for ever-more-instant gratification mounts and companies like Amazon find ways to drastically cut shipping costs with technology, consumer pressure may make this too tempting a development to pass up.

TRIA Advocates Testify in Favor of Long-Term Extension

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On Tuesday, February 25, the Senate Banking, Housing, and Urban Affairs Committee held a hearing on “Reauthorizing TRIA: The State of the Terrorism Risk Insurance Market.” Witnesses from several industry groups advocated for a long-term, if not permanent, extension of the program beyond its current deadline of December 31, 2014.

“The availability and affordability of adequate insurance coverage for acts of terrorism is not only an insurance issue, but an economic one,” said RIMS President Carolyn Snow. “By providing a backstop, and assuming some of the market terrorism risk as a reinsurer, the federal government has freed up capacity in the private market that would not otherwise exist.”

Douglas Elliot, president of commercial markets for The Hartford Financial Services Group, and speaking on behalf of the American Insurance Association, argued against any sweeping changes to the current TRIA program. “A number of proposals that have been discussed could-in the name of increasing private market capacity for terrorism risk-actually lead the industry to a tipping point beyond which individual insurers would need to make difficult decisions to safeguard a company’s financial condition instead of maintaining the current level of exposure to catastrophic terrorism risk.”

Many witnesses, including W. Edward Walter, president and CEO of Host Hotels & Resorts, on behalf of the Coalition to Insure Against Terrorism, addressed the effect that TRIA’s uncertainty will have on the lending industry. “The lack of clarity around this issue will likely slow the pace of new financing, especially in the case of properties that are perceived to be a higher risk of terrorist attacks such as high profile buildings and real estate generally located in key gateway urban markets.”

When asked for the ideal duration of a TRIA extension, all of the witnesses asked for a permanent solution with ten years being a minimum timeframe for an extension.

This is the second hearing that the Senate Banking Committee has held on the issue. Committee leadership seemed to understand the urgency and expressed a desire to move on the issue sooner rather than later; however, House leadership has expressed a desire to make changes to the legislation which could slow action on an extension as those changes are debated.