A Risk Control Program that is Just Right: Risk Management and the Goldilocks Effect Focus

Just like Goldilocks, developing a risk control program for your agency that is just right is a bit of trial and error; but understanding the level of risk services will benefit both the agency and its employees.

In this session at PRIMA 2024, Erike Young, Deputy General Manager of the California Intergovernmental Risk Authority (CIRA), explores various risk management services models found across agencies, the hurdles that arise when implementing software solutions, and the benefits that come from developing leading indicators to drive decisions.

Small or Limited Service Model

Typically, with this model there is no in-house risk control staff or use of consultants offering passthrough services. There are no investments in software or tools for the pooled members to use. There is also an expectation that members run their own program.

Pros

• Minimal or low incurred cost to pool
• Pool visibility to member
• More flexibility in offering different services
• Economies of scale

Cons

• Service hours predicated on hourly rate
• Minimal means to reduce claim frequency or severity
• Consultants are not as invested in the members
• Limited access to loss data
• Programs are one-sized and have minimal consultation
• Lower implementation rate of programs

Medium Service Model

This model type is composed of a small risk services team, usually with 1-4 members that will leverage passthrough services. There are minimal investments in technology development.

Pros

• Staff invested in results and accountable
• Service hours are not limited
• Access to loss data
• Enterprise admin access to software and tools
• Use of some leading and lagging indicators
• Relationship and culture building
• Consistent program delivery
• Understanding all programs

Cons

• Increased cost to the pool for salary, benefits, and pension
• Not enough staff to provide equal service to all members
• One size does not fit all
• Potential to overpromise and under deliver

Full Service Model

This model involves a robust risk management team, typically 10-15 members. There are thorough investments in software and tools for pool use. Additionally, there is customized pool training.

Pros

• Staff invested in results and accountable
• Service hours not limited
• Access to loss data
• Enterprise admin access to software and tools
• Use of some leading and lagging indicators
• Relationship and culture building

Cons

• Higher incurred cost to pool (salary, benefits, pension, travel)
• Possible overcontrol of risk
• Over servicing of members with lower risk profile
• Potential non-ownership of risk and safety at member level
• Teams can become siloed

Right Size Considerations

Determining what will work best for your program, starts with asking your risk management team. What do they need? What isn’t working? Other considerations include:

• Pool losses and potential risk
• Added services requested by members
• Risk/safety program maturity at member level
• Staff to member ratio
• Regulatory risk vs. insurance risk
• ROI
• Ability to cross train staff and understand all operations of the pool

CIRA Pool Evolution

In managing and right-sizing their pool, CIRA made several changes to their program. They started by bringing their risk control program in-house. They also implemented a hybrid model with all members having site visits at least twice per year. They hired a risk control advisor, and moved from a required number of visits to prioritizing service levels for each member.

Developing Manager Buy-In

Management support is essential to support technology investments. However, they will have a multitude of questions to understand the overall benefits. Risk managers should be prepared to answer questions about time commitment, investment costs, and the return-on-investment.

Technology Implementation

There will always be pain points in the implementation of the new technology, but it’s important to celebrate successes of the program. Providing that feedback to vendors may also help them develop software to better serve their client needs, especially when they are serving larger groups. Validating the data from the software can help find the true value and keep everyone involved motivated.

Leading Indicators

Leading indicators can identify repeat hazard patterns across departments, and easily be found through RMIS dashboards, but it requires actively using them instead of trying to build a program through lagging indicators. Leading indicators can include:

• Number of inspections completed
• Number of hazards identified
• Number of hazards corrected, or corrective actions implemented
• SOP created and implemented
• Programs reviewed and revised

Leveraging Data

For public entities to see real change in their organization, risk managers have  to be able to tell their story. There is a tendency for the negativity of claims to take the forefront, but emphasizing the positive cultural changes and accident reduction from program implementation can help. It’s also important for risk managers to start with simple changes. For example, something as small as non-slip shoes for all employees can prevent further slip and fall claims.