Risk Challenges Facing Companies in Transition: New Businesses, Big Growth, Restructures and Change

The last few years have been major challenges for risk managers. Besides COVID-19, risk managers have had to face dramatic changes in business demands, supply chain and economic disruptions, the Great Resignation, court shutdowns, “yo-yoing” workers’ compensation costs, hard insurance markets, work-from-home and return-to-the-workplace issues. Some companies got bigger by growth or acquisition, some went through layoffs, workforce restructures or divestitures, but almost all companies are different today than they were in March 2020.  At the 2022 Workers’ Compensation Institute Conference in Orlando, a panel of risk managers at companies who have faced these changes discussed their experiences. Speakers included:

• Gillian Cummings-Beck – Vice President, Risk Management, Taylor Morrison, Inc.
• Michael Griffin – Risk Manager, Refresco Beverages
• Stephanie Horne – Director of Risk Management & Safety, First Watch Restaurants
• Marc Salm – Vice President Risk Management, Publix Super Markets, Inc.

Q: For the panelists that changed careers, did the events of the last two years impact your decision?

• A: I moved jobs two weeks before the pandemic started.
• A: The pandemic opened doors for me as it created more opportunities for risk managers that did not require relocation.

Both agreed it was very difficult to get to know people at the company and all their vendor partners in a fully remote setting.

Q: How was the transition to your new role?

• A: I stepped into a very structured risk management program replacing a long-time risk manager so it was an easy transition.
• A: My program didn’t previously have a risk management function, so I was building the program from scratch. This was nice to have the freedom to develop the program as you felt was appropriate rather than being burdened by an established structure.

Q: What are some of your biggest challenges in a new role?

• A: Proving yourself over and over again. The C-Suite does not often understand the nuances of risk management and insurance and may not understand the value of the tasks you are doing.

Q: What was the pandemic like for your company?

• A: Our business stalled quickly at first, and we had to lay off 30% of our workforce. However, things bounced back quickly and we had our biggest year ever in 2021.
• A: In the restaurant business, we had to pivot to a delivery/takeout model at first. For some restaurants, this was easy, but for others, takeout was only a small percentage of their business before the pandemic so the change was more dramatic.
• A: Our company was deemed an essential service so we had a record-breaking year during the pandemic.

Q: How are you approaching remote work?

• A: Our workforce was in the field, so nothing changed for them. The corporate office worked from home for several months, and now, we are in a hybrid model requiring people in the office three days a week. Everyone has to be in the office on Wednesdays, so that meetings can happen on that day. They also don’t allow people to work from home both Monday and Friday.
• A: We have very limited work from home. One day every two weeks.
• A: We just build a brand new building, and we want people in the office.
• A: Our corporate employees are required to be in the office three days a week, and two of those days have to be Tuesday and Thursday.

Q: How have insurance renewals been within different markets?

Directors & Officers

• A: The D&O market is extremely challenging. This got even worse when I switched to a company that was just going public. However, things seem to be going better this year.
• A: Your executive team needs to be very involved in your D&O renewal as they are key.

Property

• A: Accuracy in your statement of values is the key to this. Carriers are pushing for recent appraisals on your properties to make sure they are accurate.
• A: Our property has been fairly flat in rates.

Casualty 

• A: We had a very large liability claim that resulted in an increase in both our retention and the rates we were charged.
• A: The excess layers on the liability/auto side have been a challenge. We have seen both retention and premium increases in this area.
• A: We saw a huge increase in the excess liability layers that forced us to increase our retentions and reduce our limits.
• A: Reduced capacity and excess verdicts are driving costs in the excess liability marketplace. Because of the huge verdicts, carriers are reducing the limits they are willing to put up.
• A: Another challenge that developed in the casualty market was their bond on the workers’ compensation program. Their corporate financial rating was dropped at the start of the pandemic which made their bond carrier drop them. Finding a replacement was difficult.

Q: How did the disruption in supply chain impact your business?

• A: Like many industries, we did experience supply chain disruption, with aluminum cans in particular.
• A: The construction industry has experienced significant disruptions in certain supplies including windows, doors, appliances and paint.
• A: The supply chain disruption seemed to be sporadic in the grocery industry. The items unavailable changed week to week and didn’t make sense.

Q: What did you see in terms of claims?

• A: We experienced an initial drop in our workers’ compensation claims, but those bounced back quickly because we were an essential business. The liability claims have been dragging because the courts were shut down for an extended time.
• A: We were severely understaffed in the restaurant industry, which has led to an increase in claims frequency. The claim frequency is especially high with new employees. Because of this, we are trying to do a better job with safety training for new associates.
• A: Our claims have not changed much over the last two years. We don’t have much workers’ compensation in our program because we work with contractors and that risk falls to them. One challenge we are seeing on claims is that the companies we work with are tendering claims back to us. It is important to review your contracts carefully to make sure this situation is clear.
• A: Our claims have been very steady.

Q: How has The Great Resignation impacted your risk management program?

• A: The challenge has been around adjuster turnover at our TPA.
• A: We’re concerned about adjusters working from home doing the bare minimum.
• A: We have seen lots of turnover on the broker side driven by the Willis Towers Watson and Aon situation.

Q: How has the pandemic impacted the future of risk management?

• A: I feel the pandemic really shined the light on the risk management industry and showed its value.
• A: Risk management is a great career because of the wide variety of different things you get to deal with. Every day is something different and you can make a positive impact on the company.