CTAV 2003 Expo

1. CTAV 2003 Expo Risk Management for Transit Operations

2. SafetyFirst & Selective • Paul Farrell, CEO - SafetyFirst • 15 years – Insurance Industry, Loss Control • Selective and SafetyFirst have worked together for several years. • SafetyFirst provides safety programs to Selective Policyholders

3. Overview of Session • What is Risk Management? • Five Step Process • Practical Application for Transit Operations • Resources for more insight

4. Risk Management • Risk management is the method of dealing with uncertainty: • In your personal life & at home • In your business • Risk management is the pursuit of control over those events we hope never happen, but could.

5. Risk Management • We each practice risk management daily: • Retirement planning • How we drive (choosing route, seatbelts, etc.) • Car, home, life insurance • Managing investments with care • Planning for future • Learning from the past

6. Risk Management • At work we see risk management: • Insurance • Proof of Insurance from others • Safety Programs • Hiring practices, audits, inspections • Review of past losses, crashes, injuries • Accident review boards Lets define the process and look closer

7. Risk Management Process • Five Step Process: • Establish Context (Set Goals) • Identify Actual Risks/Threats • Analyze and Prioritize Risks/Threats • Select Plan and Implement • Monitor Effectiveness of Plan and Modify as Needed Simple, Huh?

8. 1. Establish context for concerns • What are our goals for implementing a risk management program (“big picture goals”)? • Financial security • Free up resources for other business goals • Preserve goodwill in the community (credibility) • Minimize needless suffering from injury, damages, business interruption How would we define a “victory” in one year?

9. 1. Establish context for concerns • Specific examples from your company? • Safety Policy Statement • Risk Management Policy • Business Plan How do you safeguard your company?

10. 2. Identify Actual Risks/Threats • Four major categories: • People • Property • Income • Goodwill (make the business run) (place to run business) • (sustain business through economics) (sustain business through credibility)

11. 2. Identify Actual Risks/Threats • How do we identify risks? • What is the process? • Surveys • Checklists • Questionnaires • Consultants

12. 2. Identify Actual Risks/Threats • People: • Employee Injuries? Customer Injuries? • Vehicle Collisions • Falls (boarding), Falls on property (slip/trip) • Harassment, Employment Practices • Child endangerment Hurt people lead to lawsuits

13. 2. Identify Actual Risks/Threats • Property (damage to or loss of): • Buildings • Computer Equipment, Communications • Vehicles, parts, maintenance equipment • Data, records, intellectual property (proprietary software, databases, etc.) Property issues are typically infrequent

14. 2. Identify Actual Risks/Threats • Property (damage to or loss of): • Property of others (in transit or stored) • Highly specialized equipment • Marine exposures (ferry?) • Floods, Extreme Weather, etc. Property issues are typically infrequent

15. 2. Identify Actual Risks/Threats • Income (unplanned reduction in income): • Loss of grants, Contract cancellation • Ridership losses due to terrorism threats • Embezzlement, fraud, etc. Income issues are generally unusual

16. 2. Identify Actual Risks/Threats • Goodwill (credibility): • Unfavorable news coverage • Reputation for collisions, or poor performance • Employee morale leading to perceptions of poor performance among riders Goodwill issues are potentially devastating

17. 3. Evaluate and Prioritize Risk • A question of likelihood and potential consequence: • Meteor collisions are devastating, but so unlikely that we could spend our time elsewhere • How do we place proper emphasis on each potential risk?

18. 3. Evaluate and Prioritize Risk • Study past losses and problems • Study the history of similar operations (trade groups, associations, networking, journals) • Bring in consultants: • Insurance agent • Insurance loss control staff • Transportation specialists (leasing company,etc)

19. 4. Select and Implement a Plan • Avoidance • Modification (or “Risk Control”) • Retention • Risk Sharing or Risk Transfer

20. 4. Select and Implement a Plan • Avoidance: • The issue is likely to cause loss, the loss would be consequential, no controls are practical and there is no opportunity to transfer or share the risk with someone else. • Murphy's Law to the Extreme • “Just Don’t Do It” • Sometimes you walk away

21. 4. Select and Implement a Plan • Modification: • Can the situation be improved to lessen the likelihood or severity of the loss? • Safety programs • Hiring guidelines • Training for managers and staff • Education for customers? We will revisit this issue later

22. 4. Select and Implement a Plan • Retention (by design v. unintentional): • It may be efficient to take on the risk (or a portion of the risk) directly • Deductibles • Self Insurance Fund • Sometimes we take on risk without intending to do so (oops!) • Coverage gaps • Pioneering new exposures Consultant advice is helpful

23. 4. Select and Implement a Plan • Risk Sharing or Transfer: • Insurance coverage is a form of risk sharing • Pay for a contract that covers some or most of risk of loss • Sometimes contracts (other than insurance) can be used to share risk • “Hold Harmless” • Assumption of Liability Contract review is vital

24. 5. Monitor and Modify • Is the plan working? • Are losses down? • Were deductibles placed at the right levels? • How do you define a victory? (review your goals) • Is the firm meeting it’s business objectives (have resources been deployed effectively?) Clearly, if the plan is not working – Try Again

25. 5. Monitor and Modify • Does the plan need to be updated to reflect: • new operations? • changes in case law? • changes in regulations? • changes in insurance availability (& price)? The world never stops changing

26. 5. Monitor and Modify • Any examples or experiences from your company to share with the group? The world never stops changing

27. Remainder of Session • Resources for more help on “Risk Management” • If time allows, conduct brief reviews on: • General Safety (property, work comp) • Fleet Safety (drivers, crashes, passengers)

28. Help Me, Please! • Risk Management Resource Center • Queensland Government Risk Management Page • Public Entity Risk Institute • Nonprofit Risk Management Center • Computer Assisted Risk Evaluation System (CARES) The web links are on the supplement

29. Help Me, Please! • Sample documents • Email lists, bulletin boards • Templates • Training sessions • Books • Consultants The web links are on the supplement

30. Help Me, Please! • CARES – on the internet • Intended for non-profit, but… • Free to try out, VERY thorough • Low cost to subscribe • Some sections more critical than others • Worth taking an hour to review in detail The web links are on the supplement

31. Help Me, Please! • The Risk and Insurance Management Society (RIMS) • Free for non-member access • Allows you to view and download conference slides, handouts, outlines • ACTIVE email list (daily digest) The web links are on the supplement

32. Help Me, Please! • Insurance carrier and agent/broker as a “pre-paid consultant” • Commitment beyond just paying claims • If they can help you, they benefit, too! (this is a GOOD thing for both firms) • “Loss Control” brings experience from other, similar firms (not a “safety slave”) Hey, I used to be a Loss Control guru!

33. Help Me, Please! • The folks in this room, and the staff of CTAV can help you, too! • Benchmarking or simple discussions about past problems and how they were dealt with can make a big difference

34. Help Me, Please! • What about SafetyFirst? – Watch out… here comes the “advertisement” • We help fleets spot risk taking and deal with it quickly • The program works very well • Usually insurance carriers pay for it • See me if you’d like to learn more. That wasn’t too painful, was it?

35. Thank You For Your Interest SafetyFirst and Insurance Providers Working Together to Improve Results for Everyone

36. Property Safety • Fire controls: • Ignition sources (smoking, welding, electrical) • Fuel (paper, boxes, paint, junk) • Suppression/Notification • Extinguishers • Sprinklers • Alarm systems (notifies who?)

37. Premises Safety • Visitor controls (security) • Slips/Falls (housekeeping) • Attractive Nuisance (kids) • Audits/Inspections

38. Employee Safety • Do we have another couple hours? • What are YOUR biggest issues? • What resources have you discovered that help you out?

39. Fleet Safety • Fleet Safety Components: • Driver Recruiting, Screening, Hiring • Regulatory compliance • Driver Training (safety awareness) • Maintain tenure (reduce turnover) • Monitor performance for results

40. The “Current” System Driver Screening Background Checks Drug Testing Accident Reporting Training Events Safety Dept. HR Dept. Compliance Dept. Training Dept.

41. Making Sense of It All Training Supplier Data Supplier Driver Screening Training Events Drug Testing Background Checks Accident Reporting Insurance Carrier Safety Dept. HR Dept. Compliance Dept. Training Dept. Magic, Black Box Database?

42. Fleet Safety • Where do most collisions come from? • The “other” driver • Your operator • Roughly 90% of all collisions due to driver behaviors, choices, actions • The trick is knowing who needs help, before they have a collision Use every tool available – try new things, too

43. Thank You For Your Interest SafetyFirst and Insurance Providers Working Together to Improve Results for Everyone