Key Elements of An Effective Loss Control Program Integrated Loss Control, Inc – Minneapolis, MN...

Key Elements of An Effective Loss Control Program

Integrated Loss Control, Inc – Minneapolis, MN – www.ilci.com 1

Loss Prevention and Cost Containment……Key Elements of An Effective Loss Control program

November 12, 2014

Presented by: Mike Holmquist, MS

Integrated Loss Control, Inc.

Sponsored by

Johnson-McCannof


Loss Prevention and Cost Containment

Introductions- Mike Holmquist:

• Education (BA Biology, Chemistry, MS in Health and Safety)

• Experience (Private Industry, City, County & State of MN)

– Integrated Loss Control (ILC):• 23 Years of Providing a “Systems Approach to Loss Control”

– Johnson-McCann (North Risk Partners) & ILC • A Service Partnership




Today’s Objectives:

– Conceptualize and Define A “Loss Control Program”– Explore the meaning of Loss Prevention & Cost Containment– Define what makes up a Loss Control Program– Define what makes up a Cost Containment Program– What should you expect from these two key Elements (ROI)– Setting Expectations– How This Can Help You– Identify and Coordinate Resources– Provide Ideas and Examples




My Approach to this Presentation

– Very Brief Overview of Previous Webinar – A Systems Approach to Loss Control, What it Means to the Bottom-line.

– This presentation builds off the previous, and as before, I will approach the subject from a global perspective, looking at key Loss Prevention and Cost Containment initiatives and discuss opportunities for integration of these elements.

– As with any subject there is much detail within each component we will discuss today and that detail is not a part of today’s discussion.




Decisions Require Trade-Offs

Know where your corporate risk window is positioned….

How open is it?

• We are in control, by the decisions we make

• Decisions require trade-offs

• Do you know what you are about to trade-off

• Make an informed decision, MINIMIZE THE RISK





Let’s get really basic to start with………a review………..

•What does Loss Prevention mean to you, how do you understand it?

•What does Loss Prevention mean to the others on your TEAM?

•What does Cost Containment mean to you, how do you understand it?

•What does Cost Containment mean to the others on your TEAM?

•If they each wrote what it means to them, would the answer be the same or different?

To have a coordinated and effective program……. It is critical to have a common understanding of what your Program consists of and what is expected of it.




Think about it……..

What makes up your current Loss Prevention Program? Any Idea?

and should an incident/accident occur…….

What makes up your current Cost Containment Program?

Every organization has some form of Loss Prevention and Cost Containment Program, some more detailed and structured than others, but they have one………..




Definitions…………….

Loss Control – Assessment of potential loss before they occur or to prevent further loss from accidents that have occurred in the past. It is a way to control costs whether insured or self-insured, effectively manage claims and enhance the work environment to promote

productivity, growth and profitability.

Risk Management – A procedure to minimize the adverse effect of a possible financial loss by (1) identifying potential sources of loss; (2) measuring the financial consequences of a loss occurring; and (3) using controls to minimize actual losses or their financial consequences.




Definitions (continued) …………….

Loss Prevention – Programs/initiatives instituted by individuals and companies to prevent losses (in selected areas).

Cost Containment – The process of controlling the expenses required to operate an organization or perform a project within pre-planned budgetary constraints. The cost containment process is an

important management function that helps keep costs down to only necessary and intended expenses in order to satisfy financial targets.



What Does It Mean To MyCompany’s Bottom Line?

very basically:

(+) Gross Revenues(-) Fixed Expenses(-) Variable Expenses (routine)(-) Losses Due to Unplanned Unwanted Events*

Adverse impact on our Human, Physical and Financial Resources

* This is what we are trying to prevent and/or contain




( EPA)MPCA

COUNTY

DNR

MNOSHA(Fed. OSHA)

FEDERAL(EEOC)

CITY

MEDICALPROVIDERS

INSURANCE COMPANY(Agents)

STATE(Human Rights)

(Labor & Industry)

Examples of Areas of Potential Risk of Loss

There are others…….





• A Structured Integration of Selected Disciplines• Establishes Consensus and Controls Expectations• Allows For Coordination of Key Information• Identifies and Coordinates Relevant Resources• Identifies and Minimizes Major Risk• Emphasizes Prevention and Cost Containment• Can Be Established Over Time to Meet Needs• Out Lives Those Administering to The Various Disciplines• Assists With Change and Adaptable To Change

It can mean different things to different people depending on who they are and what their daily responsibilities are. We see the basic characteristics to be:

What we think a “Loss Prevention/Cost Containment Program ” is or can be -


Systems Approach to Loss Control





• HR Policies & Procedures• Pre-employment Screening• Drug & Alcohol Program / Screens• Safety Programs• Standard Operating Procedures• Insurances • Relevant Compliance Programs• Workers’ Compensation Program• Clearly Assigned Roles & Responsibilities• Self Audits / Risk Assessments• Multi-Dimensional Job Analysis• Ergonomics Program• Employee Training• Emergency Action Plan• Business Continuity Plan• Vendor/Contractor Guidelines• Contractor Risk Transfer• Fleet Safety Program• Others……..

• Accident/Incident Investigation• Prompt Reporting• Clearly Assigned Roles & Responsibilities• Established Claims Management Team• Post Incident Drug & Alcohol Testing• Pre-employment Screens• Supervisor / Employee Training• Reporting Incident to Proper Authorities• Subrogation / Fraud Investigation• Information Management/Access/Use• Contractor Risk Transfer• Business Continuity Plan• Insurances• Others…….

Incident OccursLoss Prevention Elements Cost Containment Elements




A Simple Visual Can Be A Key Cost ContainmentTool……….




So where do we start?

1- Identify potential for loss in selected areas

2- Evaluate potential for loss

3- Identify controls to prevent and/or contain loss

4- Implement the controls

5- Monitor and Adjust accordingly

Key To Success - Identify Appropriate Resources and Coordinate




Based on your individual business philosophies, we believe it can assist with:

• Take Your Program To The Next Level (you help define)

• Makes Your Job Easier• Can Save You Time and Money• Helps Market Your Program (insurance market, financing, current customers,

potential customers, mergers, sale, ISO Certifications, etc.)

• Can Help You Target Resources & Coordinate Them• Meet Insurance Industry Requirements• Meet Regulatory Compliance Requirements• Meet Third Party Requirements• Meet Your Customer Requirements

What a Loss Control Program with Specific Loss Prevention & Cost Containment Elements in place do for you?



• Identify The Stakeholders• Resource Identification and Coordination• Risk Assessment (current and future)• Loss Prevention Program Development• Cost Containment Program Development• Management Training (now and future)• Employee Training (now and future)

• Information Management/Access/Use• Continuous Review & Updating• Packaging and Leveraging of Opportunities

A Suggested Logical Approach ……. more discussion later…….

Place on WorkPlan





Where are your risk exposures in relation to……..



• Various Management Representatives• Insurance Manager / Coordinator• Safety Manager / Coordinator• Environmental Manager / Coordinator• Insurance Agent / Broker• Insurance Carrier • Human Resources Manager / Coordinator• Workers’ Compensation Coordinator• Wellness Coordinator• Benefits Manager• Outside Consultants • Regulatory Agencies• Selected Vendors (medical, equipment, etc.)• Training Manager / Coordinator• Bankers

Identifying The Stakeholders




• Within the Your Organization• Agent / Broker• Insurance Carrier• Medical Provider• Benefits Provider• Third Party Administrator• Third Party Consultants (licensed and non-licensed, certified, etc.)• Government Agencies (state, federal, county, city)• Others……

Resource Identification and Coordination

Even the most basic Loss Control Program needs multiple resources to assist with identifying risk, preventing loss and the containment of costs associated with the incident/claim. These resources can come from various sources within the organization and from third parties. The selection of the appropriate resources and coordination of efforts is key to leveraging the combined team approach. Resources may be considered from:




Risk Assessment (current and future)


In practical terms, a risk assessment is a thorough look at your workplace, facilities, equipment, work practices, products, etc., to identify those things, situations, processes, etc., that may cause harm, particularly to people and property. After identification is made, you evaluate how likely and severe the risk is, and then decide what measures should be in place to effectively prevent or control the harm from happening.

Quantitative risk assessment requires calculations of two components of risk, the magnitude of the potential loss, and the probability that the loss will occur. Acceptable risk is a risk that is understood and accepted (as is or as reduced by various risk management techniques).

Before you can establish Loss Prevention strategies you need to know where to focus your efforts and resources…………



• Health and Safety Program• Environmental Compliance Program• Fleet Safety & Compliance Program• Workers’ Compensation Cost Containment Program• Human Resources Program• Health Benefits Program• Business Continuity Contingency Plan• Insurance Programs (look at the nature of your business)

• Others……..

Program Audits (needs assessment – administrative and/or physical)

Based on the nature of the business, what is required and how is it working?




• Essential Physical Requirements• Essential Functions• Ergonomic Risk Factors• Safety Sensitive Job• Industrial Hygiene Surveillance Program • Job Hazard Analysis• Others?

Work Environment Evaluation

Do it once and utilize the outcome to meet multiple needs/opportunities. This saves time and dollars.

Design the evaluation with input from stakeholders before you leap.




• Orientation to Program Initiatives (buy in from all levels)• Program Administrator / Coordinator• Roles and Responsibilities (existing and newly established)• Give People The Tools To Succeed• New People, Existing People But Different Role Now• Hold People Accountable (its job performance)• Remember to Sustain the Training Over Time

Management Training

To be successful, everyone must be on the same page. It begins and stops with management.




• Identification of Key Information (examples)• Who Maintains This Information (and in what format)• Who Can Benefit From This Information (examples)• Provides Guidance and Goal Setting

Information Management / Access / Use

Information contained in various reports and in various files within different areas of responsibility within an organization can be easily overlooked for the potential cumulative benefit they may have. In addition information/data maintained by third parties may not be leveraged. A structured system can help provide:




• Develop Pre-Qualification Documents– Insurance renewals (consistent and current information)

– Aids with pre-qualification when required by others

• Can Aid With Financing Business Needs• Reduces Non-Compliance Exposures• Expedites Information Gathering and Reporting• Aid in Responding to Business Opportunities• Helps You Feel More In Control

Packaging and Leveraging

Now that you have some of the elements in place, how can you start to use them………..




Maintenance and Continuous Review and Updating

Once the investment of time and money has been made, no one wants to let the desired outcome (return-on-investment) slip away due to failure to sustain and manage these Key Elements.

Day-to-day challenges can compete for an individuals attention and time. The business day is full of decisions, and decisions require trade-offs, it is easy to overlook activities/actions that are important to sustaining the level of program originally designed.

An Annual Workplan relevant to the program can serve to provide guidance, timeframes, reminders, resource management, current status of action steps, etc.

Lets look at what can do for you………




• Sets and controls expectations• Identifies interested parties• Establishes specific goals• Presents routine and non-routine activities• Identifies and assigns appropriate resources (coordinates)

• Updated as necessary to reflect required adjustments• Maintained by one individual or multiple as established• Provides continuity throughout changing people and times• It is the rudder on Program the ship

Establish Annual WorkPlans for Each Critical Program ElementIf you can’t put it in writing, what makes you think you can do it?



Integrating Wellness & Loss Control




Challenges to Implementing and Sustaining ………..

– Organizational culture– Organizational structure– Staff capabilities, skill sets, experience, accountabilities– Turf – Time, I have enough to do….– Getting employees involved– It is a very slow process, can be like turning an oil tanker with a canoe paddle– Little injections of coordinated & linkable subject matter over time, build on this

longer term strategy– Lack of Funding– Lack of buy-in by management & employees & the staff administering the program– Others?




Sounds like a lot of work, but if you…….

……it can be simple when broken into each element.

1- Have a goal.2- Think it through.3- Start out with a plan.4- Be patient.5- Build elements to connect.6- Do what works for you.6- A partial program is better than none.




What Role Can It Play?

• Eliminate or reduce risk of loss (Human, Physical, Financial)

• Improve image with employees, customers & industry• Allow expanded business opportunities• Improve chances of obtaining operating capital, etc.• More marketable and better pricing in the insurance

world




Summary• If thinking about implementing a formal Loss Prevention and Cost

Containment Program, why would you do that?

• Gain support, who are the stakeholders?

• Identify what it is you want to accomplish through this effort (if you can’t put it on paper, what makes you think you can achieve it, expectation setting)

• Establish your Team (Loss Control Program Steering Committee) to work on this together

• Train your Team

• Look at your existing programs (across departmental lines) & identify what makes up your current overall Loss Control Program and its Loss Prevention elements and its Cost Containment elements. Conduct Risk Assessments.




Summary (continued)

• As you look at these Key Elements & where they reside within the

organization, identify various internal resources (people, equipment,

technology, dollars, etc.)

• Identify external resources (people, equipment, technology, dollars, etc.)

• Lay out your program(s) in writing & set your goals (measurable &

reachable)

• Create an Annual Loss Control Program Workplan with action steps

supporting the overall Loss Prevention and Cost Containment goal(s).




Summary (continued)

• Train your managers & supervisors, directly & indirectly

• Communicate & Market (get creative, embed these element topics in various training initiatives)

• Monitor your progress toward your goals, establish benchmarking reports/indicators

• Give it the attention required, as based on your original consensus purpose

• Times change & so must our Loss Prevention and Cost Containment efforts





•Can you now visualize what makes up your program?

•Do you know the current status of your organization’s RISK WINDOW?

•Do you know what elements make up your Loss Prevention Program?

•Do you know what Cost Containment elements are present within your program?

•Do they meet your current needs and expected ROI?

•Is it acceptable?

Question…… Now that we finally reached the end of this summary discussion…….




Hopefully you have gained some insight into what Loss Prevention and Cost Containment Programs can consist of and what they can do for your organization.

Now, if you ever find yourself in a conversation and someone who mentions Loss Prevention and/or Cost Containment, don’t be afraid to ask them what is their definition and what do they expect from their Program.

NEED HELP – If you should find that you need a little assistance, coaching or just brainstorming do not hesitate to contact a representative at Johnson-McCann of North Risk Partners.



Questions ?




We Thank You For The Opportunity

To Speak With You Today


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