Risk Management
Best Practices
NCGFOA Summer Conference
July 18, 2011
Presented by:
Greg Gaskins
Chief Financial Officer
City of Charlotte
ggaskins@charlottenc.gov
Dan Pliszka
Manager, Risk Management
City of Charlotte
Mecklenburg County
Charlotte-Mecklenburg Schools
dpliszka@charlottenc.gov
Why Risk Management??

Legal

Humanitarian

Economic $$$$$$
Risk Management History

Hard market of the mid to late 80’s.

Workers’ Comp Crisis early 1990’s


GASB 10 reporting requirements
Required loss funding of $17 million

Increased emphasis on cost containment.

Increasing losses with multiple cost drivers.
Increasing Losses and Drivers
• High risk exposure as part of our business.
•
•
•
Public Safety Functions
Construction and Engineering
Right of Way and Property Management
• Increase in settlement and litigation costs.
•
Exponential increase in claims settlement costs over the past
several years.
• Increasing jury awards.
•
Litigated claims are receiving record jury awards both locally
and nationally.
Increasing Losses and Risk Drivers
• Industrial Commission Rulings.
•
•
•
Adverse rulings on Workers’ Compensation cases.
Changing definitions of compensable claims.
Need for Workers’ Compensation reform.
• Increase in High Profile and Large Losses.
•
•
Large and severe losses are increasing.
Large losses can be mitigated by reducing the high number of
smaller losses.
• Losses tend to be cyclical !!
Losses are Cyclical
What did we do???
• IRMA (Insurance and Risk Management Agency)
• Self Funded Program
• Established DIRM (Division of Insurance and Risk Management)
• Risk Management Division
• Consolidated Program.
•
City of Charlotte, Mecklenburg County, Charlotte-Mecklenburg
Schools
• Comprehensive Program:
•
•
•
•
Auto, General Liability, Workers’ Compensation
Risk Control Services
Risk Financing
Insurance and Contracts
Successes
 Created Loss Metrics.
 Actuarial Funding of Losses.
 Implemented Cost Allocation
 Outsourced City operated Health Clinic.
 Find the Dent on the Police Car.
 Strengthened relationships with Legal and Human Resources.
 Citywide Safety Team.
 Incorporate County Safety Position.
Successes
 Began providing loss metrics to business unit management.

What gets measured gets done !!
Citywide Restricted Duty and Lost Time
10000
8000
Citywide Workers' Comp Claims / 200,000 Hours
6000
Citywide Workers' Comp Claims-Does Not Include
BOD
4000
11.50
11.13
11.00
10.50
11.21
2000
10.91
10.84
0
2007
10.24
2008
2009
Restricted Days
10.00
2010
2011
Lost Days
9.50
2007
2008
2009
2010
2011
Citywide Vehicle Claims Per Million Miles
19.72
20.00
19.00
19.09
18.34
18.06
18.00
17.31
17.00
16.00
2007
2008
2009
2010
2011
540
520
500
480
460
440
420
400
511
510
2008
2009
520
511
453
2007
2010
2011
Efforts
• Opened the Charlotte Vehicle Operations Center
• In response to dramatically increasing vehicle claims frequency and
severity.
CHARLOTTE VEHICLE OPERATIONS CENTER
(C.V.O.C.)
RISK MANAGEMENT DIVISION
2725 BEAM ROAD
Where are we now??
 Still having unacceptable losses.
 ~$31,000,000 including IBNR

Formed an Executive Risk Management Task Force
• Comprised of KBE’s of the seven top loss KBU’s.
• Led by Assistant City Manager.
•
•
•
•
•
•
Review Data
Enhance the Risk Management Culture
Create Goals for Risk Reduction
Establish Scorecard Objectives
Establish Critical Incident Reviews
Establish Working Groups
Current Efforts
 Organizational Culture Change




Loss accountability
Employee ownership of safety and risk. (Safety @ Six Sigma)
Losses are no longer a “Cost of Doing Business”
Safe Production vs. Safety AND Production
 Enterprise Risk Management




Mecklenburg County
Compliance Driven Transparent Organization
Board and Senior Management Support
Insurance Broker Assistance
 Risk Management Gap Analysis




Insurance Broker Assistance
Interview management and line employees.
Identify potential Gaps and areas for improvement.
Focused on Leadership, Culture, Programs and Process
Private Sector Example
 Coca Cola Consolidated Metrics
 Safety – Measured by frequency
# of Vehicle Claims
 # of Workers’ Comp. Claims
 # of Days Lost due to Workers’ Comp claims.
 # of General Liability Claims





People – Measured by Employee Turn Over
Quality – Measured by internal index and consumer
complaints.
Responsiveness – Measured by internal schedule adherence.
Cost Management – Measured as a cost per unit produced.
Keys to Successful Efforts
 Efforts must be driven and supported from the top.


City / County Manager
City / County elected officials
 Efforts must be sustained for the long haul.

Remember losses are cyclical over time.
 Deliver the same message in different ways.
 Culture Change is Key
 Efforts must be multifocused.

Concentrating on one loss type is like playing a game of Whac-a-Mole.
Risk Management Whac-A-Mole
Workers’
Compensation
Auto
Liability
General
Liability
Public
Officials
Liability
Health
Insurance
Risk Management
NC Government Finance Officers
Association
July 18, 2011