2011 Advisory Board Meeting
Janet & Mark L. Goldenson Center for Actuarial Research
University of Connecticut
August 10, 2011
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Table of Contents

Introductory remarks

Enterprise Risk Management for Small Business

Case study on Between Rounds Bagels

Claim Cost Management System

Mature Driver Screening Program Project
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Introductory remarks




Welcoming Advisory Board Meeting special guests – Janet & Mark Goldenson, Frank
Ramsay, Jerry and Laurie Puiia, Garry Lapidus and Asiri Gunathilaka.
Highlight of past year’s activities is the expansion of the ERM for Small Businesses
initiative and the publicity it has received
Separate meetings with individual Board members to discuss joint projects with the
Center. Potential projects include:

a predictive modeling approach to analyze early lapse experience of life insurance polices sold in
China

a Retirement Satisfaction Index to measure non-economic factors impacting retirement attitudes

a Mature Driver Screening Program

Claims Management Modeling System for P&C liabilities

ERMSB analysis for brokerages and agencies of insurance companies

A/E analysis of LTD claims
Potential Center projects with non-Board members including an ERMSB project with the
Mashantucket Pequot Tribal Nation, a risk management project with a major drug chain
and a profit analysis project for a Las Vegas casino
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Enterprise Risk Management for Small Business
Jay Vadiveloo (UConn, Towers Watson)
Lu Ma (UConn)
Jackie Bogensberger (UConn)
Laurie & Jerry Puiia
Owners – Between Rounds Bagels
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Differences with Enterprise Risk Management (ERM) for
large corporations

Needs to incorporate business growth strategies as well

Need to focus on reasonably likely risks with serious consequences
versus low likelihood events with serious consequences

Business owners are very knowledgeable about risks and business
growth strategies

Easier to assess and manage risks of a small business, but
consequences of a risk shock are far greater

Qualitative risks are just as important as quantitative risks

ERM analysis covers a shorter time horizon (3 to 5 years) and should
be revisited afterwards
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Differences with ERM for large corporations: continued
A well defined ERM analysis for small business, which incorporates
business growth strategies can materially improve the
sustainability and profitability of a small business
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Risk Management Report
for
Between Rounds Bagels
University of Connecticut
Graduate Program in Actuarial Science:
Lu Ma
Jackie Bogensberger
Eric Anderson
Maura Bey
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Outline

Recognition of Risks for Between Rounds

Data Analysis


Micro Level

Macro Level
Suggestions/Conclusions
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Recognition of Risks

Competition

Bagel Stop Production Co, Bruegger’s Bagel Bakery and Lox Stock &
Bagels, Inc, Dunkin’ Donuts

Seasonal trends

Trends due to the economy

Cost efficient items

Waste management

Advertisement
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Micro Data Analysis

We used the information complied from Between Rounds’ register
reports to create a user friendly pivot table (in Excel)

In order to calculate the percent profit for each item, we assumed a
33% cost

From there we looked at best selling items (contribute to 50% of profit)
over a monthly and year basis
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Monthly and Year
Best Sellers
03/07/2010 - 02/10/2011
Item #
Item Name
191
**DOZ* BAGELS
1024
Turkey Sand
807
Bacon Egg Cheese
1125
Coffee Med
11306
PLAIN CC
1021
Chix Salad Sand
808
Saus Egg Cheese
1019
Tuna Sand
1002
Tom Tom Club
1124
Coffee S mall
1202
Fountn Soda
802
Egg Cheese
1012
Ham Sand
1009
R.B. Sand
1126
Coffee L ge
2001
Plain Cream Chs
806
Ham Egg Cheese
192
**6** BAGELS
1203
Snapple Reg
1008
Maple Turk Sand
109
Evrythg Bagel
1035
Chx CAes Wrap
11301
BUTTER
1221
Iced CoFfee
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Family Group
DOZEN BAGELS
SANDWICHES
BRKFAST SAND
HOT BEVERAG
FOOD PREPS
SANDWICHES
BRKFAST SAND
SANDWICHES
SANDWICHES
HOT BEVERAG
COLD BEV
BRKFAST SAND
SANDWICHES
SANDWICHES
HOT BEVERAG
CREAM CHS LB
BRKFAST SAND
DOZEN BAGELS
COLD BEV
SANDWICHES
BAGELS
SANDWICHES
FOOD PREPS
COLD BEV
Total
% Profit
3.41%
3.31%
3.05%
2.87%
2.84%
2.77%
2.47%
2.34%
2.19%
2.08%
2.08%
2.03%
2.00%
1.91%
1.88%
1.82%
1.77%
1.58%
1.52%
1.40%
1.37%
1.25%
1.25%
1.18%
50.37%
June 2010
Item #
1024
1021
191
807
11306
1125
808
1002
1202
1019
1012
802
1009
1124
1221
2001
1126
1203
192
806
1008
1035
1814
1115
Item Name
Turkey Sand
Chix Salad Sand
**DOZ* BAGELS
Bacon Egg Cheese
PLAIN CC
Coffee Med
Saus Egg Cheese
Tom Tom Club
Fountn Soda
Tuna Sand
Ham Sand
Egg Cheese
R.B. Sand
Coffee S mall
Iced CoFfee
Plain Cream Chs
Coffee L ge
Snapple Reg
**6** BAGELS
Ham Egg Cheese
Maple Turk Sand
Chx CAes Wrap
Lox
Joe To Go
Family Group
SANDWICHES
SANDWICHES
DOZEN BAGELS
BRKFAST SAND
FOOD PREPS
HOT BEVERAG
BRKFAST SAND
SANDWICHES
COLD BEV
SANDWICHES
SANDWICHES
BRKFAST SAND
SANDWICHES
HOT BEVERAG
COLD BEV
CREAM CHS LB
HOT BEVERAG
COLD BEV
DOZEN BAGELS
BRKFAST SAND
SANDWICHES
SANDWICHES
DELI MEAT
HOT BEVERAG
Total
% Profit
4.05%
3.45%
3.08%
2.81%
2.78%
2.48%
2.35%
2.22%
2.17%
2.16%
2.15%
1.99%
1.96%
1.75%
1.74%
1.68%
1.62%
1.54%
1.53%
1.49%
1.49%
1.41%
1.35%
1.29%
50.51%
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Total Gross Profit
for All Locations
Yearly Gross Profit by Branch
1,200,000.00

Manchester is the only
growing branch

Manchester is the smallest
branch
Gross Profit
1,000,000.00
800,000.00
South Windsor
600,000.00
Vernon
400,000.00
Manchester
-Overall profit has decreased,
but as has the economy
200,000.00
0.00
2006
2007
2008
2009
2010
Total Gross Profit (All 3 Locations)

We see a positive outlook
in 2010 in all stores

Check 2011 data to see if
up turn continues
Gross Profit
Year
1,800,000.00
1,600,000.00
1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00
200,000.00
0.00
2006
2007
2008
2009
2010
Year
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Our Suggestions

Bagel Promotions: advertise on the side of a vehicle, coffee
promotion, healthy promotion during New Years Resolution Time

Online Advertisement: Groupon, Facebook

Drive Thru Menu: consider the potential for traffic, new menu items
(based on best sellers)
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Our Suggestions (continued)

Data Collection: adjust your “family groups” to be more condensed or
keep the names more consistent.

Keep count on waste

Strategizing to Appeal to other clientele: consider re-branding to
appeal to younger customers/college students
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Key deliverable

Excel-based model to track sales revenue and profit by individual item
and by store in as frequent a basis as needed
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THANK YOU!
From all of us, thank you for allowing us to analyze your business.
You have been more than cooperative and we appreciate it!!
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Student perspective on Enterprise Risk Management for
Small Business (ERMSB) initiative

Not a typical actuarial project

Forces students to think out-of-the-box since each ERMSB project is
unique

Students work in a team and are involved from start to finish
— Students work directly with the business owners
— Final report, models and presentation done by students
— Invaluable experience and immediate gratification of having recommendations
implemented by owners
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Where do we go from here?

Need to expand the Center’s ERMSB initiative on a larger scale

Any large scale implementation should be supported by large corporations,
private foundations and government agencies and not small business

Most cost effective way to do these projects is to engage students at
universities all over the country (and globally as well)

Positive public relations / articles / media coverage on this initiative would allow
the Goldenson Center to help facilitate and coordinate any large scale ERMSB
initiative






Radio talk show interview with Lu Ma and myself in June
Interview by UConn media
Upcoming paper in Contingencies Magazine
Selected by SOA to be media spokesperson for ERM related activities
Presentation at actuarial conferences
Potential paid engagements by larger corporate sponsors
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Claim Cost management
Project: Red Wine
Goldenson Center for Actuarial Research, University of Connecticut and
Towers Watson
Jay Vadiveloo (UConn, Towers
Watsn)
Frank Ramsay (Towers Watson)
Brian Stoll (Towers Watson)
Brian Wirtz (Towers Watson)
Asiri Gunathilaka (UConn)
James Gu (UConn)
Yingqi Tao (UConn)
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Project Overview
Phase 1:
Develop database tool for TW claim cost management review
Phase 2:
Build a quantitative formula to estimate ROI for client
Phase 3:
Develop a tool to combine databases from various clients in order to
develop benchmarking studies
Phase 4:
Develop applications of predictive modeling for claim cost management
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Existing Tool
Startup Screen
Typical Review Process
• Obtain claim data from client
• Selection of representative sample
• Pre fill randomly selected claim information
• Initial Review
• Auditing for errors
• Peer Review and make necessary changes
• Generate reports
• Final deliverables
Data Entry Form
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Report
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Limitations Of Existing Tool

Limited specificity to each line of business (LOB)

Forced use of written worksheets to record data and then reenter
into tool

Lack of an electronic peer review or project management function

No connectivity between users and project manager

Subjective questions that lead to bias responses

Information collected lacks details

Inability to customize data entry forms

Inefficient report system

Not user-friendly
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Project Workflow
PROJECT MANAGER
Edit project
information;
Customize data entry
forms;
•
•
Prefill basic claim
information;
Claim assignment
Peer
review
Report and
analysis
AUTOMATED
Initial reviewer
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New Tool: Control Panel
Tailor-made versions for both project manager and initial reviewer
with required functionalities
Project manager version
• Project customization / claim assignment
• Initial review / peer review
• Generate reports
• Import and export
Initial Reviewer version
• Initial review
• Import and export
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New Tool: Data Entry Forms
Existing data entry forms
• Limited specificity to each LOB
• Subjective questions that lead to biased responses
• Information collected lacks details
• Inability to customize data entry forms
• No completeness check
• Not user-friendly
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New Tool: Data Entry Forms
Improvements of new data entry forms
• Specific closed form questions
• Complete details gathered
• Both loss and expense savings opportunities estimated for each activity
• Response specific details obtained
• Completeness check available
• Detailed quantitative analysis
• User-friendly
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New Tool: Reports
Report Generator Comparison
New reports
• Categorized by line of business
• Seven reports versus 15+ reports
• Combined redundant reports
• Reports with graphs
Old reports
• Missing Line Specific reports
• Report redundancy
• Inefficient reports
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New Tool: Reports
Summary Graphs
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Next Steps

Extend General Liability model for Medical Malpractice claims model and other
lines of business

Explore customizing Claims Management tool for individual and group
disability income claims

Develop tool to combine databases from various clients in order to develop
benchmarking studies

Develop applications of predictive modeling for claim cost management
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Mature Driver Screening Program
Garry Lapidus
Director, Injury Prevention Center
Connecticut Children’s Medical Center/Hartford Hospital
Associate Professor, UConn School of Medicine
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Background

Motor vehicle crashes (MVCs) among mature drivers (age 65+) are an
important traffic safety and public health issue

In 2009, 5,300 deaths and 187,000 non-fatal injuries

16% of all traffic fatalities
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Normal aging affects driving ability

Unlike younger drivers, mature-driver crashes result not from deliberate
risk-taking but from age-related declines.

Declines in perceptual, cognitive, and psychomotor functions

Medical conditions and the medications used to treat them
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Aging and Driving
Mature Drivers tend to:
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
Travel slower

Choose times,
roadways, and routes
that make them feel
safest
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Mature Driving Screening
Benefits

Increase awareness of declines

Identify declines at an earlier stage allowing for intervention
But

Despite clear efficacy, screening is underutilized

In most states, driver screening and referrals are not standardized or
systematically provided
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AAA Roadwise Review™

Home based 30 minute computer program (CD ROM and internet)

Identifies impairments in 3 major areas:


Vision, physical fitness, cognition

Scored as no, mild, serious impairments
Provides recommendations to address impairments


Vision/medical evaluation, Driver refresher course, Driving evaluation
AAA reports widespread distribution but,

actual use unknown because it is designed to be used in-home
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Roadwise Review™
adapted for community based screening at senior centers

Used test administrator for screening

Provided documentation of completion and analysis of results

Allowed for explanation/counseling of results for participants and followup
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Results
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Results
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Referrals and follow-up


75% of participants were given referrals

Driver refresher course (73%)

Vision check (18%)

Medical evaluation (7%)

On-road driver evaluation (5%)

Occupation therapist evaluation (6%)
At 2 week follow-up 74% reported intent to complete
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Program satisfaction was high
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Limitations of Roadwise Review™ and
Need for new screening tool


Software and hardware limitations

Cumbersome set-up, confusing instructions, unable to easily fast forward

Operating system and touch screen issues
New screening tool

Improve ease of use

Demonstrate effectiveness by correlating screening performance and
traffic violations, claims, and crashes
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Joint proposal development with Goldenson Center to a
major insurance company

Develop and test a new computerized mature driver risk screening tool

Disseminate new mature driver screening tool

Create a branded proprietary screening tool that can be sold
nationwide and provide a revenue stream
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Role of the Goldenson Center

Assist in the development of the screening tool

Develop a predictive model which incorporates results of the screening
tool with other related data such as driving history, medical data, etc.

Apply results of predictive model to enable partnering insurer to better
price auto insurance coverage for mature drivers
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Project partners

Injury Prevention Center & UConn School of Medicine

Collaboration with the Goldenson Center faculty and graduate students

Target funder: major insurance company
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Drive Safer, Longer
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