Author Archives: Caroline McDonald

About Caroline McDonald

Caroline McDonald is a writer and former senior editor of the Risk Management Monitor and Risk Management magazine.
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Hiring at Top of Companies Concerns

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A majority of organizations plan to grow in 2014 (71%), with almost one-third of companies with 4,000 or more employees predicting their staff will grow by 6% or more, according to the “Employment Screening Benchmark Report” by HireRight.

Employers cited acquiring talent as a core business challenge. The majority, more than three-quarters, said they prefer traditional methods for recruiting, such as online job boards. However, they could be missing hiring opportunities by not using social media. Nearly 60% of those surveyed said they are not using Twitter, LinkedIn or other means to find qualified candidates, the study found.

The study also found that (83%) of companies screen their potential employees. Of those, almost three-quarters, said they discovered issues that would not have been uncovered otherwise and more than half reported that screening improved the quality of their hires. The top benefits of screening were reported as:

• A better quality of employees hired (56%)

• More consistent safety and security (52%)

• Improved regulatory compliance (48%)

• Better company reputation (22%)

• Greater employee retention (17%)

But while a majority of respondents screen prospective employees, some organizations may have gaps in their screening programs. According to HireRight:

Contingent workers often represent a significant part of an employer’s workforce, and can include those in critical positions, so failure to screen these workers at the same standard employees are screened can present a substantial risk for organizations…The lack of a contingent workforce screening program has the potential to lead to workplace violence or fraud and can result in negligence claims. Negligent hiring cases have had verdicts of up to $45 million, and the average negligent hiring lawsuit settlement is nearly $1 million.

 

Five States Most Likely to See Employee Lawsuits

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Businesses in California, Illinois, Alabama, Mississippi and the District of Columbia face a markedly higher risk of being sued by their employees compared to the national average, according to a study by Hiscox.

“Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher,” Mark Ogden, managing partner of Littler Mendelson, employment and labor law firm said in a statement. “Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000.00, most state employment statutes impose no damages ceilings.

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Consequently, employers in high-risk states must ensure that their workforces are adequately trained regarding workplace discrimination, harassment and retaliation and that policies forbidding such conduct are strictly enforced.”

The study found that a U.S.-based business with at least 10 employees has a 12.5% chance of having an employment liability charge filed against it. Businesses in several states, however, face a much higher level of exposure to litigation. California tops the list with establishments with at least 10 employees having a 42% higher chance above the national average of being sued by an employee. Other states and jurisdictions include the District of Columbia (32%), Illinois (26%), Alabama (25%), Mississippi (19%), Arizona (19%) and Georgia (18%). Lower-risk states for EPL charges include West Virginia, Massachusetts, Michigan, Kentucky and Washington.

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State laws can have a significant impact. For example, the employee-friendly nature of California law in the area of disability discrimination may contribute to the high charge frequency in the state.

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Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA).

FEHA applies to a broader range of businesses, covering any company with five employees, versus a 15-employee minimum for cases brought under federal law as outlined in Title VII of the Civil Rights Act, according to Hiscox.

Mudslide Was Forewarned, Experts Assert

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Shutterstock/Dan Schreiber. Mudslides scar Washington hillsides.

Even as rescue teams search for more bodies in the aftermath of the March 22 mud slide in Washington, records show that while the area is prone to these disasters, homes were allowed to be built there anyway.

The slide, triggered by excessive rain, has claimed 24 lives so far and 176 are still unaccounted for, the Associated Press reports.

Snohomish County Emergency Management Director John Pennington said during a news conference on March 24 that the slide was “completely unforeseen” and that it “came out of nowhere.”

In a 1999 report filed with the U.S. Army Corps of Engineers, however, geomorph­ologist Daniel J.

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Miller and his wife, Lynne Rodgers Miller, warned of “the potential for a large catastrophic failure” in the area, according to the Seattle Times.

“We’ve known it would happen at some point,” Daniel Miller said. “We just didn’t know when.” He added that after a mudslide in 2006, he was surprised to find that more building was allowed in the area just weeks later. “Frankly, I was shocked that the county permitted any building across from the river,” he told the Seattle Times. “We’ve known that it’s been failing,” he said of the hill. “It’s not unknown that this hazard exists.

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”

The area has a history of mudslides. After two earlier slides on the hill in 1949 and 1951, recommendations were made to permanently divert the Stillaguamish River or build berms to reinforce the slide area.

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Howard Coombs of the University of Washington, however, concluded that any fix was likely to be temporary.

A thousand-foot berm was built in the fall of 1960, but it was mostly destroyed by high water in the Stillaguamish the following year, according to state records. Other barriers that were built were also destroyed by mud, the report said.

Tracy Drury, an environmental engineer and applied geomorphologist said there have been discussions over the years about whether to buy out property owners in the area, but that the talks never became serious proposals, The Seattle Times reported.

Marine Losses Continue Downward Trend

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The marine industry continued to see a steady decline in the number of large ships losses globally since 2002, with 94 ships lost in 2013, down 20% from 117 reported in 2012, according to a study by Allianz.

The “Safety and Shipping Review 2014” by Allianz Global Corporate & Specialty found that of ships lost, the largest number, 32, were cargo vessels; 14 were fishing vessels; and 12 were bulk shipments. Only six passenger ships were lost, the survey found. The most common cause of losses in 2013, and over  the last 12 years, was foundering (sinking or submerging). The demise of 69 ships accounted for nearly three-quarters of all losses—with bad weather a significant driver.

Worldwide there were 1,673 losses from Jan. 1, 2002-Dec. 31, 2013, with an average of 139 per year. The top geographic area for losses has been South China, Indo China, Indonesia and Philippines. The area including British Isles, North Sea, English Channel and Bay of Biscay is still ranked fourth, despite improvement. With 45 losses overall, the U.S. eastern seaboard improved in 2013, dropping out of the top 10 regions.

According to the study, January is the worst month for all casualties in the Northern Hemisphere. There were 23% more losses in January compared with the quietest month, June. In the Southern Hemisphere July sees 41% more losses than April.

The majority of losses are caused by machinery damage, the reason for most losses in marine insurance. Statistics from the International Union of Marine Insurance (IUMI) report that 40% of hull claims are machinery damage and account for 20% of costs.

The review found that while piracy is still a threat, it has also subsided. Piracy at sea reached its lowest levels in six years, with 264 attacks recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. Fifteen incidents were reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents, down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in Gulf of Aden, Red Sea and Oman).

According to the study: “The very real threat of piracy for ships operating in the Gulf of Aden reached the general public last year as the Hollywood Oscar-nominated blockbuster Captain Phillips was released. Tom Hanks played the lead as the master of the pirated Mærsk Alabama, broadcasting the piracy problem to a much wider audience and raising awareness of its consequences. The steps that the international maritime community has taken to reduce the threat of piracy in the Gulf of Aden have been extremely successful with the number of ships seized and hostages taken in 2013 significantly down on 2012.”

Lower losses overall were attributed to a number of factors including increased regulation, which has helped the maritime industry improve its safety record. Because the quality of operations varies in different regions, however, there is a big need for universal regulations on ship safety to reduce the risk of casualties and loss of life, the survey concluded.