Category Archives: Risk Management

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Structures in Wildland Urban Interface Present Added Fire Risks

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The trend of building homes in isolated wooded areas has been increasing across the United States. This urbanization of woodlands has changed the way forests are managed. Small wildfires that were once allowed to burn out are now suppressed to protect homes and buildings. Added to this are drought conditions exacerbated by climate change. All of these factors have increased the likelihood of wildfires.

The United States Forest Service (USFS) notes that 32% of the housing units in the U.S. and one-tenth of all land with housing are situated in the Wildland-Urban Interface (WUI). The largest cost driver for both Federal and State wildfire suppression operations is the protection of public and private property in the WUI, according to the USFS.

The “Wildland-Urban Interface Federal Risk Mitigation Executive Order 13728,” released in 2016 by the Federal Emergency Management Agency (FEMA), reported that:

In 2015 alone, more than 10 million acres of wildlands burned, requiring the service of more than 27,000 firefighters and resulting in $2.1 billion spent by the USFS and the Department of the Interior (DOI) to suppress the fires—a record amount. Over the last decade, the fire season has become 2.5 months longer, and fires covering more than 10,000 acres increased, with the average area burned by wildland fires doubling in the last three decades to an estimated seven million acres per year.

This year, more records were broken. In California, the Mendocino Complex Fire became the largest wildfire ever recorded in the state, according to the California Department of Forestry and Fire Protection, or Cal Fire.

According to FEMA, 46 million homes in 70,000 communities are at risk of WUI fires, which have destroyed an average of 3,000 structures annually over the past decade. As more people move into the WUI, businesses follow, putting organizations and jobs at risk.

To protect structures from fire, especially those in the WUI, the Insurance Institute for Business & Home Safety (IBHS) recommends that protection should take into account for a building’s materials and design features—as well as the selection, location and maintenance of landscape plants, including grasses, shrubs, bushes and trees.

According to IBHS, a defensible space should be maintained around a building to reduce wildfire threat and help a building to survive without assistance from firefighters. A vegetation management plan (VMP) also needs to be put in place, particularly in WUI areas. A VMP provides important information about the land, such as:

  • Topography (slope and aspect)
  • Location of building(s) on the land
  • Proposed fuel treatment details (suggested actions such as thinning and prescribed burning to minimize wildfire risks)
  • Environmental concerns (such as threatened and endangered species, state-listed sensitive species and wetlands)

The VMP also provides detailed information on how the three defensible space zones will be developed and maintained. When developing a VMP, IBHS recommends consulting a landscape professional such as a forester, range manager, or natural resource specialist.

IBHS recommends creating three defined areas around a building called defensible space zones. Each zone has specific recommendations for the types of plants used, including how they should be grouped and maintained.

Jacksonville Murders Force Reassessment of Active Shooter Risks

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A mass shooting at a video game tournament in Jacksonville, Florida on Sunday has once again shined a spotlight on the growing risks businesses face even as they conduct normal operations.

A lone shooter, 24-year-old David Katz, opened fire on football video gamers at a pizza restaurant, killing two and injuring at least nine before turning the gun on himself in an adjacent restaurant. Reports indicate that Katz was allegedly upset at being eliminated from the tournament. One of the deceased victims was a player who defeated Katz in a prior tournament, leading investigators to believe there had been a motive for the shooting. 

The effect of mass shootings has left Florida numb, especially since this follows the Feb. 14 massacre at Marjory Stoneman Douglas High School in Parkland, which left 17 dead and 17 injured; and the Pulse Nightclub shooting in Orlando in 2016, leaving 49 dead and 53 injured. These tragedies demonstrate that no business or venue should consider itself inherently safe and serve as reminders to risk professionals in all sectors that their organizations could be vulnerable to a mass shooting.

Public Safety
The shooting was unique in that it occurred during a live broadcast of the football gaming tournament. Gunshots were clearly audible as players delivered commentary during their simulated contests, prompting them to take cover and call the police, who responded minutes after receiving the first call.  

The incident marked the 235th mass shooting in the U.S., according to the Gun Violence Archive, an organization that collects information about gun-related violence in the country. The FBI and the United States’ Congressional Research Service consider a mass shooting to be one that injures at least four people, excluding the shooter.

In light of this increasingly commonplace threat, understanding how to respond to an active shooter situation can mean the difference between life and death. The U.S. Department of Homeland Security has provided the Run.Hide.Fight plan for guidance in what to do in an active shooter scenario.

Mental Health
As more information about Katz emerges, the links between gun violence, mental health and public safety in the United States become more evident.

CNN reported that Katz had a history of mental health issues and legally purchased a 9mm handgun and a .45-caliber handgun in Maryland. How he transported the weapons and ammunition across state lines and into the event are details still being investigated.

CNN also obtained police records that show 26 calls to the police from the Katz family home in Columbia, Maryland, from 1993 to 2009, for issues ranging from “mental illness” to domestic disputes. At least two of those calls involved Katz arguing with his mother, although none of the reports provided to CNN indicate any physical violence.

Since 2013, residents in Maryland must obtain a handgun qualification license from the state police before purchasing a pistol or revolver. That means Katz would have submitted his fingerprints, undergone a background check (which includes disqualifying individuals who were voluntarily or involuntarily hospitalized for more than 30 days), and passed a firearms safety training course to buy those guns. This scenario has been met with wide skepticism. And since some of his documented mental health issues may have occurred before the gun laws were revised, the disqualifications may not have applied to Katz.

“That clearly is an area in need of reform,” said Democratic Sen. Robert Zirkin, who chairs a Senate committee that handles gun laws.

Insurance
Risk Management magazine recently reported that companies may not be aware of potential gaps in their coverage or that the limits of their coverage, when considering active shooter incidents, are insufficient.

“You might have property coverage, but you might not have assessed your properties in specific locations against this type of risk,” said Robert Hartwig, clinical associate professor of finance and co-director of the Risk and Uncertainty Management Center at the University of South Carolina’s Darla Moore School of Business.“You almost certainly would not have crisis management under your ordinary property or liability policy. So these represent gaps that, as a risk manager, you might be unaware of.”

Beyond property damage, it can be unclear what is covered after a shooting. For example it is difficult to establish the liability for allowing an assailant on a property. “Unfortunately, the increase in the number of active shooter situations has probably gotten ahead of the law on this issue,” Hartwig said. He added that a number of states do allow individuals to carry concealed weapons much, if not all, of the time. “So it’s not necessarily the case that, just by entering the premises with a weapon, individuals are violating the law. Therefore, a business is not necessarily negligent by allowing an armed individual to enter its premises.”  

Follow-Through Needed for Effective Safety Culture

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The concept of a culture of safety can be stalled by employers that say they want to be safer, but do little to implement real change.

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For example, a company hoping to understand the causes of fatigue, but won’t adjust its schedules, can set itself up for injuries and hazards.

A new report, Making a Safety Culture Truly Cultural, published by KPA, a risk management consultancy found that:

  • 90% of employers want to understand root causes of employees’ fatigue,
    but only 55% say they will adjust schedules or tasks.
  • 51% assign a night shift to an employee immediately before or after a day shift.
  • 60% that know rest is important lack a designated area for employees to do so.

“You may think a workplace fatality is unlikely, but put it into perspective,” the report says. “The Centers for Disease Control and Prevention estimate that a fatal injury could cost nearly $1 million. And the National Safety Council estimates the cost at $1.4 million. Also, factor-in the indirect costs of lost productivity, employee replacement, insurance and attorneys, and the cost jumps to $3 million on average.”

The study offers tips for employers trying to embed safety into their organizational DNA. It also explores how employers who invest time, funds and effort into reshaping their culture can save millions in structural and legal damages.

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The report puts safety under a microscope to discuss:

  • Its current state in U.S. workplace
  • Where it needs to change
  • How to create a new culture
  • Return on investment
  • How behavioral changes can be key to preventing injuries

The report features case reviews where employers were both proactive and reactive in their efforts to make their workplaces safer. Some were in conjunction with a 2015 OSHA initiative and included adding hands-free tools, re-engineering control systems and installing metal guards to prevent contact with moving machinery.

These actions caused small habit changes that contributed to the larger goal of creating a culture of safety, the report says. Even changing a bad habit such as slow reporting into prompt reporting has proven to reduce future injuries. Addressing one safety issue at a time rather than several concurrently, KPA contends, is the most effective sequence for reshaping a culture.

Habit loops and how cues within those loops translate into the workplace were also explored.

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“It’s hard to change habits, but we can fiddle around with the components of the habit loop,” KPA says. “When behaviors become good habits—part of our routine and organizational DNA—that is a clear sign of developing a true safety culture.”

The report is currently available to RIMS members. To download the report, visit the RIMS Risk Knowledge library at www.RIMS.org/RiskKnowledge. All downloads of this publication will be shared with the sponsor, KPA.

To learn about other RIMS publications, educational opportunities, conferences and resources, visit www.RIMS.org.

Steering the Sales Strategy Toward Compliance

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It isn’t difficult to understand that one of the main reasons a salesperson would make a bribe is to make a sale.

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This kind of corrupt practice is common and even expected in many areas of the world. It is why sales and anti-corruption compliance are so often uttered in the same breath.

Sales and compliance is a pairing that must be examined closely and continuously. However, risk assessments often aren’t thorough, internal controls don’t catch suspicious transactions, and one side doesn’t know (or trust) what the other is doing.

When the compliance and sales functions aren’t aligned with respect to how they approach anti-corruption risk, all of the above missteps can happen. Even more frustrating is that most sales leaders want to behave ethically—they want to close sales based on their own skill rather than by cheating. Winning is that much sweeter when they do. So then, how do things keep going awry in practice?

For starters, the emphasis on ethical conduct doesn’t resonate with the sales department because they hear multiple conflicting messages. One comes from the top, that ethical conduct is important. The other comes from somewhere below the top, that sales goals must be met by any means necessary.

This is a situation that requires some serious thought; it means that your corporate culture isn’t unified. Instead, you have a subculture (meet sales goals) that contradicts the ethical culture the CEO and other senior executives like to talk about. If you can identify that you do have conflicting messages and subcultures at your organization, then you can attack that subculture with practical steps to stamp it out.

One place to start would be rethinking your incentive program. Sales teams live and die on incentives—and there’s nothing inherently wrong with that, if your incentives push them in the correct way. Do your incentives punish failure more than they reward success? Do they encourage cooperation among the team or do they pit sales reps against each other?

Of course, independent measures should be part of a compliance program, such as accounting controls that block suspicious payments to intermediaries, or audits of due diligence procedures. The compliance function always needs to act with independence, and verifying the sales team’s compliance with policy and procedure is part of that job.

Even so, companies don’t really encourage compliance itself. Rather, they explain compliance, which is a procedure that employees should follow. They encourage ethical conduct, which is (or should be) a core corporate value—and when employees embrace it, their behavior naturally follows the compliance procedures companies have established.

What’s the point of making this seemingly small distinction? The reason is that companies can indeed enforce compliance with the sales team: by auditing and punishing non-compliant behavior or sealing up opportunities for non-compliance. If those efforts are strong enough, you might even prevent compliance failures on those efforts alone.

Ultimately, though, what will the financial or cultural cost be? A stringent system of controls, rules, and punishment might make for fewer FCPA mistakes (although that’s a stretch). It also sounds like a painstaking system to implement and a miserable place to work.

The alternative is to make sure that ethical business conduct is at least an equal priority (if not greater) to hitting sales targets. Then you can ask: are we structuring incentives to support that priority?

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Are we relying on intermediaries and agents to the minimum amount necessary? How many due diligence duties can we put onto the sales team, and how many do we place with compliance or audit to trust but verify?

These are important questions and their answers are not always easy to find.

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In most organizations, with pre-existing sales functions, business practices, and cultures, the answers will also be laborious to implement. At least, however, sales and compliance will be aiming toward the same objective of doing business ethically—and that is what alignment is.

Working from a place of alignment stands a far better chance of keeping sales practices compliant than having sales and compliance teams circling each other in distrust.

That leads only to frustration and a negative work environment. Encouraging ethical conduct rather than merely “teaching compliance” will position your organization for greater success.