Risk Management Best Practices NCGFOA Summer Conference July
18, 2011
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Presented by: Greg Gaskins Chief Financial Officer City of
Charlotte [email protected] Dan Pliszka Manager, Risk
Management City of Charlotte Mecklenburg County
Charlotte-Mecklenburg Schools [email protected]
Risk Management History Hard market of the mid to late 80s.
Workers Comp Crisis early 1990s GASB 10 reporting requirements
Required loss funding of $17 million Increased emphasis on cost
containment. Increasing losses with multiple cost drivers.
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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.
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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
!!
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Losses are Cyclical
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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
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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.
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Successes Began providing loss metrics to business unit
management. What gets measured gets done !!
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Efforts Opened the Charlotte Vehicle Operations Center In
response to dramatically increasing vehicle claims frequency and
severity.
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CHARLOTTE VEHICLE OPERATIONS CENTER (C.V.O.C.) RISK MANAGEMENT
DIVISION 2725 BEAM ROAD
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Where are we now?? Still having unacceptable losses.
~$31,000,000 including IBNR Formed an Executive Risk Management
Task Force Comprised of KBEs of the seven top loss KBUs. 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
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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
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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.
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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.
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Auto Liability Risk Management Whac-A-Mole Workers Compensation
General Liability Public Officials Liability Health Insurance
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Risk Management NC Government Finance Officers Association July
18, 2011
