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Top 10 Mistakes to Avoid as a New Risk Manager

The transition into your first risk management job can be difficult. Whether your boss promotes you into your first risk management job or hires you from another organization, you want to excel at your new position over the long haul. In part, that means avoiding mistakes. We often learn our best lessons when we fail, but some mistakes can seriously hurt your risk management program, harm your reputation or even derail your career. Here are 10 mistakes you can avoid.

  1. Don’t rush in with all the answers. You may arrive wanting to form your own alliances and acquire your own team, but avoid making hasty decisions. Give current employees a chance to prove themselves before you transfer them or hire your own team. The same applies to vendor relationships. You can lose a great deal of knowledge about loss history and coverage negotiation if you immediately decide to switch insurance brokers. “Changing brokers can be a great way to create significant coverage gaps or an errors and omissions claim for your friend the new broker,” according to one Atlanta broker. Some vendor alliances, such as relationships with contractors and body shops, may be long-standing, especially in a small town. Rushing in and making changes can cause big ripples in a little pond.
  2. Don’t try to do everything at once. In my teens, I read a book called Ringolevio, about a kid named Emmett Groan growing up in the streets of New York City. One of his compatriots frequently warned Emmett when he was about to rush headlong into a decision, “Take it easy, greasy, you’ve got a long way to slide.” I found that advice very applicable in risk management. If you inherit a big job, you will be faced with hundreds of decisions, some big, some small. Take your time. While you may feel overwhelmed at first, chip away at the organization’s most pressing problems. Put out fires as they arise. Then schedule time for you and your advisers — your brokers, your attorneys, your actuaries and your managers – to develop sound strategies and plans.
  3. Don’t use a shotgun, use a rifle. If the organization is experiencing too many injuries, for example, don’t jump to an obvious solution like using more personal protective equipment. Talk with front-line supervisors, study historical loss data and consider several options before you throw money at a problem. Once in the door, interview employees, talk with other managers, meet with your vendors and set a few important priorities for your first six months in the job. Using a rifle approach means you’ll have to say “No” to some people. This can cause problems. When possible, explain why you’re declining to act on the problems or the specific issues others may present to you. The more transparently you operate, the less criticism you will face. Openness reduces speculation and helps avoid resentment.
  4. Don’t job hop. Most people can be very ambitious early in their careers. Yet too much ambition can hurt your career. Think long and hard before changing jobs. Bad bosses rarely outlast their employees. Deciding to change jobs because of a conflict with a supervisor is often short-sighted. The grass might seem greener on the other side, but sometimes that’s because of a septic tank (to paraphrase a famous comedian). These questions may help you avoid rash decisions.
    • Am I making the change solely to earn more money or for a more prestigious title? If so, will this change “pay for” what I will lose?
    • Am I making the change because I’m feeling unchallenged or bored? If so, what steps can I take to make my current job more challenging? For example, would becoming more active in a trade association, offering expertise to a local nonprofit or mentoring an up-and-coming risk management professional add challenge and interest?
    • How will this affect my retirement financially? Will I be changing retirement systems, or will I lose significant bonuses or vacation because of the change? Always factor those figures into the salary decision. This question becomes more important as retirement age nears.
    • How will this change affect my family and my coworkers? Our coworkers can turn even a challenging job into an appealing one. Do you really want to leave your coworkers? As for family, what ages are your children? Disrupting school-aged children can have negative, long-term consequences.
    • What are the odds I will regret this decision? Go ahead, we’re numbers people. Put a percentage to your decision, then ask yourself if you’re really ready to take that gamble.

    It takes months to settle into a new job. It’s often a year or more before we feel comfortable. Some studies show that many people who change jobs would have done much better if they had stayed put longer. Change for the sake of change frequently is not positive.

  5. Don’t entertain gossip about your predecessors. Some at your new organization may try to build an alliance with you at the expense of your predecessor. Short-circuit these conversations whenever possible. Tactfully turn the conversation to another subject or excuse yourself from the conversation. Try not to make an enemy of the person who is trying to get into your good graces.
  6. Don’t revisit your predecessor’s decisions. Especially when working with unions, you may find people lined up at your door asking you to revisit your predecessor’s judgments. Unless your predecessor’s conclusions hurt your overall program, don’t rush into undoing the decisions and the work he or she completed. You may not be operating under the same set of facts or with the same long-term vision that the former risk manager had at his or her disposal.
  7. Don’t believe your own PR. Never pretend you know more than you know, and don’t start believing your own “press.” While others may soon invite you to participate on panels and present at conferences, remain humble and teachable. It’s terribly painful to learn humility through humiliation.
  8. Don’t fail to communicate. A lack of communication is one of the most damaging mistakes a risk manager can make. A risk manager must have the ear of employees across the organization, from line supervisors to senior management. According to Don Donaldson, president of LA Group, a Texas-based risk management consulting group, “A risk manager needs to be an excellent communicator and facilitate his or her message across the entire organization. In my mind, that requires getting out of the office and pressing the flesh; seeing and being seen and listening, really listening, to determine what is going on in the organization.” Management by walking around is one strong tool in a new risk manager’s tool bag. Once people see that you’re willing to leave your office to discover what is happening, whether it’s on the shop floor or on the sewer line, they’ll more readily accept your expertise and counsel.
  9. Don’t get discouraged. “New risk managers may make the mistake of thinking that risk management is as important to others in the organization as it is to them,” according to Harriette J. Leibovitz, a senior insurance business analyst with Yodil. “It takes time, and more time for some than others, to figure out that you're more than an irritation to the folks who believe they drive all the revenue.” Over time, you will prove your value to the organization many times over. Until that day, quietly do your job and find encouragement from your risk management peers.
  10. Don’t forget to laugh. You will be privy to the peculiarities of human nature both at its finest and at its worst, so don’t forget to find the lighter side of situations when you can. A robust sense of humor will help you through the rough spots and build bonds with your coworkers.

While these are just a few tips to help you in your new role as a risk manager, your peers probably can offer many more ways to ensure success. Over my career in risk management, I have found my fellow risk management professionals to be some of the most generous people in my life, always willing to share their expertise and provide me with a helping hand. Develop and lean on your network. If this is your first job as a risk manager, you’re in for a wonderful experience. Take time along the way to enjoy the experiences, appreciate the great people you will meet and appreciate the lighter side of risk management.

The Insurance Implications of Social Networking Websites, Part 3

This is the third part of a six part series of articles discussing insurance coverage for claims that can be brought against individuals or companies because of the use of Social Media websites. Earlier articles in this series can be found here: Part 1 and Part 2. This article discusses coverages potentially triggered under Coverage A – Bodily Injury.

Bodily Injury Coverage
Even if the policy contains a personal injury coverage part (as discussed in part 2 of this series), analysis should still be made whether the policy provides coverage under the bodily injury coverage part. Oftentimes, this is dependent on the policy’s definition of “bodily injury” and “occurrence.”

Does The Defamatory Comment/Posting Made On A Blog/Website Constitute An Occurrence?
In order to trigger coverage under the policy’s insuring agreement there must be a defined “occurrence” that results in defined “bodily injury” during the policy period. Policies typically define “occurrence” as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions” which results in bodily injury. Most jurisdictions hold that it is the insured’s standpoint that controls in determining whether there has been an “occurrence” that triggers the duty to defend under the policy. A majority of jurisdictions have held that an accident is “an unexpected, unforeseen, or undesigned happening or consequence from either a known or an unknown cause.” A deliberate act, therefore, is not an accident.

If the defendant publishes an internet posting that referred to the plaintiff in a derogatory manner, e.g., accusing the person of being a pedophile, then this is a deliberate act which does not constitute an occurrence as defined by the policy. Stellar v. State Farm General Ins. Co., 157 Cal. App. 4th 1498, 69 Cal. Rptr.3d 350 (Cal. App. 2007). Some jurisdictions have held that the very nature of defamation precludes the conclusion that it can occur “accidentally.” See, e.g., Uhrich v. State Farm Fire & Cas. Co., 109 Cal.App.4th 598, 135 Cal.Rptr.2d 131 (Cal. App. 2003); Rogers v. Allstate Ins. Co., 938 So.2d 871, 876 (Miss. App. 2006); Iafallo v. Nationwide Mut. Fire Ins. Co., 299 A.D.2d 925, 926, 750 N.Y.S.2d 386, 388 (N.Y. App. Div. 2002). Some jurisdictions, however, recognize negligent defamation and, therefore, there may be an occurrence triggering coverage. Cincinnati Ins. Co. v. Eastern Atlantic Ins. Co., 260 F.3d 742 (7th Cir. 2001); cf., Baumann v. Elliott, 704 N.W.2d 361 (Wis. App. 2005) (finding no occurrence because complaint did not allege a negligent defamation); Farmers Ins. Exchange v. Hallaway, 564 F.Supp.2d 1047 (D. Minn. 2008) (reversing summary judgment and holding that there may be personal injury coverage because underlying lawsuit alleged negligent defamation and intent to injure had not been decided).

There are, obviously, certain factual situations that may at first blush appear to be intentional, but, upon further, investigation, may constitute an occurrence triggering coverage. For example, an individual intends on posting a defamatory comment on Facebook, spends time typing out the comment, but later decides against posting the comment, but accidentally hits “share” rather than “cancel” and so the item is accidentally posted on Facebook against the user’s wishes. Although the individual may have originally intended to post a defamatory comment, at the moment the comment was indeed posted, the individual did not have that intention. This may constitute an “occurrence” triggering coverage.

Similarly, an individual may have intended to respond to a message on Facebook with defamatory or libelous remarks, but rather than clicking the “reply” button, the individually mistakenly clicked the “reply all” button and, consequently, the message is sent to everyone on the list, rather than just the individual that the user originally intended.

Another example includes attaching a video or picture to a social media website. The individual may have intended to attach file A, but when selecting the file, the individual selected file B, which contained a picture/video of a person in a compromising position such that the individual’s privacy is invaded.

These are a few examples where the claim or complaint may allege conduct that may at first blush appear intentional, but the true facts may reveal that coverage is triggered. Further investigation may be needed to determine coverage.

Does The Emotional Distress Or Other Alleged Damages Resulting From The Defamation Constitute Bodily Injury?
“Bodily injury” is typically defined in a policy as “bodily injury, sickness or disease sustained by a person, including required care, loss of service and death that results.” Courts have held that “bodily injury” encompasses only physical injury and its consequences and does not include emotional distress in the absence of physical injury. Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 44 Cal.Rptr.2d 370, 900 P.2d 619 (1995); Nguyen v. State Farm Lloyds, Inc., 947 S.W.2d 320, 323 (Tex. Ct. App. 1997); Wiard v. State Farm Mutual Auto Ins. Co., 132 N.M. 470, 50 P.3d 565 (N.M. Ct. App. 2000). Thus, pure emotional distress does not constitute “bodily injury” for purposes of a policy unless there is specific policy language providing coverage for pure emotional injuries.

Because most social media claims do not involve direct physical contact, there is generally no “bodily injury” triggering coverage in the traditional sense. However, physical manifestations of emotional distress may be covered by the policy even if there was no direct physical contact with the claimant. This may include loss of hair, loss of weight, exacerbation of existing illnesses like Crohn’s disease, etc. If the claimant alleges such physical manifestations resulting from social media torts, then there may be qualifying “bodily injury” as defined by the policy.

Hopefully, this article makes the reader aware that social media torts may not only trigger coverage under the typical personal and advertising injury provided under Coverage B of the policy, if available, but that such social media torts may also trigger “bodily injury” coverage under Coverage A, depending on the particular factual circumstances.