Tag Archives: risk

Translating Safety Management Compliance

OSHA is currently in the process of developing an Injury and Illness Prevention Program (I2P2) management standard intended to be extended to all fifty states. As California is one of only fourteen states to currently have a safety management program requirement in place (Title 8, Section 3203), significant attention has been paid to California’s program, the perceived costs and benefits of making safety program management mandatory, and the lessons learned along the way.

Besides cost-benefit, another issue that is often raised is whether mandated compliance, through threat of citation and/or poorly conceived requirements, actually diminishes levels of safety. Dan Petersen, a well-regarded safety professional wrote, “Most organizations I am familiar with have come to believe that, when it comes to safety and health, they have two distinct concerns, which seem to have little to do with each other: preventing accidents and regulatory compliance.”

Based on my experience, both as a safety director and a risk management consultant, I am of the opinion that requiring safety management programs is not an either/or dilemma of compliance or safety, and that effective safety management does reduce injuries and associated costs. The fundamental issue has been one of translation — which is to say that the companies that struggle with safety management (as opposed to those that reject the requirements out of hand) are simply unable to translate safety requirements into manageable and sustainable day-to-day policies and procedures, and they ultimately give up. This is an issue Cal-OSHA has addressed but not overcome.

On July 15, 2011, John Howard, Cal-OSHA Chief, gave a presentation entitled Injury and Illness Prevention Program: The California Experience, in Washington D.C. to the Small Business Roundtable. He summarized the pitfalls encountered rolling out the requirement and Cal-OSHA’s efforts at supporting implementation (translation). I have not found the transcript of the presentation, but the supporting PowerPoint provides a good overview of the specific topics he touched on.

Early criticisms of SB 198 were that it was “overly broad and burdensome” and that many employers lacked the expertise to develop (translate) requirements into an effective program. Within three years of enactment, the legislature had modified some requirements and Cal-OSHA had produced several model programs (translations) that could be used by a variety of businesses. The programs were followed with the introduction of compliance checklists (translations) that were intended to guide users to the regulatory top of the mountain. However, and as Howard notes, the downside of these support tools was that they often resulted in “paper compliance” that did nothing to enhance actual safety management. What he did not note is that they also did not provide effective compliance translation.

Currently Cal-OSHA Consultation provides on-site assistance and has developed a variety of eTools, including an online IIPP “wizard” to support companies with the development and implementation of their Injury and Illness Prevention Program. Unfortunately, many companies are leery of requesting on-site help, and it is not at all clear whether the web-enabled support helps companies struggling with the core issue of day-to-day management of their safety program.

I do not believe that it does, and would offer the following suggestions to those who have struggled with IIPP implementation:

  1. Cal-OSHA starts with the written program. You should not (but do keep your old program intact while you build the new one).
  2. Do start with the supervisors who oversee the productive part of whatever you do.
  3. Introduce a weekly or bi-monthly form that documents day-to-day behavior reinforcement. A month later add a weekly safety assessment/fix to the mix, the next month add weekly group meetings, all on the same form. Provide training and define expectations as each new component is added. To effectively support these required activities create forms that must be filled out completely in a given time frame. The frequency of completing a form can be adjusted depending on risks inherent in a work area, but the form should always be designed to be filled out completely in any given cycle.

    Learn about performance support and job aids, and develop multi-level performance support forms to guide and document your program.

    Job Aids Basics – Joe Willmore
    Job Aids & Performance Support – Allison Rossett & Lisa Schafer

    A simple checklist-style form that includes only basic details can guide and capture essential activities — including behavior reinforcement, safety assessment/fix, and tailgate training. Keep each form to a single page. Also, consider desktop/smart phone/tablet applications as alternatives to paper forms.

  4. This approach is completely scalable. Delegate to all departments and levels — design interlocking performance support forms that culminate in a monthly Safety Activity Report submitted by the safety manager to the owner/CEO. If supervisors are required to engage in behavior support conversations, then the department manager’s monthly form should include confirmation that the supervisors are fulfilling the required behavioral support activities and an assessment of the quality of their work, and so on.
  5. Look to the Injury and Illness Prevention Program requirements for those activities that should at some point be integrated into the Safety Performance Support Forms — likely activities include either doing, assessing, or assuring the doing of: behavior enforcement and reinforcement; training (new employee, new hazard, tailgate, etc.); inspection; day-to-day hazard identification and correction; accident investigation; employee suggestions, and so on.
  6. Incorporate other compliance areas (HazCom, Heat Illness Prevention, Lockout/Tagout) into your performance support forms as training, inspection, and behavior reinforcement activities.
  7. Six months after you start this process consider rewriting your IIPP to reflect what you are actually doing.

Download a sample form that will help you begin.

Life Insurance 101: America’s Most Underused Risk Management Tool

Almost four out of five U.S. households own some form of life insurance, meaning that to some degree, there is national consensus regarding the importance and usefulness of life insurance. However, the average household only owns enough coverage to replace 3.6 years of income, creating a significant gap between the amount of coverage families have versus the amount of coverage they actually need. Forty-four percent of U.S. households would agree that they do not have sufficient coverage to meet their potential needs. The question then arises of why so many Americans are underinsured.One of the primary reasons why we suspect that many Americans are not sufficiently covered is that they are not sure about what type of coverage they need or how much. They have concerns about affordability as well, especially in light of the nation’s current economic struggles. Most families are tightening their budgets in an effort to weather the storm, and unfortunately, life insurance is often one of the first expenses to go. With these issues in mind, we have come up with some basic answers to some of the most common questions that develop as families consider the purchase of life insurance.

Why do I need life insurance?
Traditionally, life insurance has been viewed as a way to cover burial costs and replace income. However, there are many additional ways that life insurance can serve as a valuable investment and risk management tool. For example, it can be used to pay estate taxes, pay off a mortgage, equalize an estate among multiple heirs, diversify investment and retirement plans, donate a substantial gift to charity, or purchase a partner’s share of a business if he or she passes away. If you do your homework, you will likely be surprised at the variety of life insurance plans that exist as well as their creative uses and how they can benefit you and your family when you pass away and while you are still alive.

What type of coverage should I purchase?
There are two main types of life insurance. Term life is temporary insurance that is offered for a specified term only; usually 10 years, 15 years, 20 years, or 30 years. Policies expire at the end of the term, much like health insurance, car insurance, or property insurance. In most cases, term policies can be converted to permanent coverage for a period specified in the life insurance contract.

Permanent life is just that — it’s permanent! Such policies can last for life if designed and monitored properly. Universal Life, Indexed Universal Life, Whole Life, and Variable Life products would all fall into the category of permanent life. They accumulate a cash value or internal cash reserve that can be used for a variety purposes. The cash value grows based on an interest rate determined by the insurance carrier. Permanent insurance can be flexible and transferable via a transaction called a 1035 Exchange, which is much like a 1031 Exchange in real estate. Typically, permanent life has a variety of uses beyond providing a tax-free death benefit, such as supplying a retirement income, serving as a cash reserve while you’re alive, offering long term care components, and giving you the opportunity to tap into the death benefit while you are alive to pay medical expenses if you become terminally ill.

Can I afford life insurance and how much do I need?
The cost of life insurance depends on your age, your health, the type of policy you’re applying for and how the policy is designed. Typically, permanent insurance, with its flexibility and multitude of uses, is much more expensive than term insurance. As you get older and/or your health diminishes, insurance carriers identify you as being a higher risk and therefore charge you higher premiums. It is best to lock in coverage while you are young and in good health.

How much coverage you need can be calculated based on your income, your projected future income, your net worth, and your age. In the case of key-person business insurance, the potential loss of profitability that would result from you passing would be a key component in the calculation. Insurance carriers consider each of these factors when determining how much coverage you can qualify for.

I’ve had some health issues. Will I even qualify for life insurance?
Underwriting is the process during which a life insurance company reviews the prospective insured’s medical records and life insurance physical exam to determine which underwriting class should be assigned to the insured. For example, ratings span from Preferred Plus, which means that the insured is as healthy as possible for someone that age, to Substandard, which means that the insured has below average health for someone in that age category. The more health issues you have, the more expensive your coverage will be. One very important fact to consider, however, is that underwriting is subjective. One carrier’s assessment of your health can be completely different from another carrier’s assessment. If you have health issues, there is value in shopping around because you never know which carrier might give you just the offer you were looking for.

What if I already have life insurance?
Active life insurance policies should be reviewed at a minimum of every two to three years. Changes in interest rates, the market, mortality tables, and product efficiency make it critical for policy owners to have their contracts evaluated periodically to ensure that their policies are still competitive. If you have a life insurance policy currently, it should be your goal to determine the following as part of your periodic reviews: Am I paying the lowest possible premium for the amount of coverage I have? How strong and stable is my insurance carrier? Is my current death benefit amount still sufficient to meet my needs? Is my policy guaranteed? Am I taking advantage of all of the living benefits my policy has to offer? Should my policy be owned by a trust? As your life changes, your policy should change to meet your evolving needs.