Risk Management: Post-Incident Risk Management

by Ed Schirick

Managing risk is a year-round, 24/7 challenge for most businesses. As we have indicated in the past, the primary goal of risk management is preserving the assets of your organization. The process of identifying, evaluating, controlling, transferring, and monitoring the risk factors that threaten your business is hopefully becoming familiar to camp directors. Camps spend a lot of time and money modifying facilities and educating staff, trying to prevent injuries and damage to property before the campers even set foot on the premises.

Unfortunately, no matter how committed you are to controlling risk in your camp environment and no matter how diligent your training efforts and safety initiatives, incidents occur during camp that damage property or cause injury to campers. Does this mean your risk management efforts are a failure? Certainly not! Does risk management end when property is damaged or someone is injured? Definitely not!

Some risk management professionals prefer to divide their risk management planning and organizing into two phases. The first part is sometimes referred to as pre-incident (injury) and the second as post-incident (injury) planning. This separation emphasizes the continuous nature of the risk management process and underscores the fact that risk management doesn’t stop after an unexpected or unplanned situation results in injury or damage.

The concept of post-incident risk management is not new. But, some camp professionals may be seeing the term for the first time. Most camps already have some elements of a comprehensive post-incident risk management plan in place through the use of emergency action plans and crisis response plans.

Pre-Incident Versus Post-Incident Risk Management

From my perspective, the main difference is the focus of the activity. In pre-incident risk management the focus is prevention. In post-incident risk management the focus shifts to risk and loss reduction.

An excellent example of pre-incident risk management is the training and information directors share with staff during orientation. Directors discuss many things including such prevention issues as following the rules for various activities, and the importance of using personal protective equipment (Personal Flotation Devices while boating, helmets while horseback riding, etc.). An example of post-incident risk management is having systems and procedures in place to allow injured workers who have lost time from work to return to work early in a different capacity.

Cost Reduction is the Goal

The practice of allowing injured employees to return to work earlier than they might have otherwise, doing a different job than the one they did previously, is widely used and accepted as cost effective. In addition, insurance industry experience with workers’ compensation claims has demonstrated that the earlier the claim is reported to the insurance company the more cost effectively it is managed. This is a desirable outcome especially if your workers’ compensation is experience rated.

The following incident is a case in point. A camp had a maintenance man who was using a gas-powered, grass trimmer with a brush blade attachment to cut thicker grass and weeds at camp. The tool was designed in a way, which prevented, or so they thought, a person from putting their hand near the blade while also keeping pressure on the trigger handle. The flaw in the design was the failure to anticipate that a very tall person, six-foot six, or seven, might be able to keep the trigger depressed, bend over, and put their hand near the blade.

This is in fact what happened. The incident occurred in a split second. The injury was severe. The employee nearly severed his hand at the wrist. Fortunately, he received immediate first aid and through the efforts of the camp director had surgery performed to repair the damage to nerves, blood vessels, muscles, and tendons by one of the finest surgeons in the area. But, he was out of work, undergoing physical therapy, and receiving lost wages payments from the camp’s workers’ compensation insurer.

Needless to say, this was a very expensive claim. However, the cost was reduced through an early return-to-work program, which allowed the employee to come back to camp before he was ready to resume maintenance duties and perform other duties. This was done with the approval of his doctors. This approach had a very positive impact on the employee’s attitude. Exactly how much money was saved was not quantified, but the insurance company claim department was certain of the benefit to the employee, and other staff, not to mention the camp’s loss ratio as a result of this post-incident risk management technique.

Blind Spots Cause Ineffective Risk Management

This leads to another principle of post-incident risk management. Know and understand your post-incident duties and obligations. These obligations may be imposed upon you by contract (your insurance policy; enrollment agreements, lease agreements, hold harmless and indemnification agreements, etc.), by law, or by your business customs and practices.

Insurance policies are contracts. They impose very specific duties and responsibilities on the policyholder. If you don’t know what your obligations are to report incidents, occurrences, accidents, or offenses, take some time this winter to review them with your insurance advisors. The obligations are different for each policy. Knowing your duties and responsibilities and staying involved helps avoid surprises and reduces the risk of taking actions or failing to take actions that might affect insurance coverage or the positive outcome of the situation.

I’ve spoken to some directors about this issue and have been told they simply rely on their insurance agents and insurance companies to tell them what to do. While this may be convenient, lack of a comprehensive post-incident risk management plan actually poses additional risk for your organization. Post-incident risk management requires the same amount of time, effort, and attention owners and directors give to pre-incident risk management. This means avoiding the temptation to let your insurance agent and insurance company take care of the matter. This means staying involved until the incident or accident is resolved.

Why Is This Important?
Turning over an incident to your insurance company and expecting them to do the right thing is a little naïve. Most insurance company claim departments are quite expert and capable. However, sometimes the interests of the insurance company and the policyholder differ and unfortunately, every once in a while an insurance company claim department may take some action, such as settle a claim involving no liability, which adversely affects the interests of the policyholder.

A hypothetical case in point is the incident, which is reported to the insurance company for Records Only. Upon receipt in the claim department, a claim is mistakenly established, and without any notice to the policyholder, a settlement is agreed upon with the injured party. In incidents reported for Records Only, an investigation from the (insured’s) camp’s point of view would have been appropriate. Contact beyond that with the parents of the injured camper may actually invite a claim. Contact with the parents would have been inappropriate in this example, since no demand had been made for damages. Incidents become claims when there is some demand made for compensation such as a refund of tuition or payment of medical expenses or upon receipt of a letter of representation from an attorney.

You should be aware that when an incident actually becomes a claim, especially when an attorney becomes involved, your involvement will change. Under these circumstances, you must be careful not to interfere with the insurance company’s claim department efforts. This doesn’t mean that your interest in the claim ends. It should not. It is reasonable to continue asking for regular updates. You may speak directly with the claim department or work through your insurance agent or broker until the matter is concluded. If the claim involves a lawsuit then the insurance company will assign defense counsel, which changes the dynamic again.

In summary, take some time to review your post-incident risk management plans and practices. If your risk management plan doesn’t include this focus, reconsider your approach. Determine your duties and obligations imposed by contract, law, and business practice. Consider the risks. Coordinate your planned activity with your insurance agent and insurance company. Cooperate with your insurance company and their representatives handling your camp’s incidents, accidents, and claims until they are concluded. Avoid surprises. You can make a difference. Good luck, and keep up the good work!

Ed Schirick is president of Schirick and Associates Insurance Brokers in Rock Hill, New York, where he specializes in providing risk management advice and in arranging insurance coverage for camps. Schirick is a chartered property casualty underwriter and a certified insurance counselor. He can be reached at 845-794-3113.

Originally published in the 2004 November/December issue of Camping Magazine.